COMMERCIAL CLASS-BOOKS 
 
 MHMIMMM 
 
 mw iM 
 
 niiimilii»nim«r<<ri>r»»Miim
 
 THE LIBRARY 
 
 OF 
 
 THE UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES 
 
 SCHOOL OF LAW
 
 MARINE INSURANCE
 
 MACMILLAN AND CO., Limited 
 
 LONDON ■ BOMBAY • CALCUTTA • MADRAS 
 MELBOURNK 
 
 THE MACMILLAN COMPANY 
 
 NEW YORK • BOSTON • CHICAGO 
 DALLAS ■ SAN FRANCISCO 
 
 THE MACMILLAN CO. OF CANADA, Ltd. 
 
 TORONTO
 
 MARINE INSURANCE 
 
 A HANDBOOK 
 
 BY 
 
 WILLIAM GOW 
 
 MACMILLAN AND CO., LIMITED 
 ST. MARTIN'S STREET, LONDON 
 
 1 (J 2 1
 
 COPYRIGHT 
 
 First Edition 1895. Reprinted with corrections 1896, 1897 
 
 Second Edition 1900. Re/u-inted September 1900 
 
 Third Edition (G^obe Svo) 1903 
 
 Fourth Edition 1909 
 
 Reprinted 1910, 1913, 1914 
 
 With additions 1917, 1921 
 
 (Demy Zvo) 1903 
 
 l9il
 
 
 I 
 
 ,^ PREFACE TO FOURTH EDITION 
 
 When the Marine Insurance Act of 1906 (6 Edw. VII., 
 Ch. 41) came into operation on the ist January 1907, it 
 seemed to put an end to any useful existence of the present 
 book, based as it is almost entirely upon Case law, which 
 has been codified or superseded by that Act of Parliament, 
 In consequcnre, it was arranged that there should be 
 no further reprint of this book, as it seemed no longer 
 adapted to the wants of the comnierciaJ community, and 
 the writer felt that, having done its work, it might well be 
 allowed to drop out of existence. But very soon after this 
 decision was reached, an unexpected demand for the book 
 arose, and as it was impossible to meet that demand by 
 immediately supplying a similar work on the Marine 
 Insurance Act of 1906, the only alternative that remained 
 was to reprint the last edition, adding in a supplement 
 the most important decisions reported since 1903. This 
 plan is by no means satisfactory to the writer, except in 
 so far as it gives him the opportunity of completing the 
 record of important decisions given up to the 31st December 
 1906, that is, up to the close of the period during which 
 marine insurance was regulated principally, if not entirely, 
 by Case law. As it appeared convenient to bring the 
 record of cases as far down as possible, the most important 
 decisions given from 1st January 1907, to the close of 
 
 V 
 
 08S228
 
 vi MARINE INSURANCE 
 
 Trinity term 1909, have also been recorded. It is felt 
 that this is a very imperfect way of dealing with the 
 subject, but in the present circumstances, it is practically 
 the only available plan. 
 
 WILLIAM GUW 
 
 5 Castle Street, Liverpool, 
 August igo9.
 
 PREFACE TO THIRD EDITION 
 
 The completion of the fifth revision of this handbook 
 leaves me with the impression that if the book had to 
 be entirely rewritten it must assume a structure very 
 different from that now presented. The controversies that 
 were raging when the book was originally planned have 
 either been settled by legal decision or have been pushed 
 aside by other and more pressing matters. In fact, the 
 atmosphere has changed ; and strange though it may 
 appear, it seems to be true that even a prosaic text-book 
 of a small section of commercial law takes its spirit and 
 form from the surroundings of its writer, much in the same 
 way as the great imaginative works of literature bear on 
 them the traces of the physical, mental and moral environ- 
 ment of their creators. But what is of perpetual value in 
 the case of genius is only misleading and worthless in all 
 the rest, and therefore in them, particularly in text-books, 
 remodelling and rewriting become necessary. Besides, 
 there appears to be some hope that the long-discussed 
 Marine Insurance Codification Bill may shortly become 
 law. When this comes to pass, there will be a well- 
 defined starting-point, whence new departures will be made 
 in directions probably quite unsuspected by any one at this 
 moment. Till then it is hoped that this little work may 
 continue to be found useful to assured and- underwriters 
 
 WILLIAM GOW. 
 
 Union Marinp: Insuranxr Company, Ltii., 
 LiVKKi'OOL, 2Tth June lyoj.
 
 PREFACE TO SECOND EDITION 
 
 At the reprintings of this volume in 1896 and 1897, oppor- 
 tunity was taken to correct such errors as had been dis- 
 covered, and to add the decisions in the most important 
 cases occurring since the first issue. On the present 
 occasion additions have been made to the text, an attempt 
 has been made to notice all recent decisions, and the 
 appendices have been enlarged, completed, and brought 
 down to date. At the same time the writer has done his 
 best to keep the book from increasing in size, a task by 
 no means easy in view of the ever- expanding material 
 of the subject and the unceasing activity of litigants and 
 judges. 
 
 B I Liverpool and LoNnoN Chambers, Liverpool, 
 15M October 1899.
 
 PREFACE TO FIRST EDITION 
 
 At the close of a course of lectures delivered in the Michael- 
 mas term of 1893 ^^ University College, Liverpool, under 
 the auspices of the Liverpool Board of Legal Studies, I was 
 honoured with several requests for the issue of the lectures 
 in book form. In spite of the existence of such admirable 
 manuals as the late Mr. Richard Lowndes's Practicat 
 Treatise on the Imiv of Marine Insurance^ and Mr. Charles 
 M 'Arthur's Contract of Marine Insurance, there seemed to 
 be a want of some smaller and simpler book, adapted for 
 the needs of beginners, and of those desirous of obtaining a 
 general knowledge of the principles and practice of Marine 
 Insurance, rather than a complete criticism of recent de- 
 cisions on the subject On consideration of the matter it 
 became clear that if I was to make an attempt to meet 
 this want, the subject must be worked over again by me 
 from the beginning, the forms of expression employed in 
 the lectures being in many cases ill -adapted or quite 
 unsuitable for a book. I have accordingly rewritten the 
 whf)le work, and have endeavoured to embody in the 
 following pages the results of all important decisions on 
 Marine Insurance up to ist February 1895. The authori- 
 ties consulted are given in detail in the list on pages xi. 
 and xii. ; unfortunately .Mr. Tyser's book did not come into 
 my hands until it was loo late to use it.
 
 xH MARINE INSURANCE 
 
 I venture to indulge in the hope that my experience of 
 insurance in merchants' and shipowners' business may have 
 enabled me to appreciate those wants of the Assured which 
 underwriters are sometimes thought unduly to neglect. 
 
 I desire to acknowledge with thanks the permission 
 given to me by Mr. Reginald G. Marsden and his pub- 
 lishers, Messrs. W. Clowes and Sons, Limited, to reproduce 
 some of the documents given in the Appendix ; the 
 suggestions made by Mr. T. A. Bellew, Secretary of the 
 Liverpool Underwriters' Association ; and the constant 
 assistance of my friend and deputy, Mr. Cyril A. Prescott, 
 who has given me much help in correcting the text and 
 checking the case-references, and has drawn up the Index 
 of Cases. To the unfailing kindness and invaluable advice 
 of another friend I owe if possible even more, but without 
 his permission I cannot take the liberty of placing his 
 name on this page and of so conferring on it a distinction 
 
 not mine to bestow. 
 
 WILLIAM GOW. 
 
 F 7 Exchange Buildings, Liverpool, 
 20th February 1895.
 
 CONTENTS 
 
 PAGE 
 
 LITERATURE xvii 
 
 INDEX OF CASES xix 
 
 HISTORICAL INTRODUCTION i 
 
 CHAPTER I 
 
 Elementary Notions — 
 
 Slip, Covering Note, Policy, Stamp Act . . .10 
 
 CHAPTER II 
 
 The Policy : Part I— 
 
 Policy Forms, Common English Policy, The Heading, 
 The Assured, Lost or Not Lost, At and From . . 27 
 
 CHAPTER III 
 
 The Policy : Part I— continued- 
 Common English Policy continued. General Description 
 of Subject Matter Insured, Duration of Risk on Goods 
 and Ship, including Touch and Slay and Deviation 
 
 Clauses ......... 43 
 
 xiii
 
 XIV MARINE INSURANCE 
 
 C HATTER I\' 
 Tiiic Policy : Pari" I — conlitiucd — page 
 
 Coinmuu English Policy continued, Valiualion . . 64 
 
 CHAPTER V 
 
 iNsuuAiiLii Interest — Suhjects ok Insurance — Mul- 
 tiple Insurance 76 
 
 CHAPTER VI 
 
 The Policy : Part II— 
 
 The Perils Insured against 92 
 
 CHAPTER VH 
 
 The Policy: Part \\— continued — 
 
 Sue and Labour Clause, Waiver Clause, Force and Effect 
 of Policy, Consideration, Attestation . . . .120 
 
 CHAPTER VIII 
 Principles of Interpretation of the Policy . .130 
 
 CHAPTER IX 
 Total Loss of Ship and of Cargo .... 144 
 
 CHAPTER X 
 Total Loss of Freight 160 
 
 CHAPTER XI 
 The Memorandum — F.P.A. Clause . . , .171
 
 CONTENTS 
 
 XV 
 
 CHAPTER XII 
 Particular Average ... 
 
 PAGE 
 
 188 
 
 CHAPTER XIII 
 Particular Charges — Suing and Labour Expenses 221 
 
 CHAPTER XIV 
 Insurances on Time— Time Policies . 
 
 228 
 
 CHAPTER XV 
 
 LlAUILlTIES 
 
 243 
 
 CHAPTER XVI 
 Warranties and Representations 
 
 260 
 
 CHAPTER XVII 
 
 General Average 
 
 279 
 
 APPENDICES 
 A. Specimen Slip .... 
 15. Early Policies .... 
 Ca. Covering Note on Ship . 
 Cb. Covering Note on Cargo and Fri 
 I). Quotation Form 
 
 E. Tender ok Auandonment 
 
 F. Full Protection Policy . 
 
 IGIIl 
 
 3'7 
 319 
 324 
 325 
 326 
 
 327 
 328
 
 XVI MARINE INSURANCE 
 
 PAGE 
 
 G. York-Antwerp Rules 332 
 
 li. Rules ok Practice adopted by the Association 
 
 OK Average Adjustkks up to May 1915. . 338 
 
 Index to Rules ok Practice 358 
 
 Subject Index to Rules ok Practice . . . 360 
 
 I. Institute Voyage Clauses, 1917 .... 365 
 
 Ka. Institute Time Clauses, 1917 .... 369 
 Kb. Institute Time Clauses, 1916 — 
 
 Hull— F. P. A. absolutely 374 
 
 Kc. Institute Time Clauses, 1916 — 
 
 Steamers — Free of Damage absolutely . . . 377 
 Kd. Institute Time Clauses — 
 
 Hulls — Excess 3 per cent P. A., 1917 . . . 380 
 
 Ke. Institute Clauses for Builders' Risks, 1916 . 385 
 
 Kf. Institute Time Clauses, 1916. Freight . . 389 
 
 Kg. Institute Voyage Clauses, 1916. Freight . 391 
 
 Kh. Institute Cargo Clauses (F.P.A.) 1916 . . 393 
 Ki. Institute Cargo Clauses (for Policies covering 
 
 Average) 394 
 
 L. I. Liverpool Slip Warranties: 2. Time Warran- 
 ties USUAL IN 1899 395 
 
 M. Clauses in Ordinary Use in Policies on Interest 
 
 other than Hull 396 
 
 N. Clauses in Occasional Use in Policies on In- 
 terest OK ALL Kinds 403 
 
 O. Marine Insurance Act, 1906 .... 405 
 P. A Bill to prohibit Gambling on Loss by Maritime 
 
 Perils 43' 
 
 ADDENDA 433 
 
 INDEX 439
 
 LITERATURE 
 
 Allen, E. K., "Stamp Duties on Sea Insurances," 2nd edition, 
 
 London, 1903. 
 Andresen, Th., " Seeversicherung," Hamburg, 1888. 
 Arnould, Joseph, " Treatise on the Law of Marine Insurance and 
 
 Average," 2 vols., 2nd edition, London, 1857.^ 
 Baily, Laurence R., "General Average," 2nd edition, London, 
 
 1856. 
 Do. " Perils of the Seas," London, i860. 
 Barber, W., " Principles of the Law of Insurance adopted in the 
 
 Civil Code of California," San Francisco, 18S7. 
 Benecke, W., "Principles of Indemnity in Marine Insurance, 
 
 Bottomry and Respondentia," London, 1824. 
 Do. "System des Assekuranz- und Bodmereiwesens," umgear- 
 
 beitet von Vincent Nolte, 2 vols., Hamburg, 1851, 1853. 
 Black, W. G., "Digest of Decisions in Scottish Shipping Cases, 
 
 1865-1890," Edinburgh, 1S91. 
 Chalmers, M. D., and Owen Douglas, " Digest of the Law relating 
 
 to Marine Insur.nnce," 2nd edition, London, 1903. 
 Chalmers, Sir .\I. D., and Owen Douglas, "The Marine Insurance 
 
 Act, 1906," London, 1907. 
 Crump, F. Octavius, " Marine Insurance and General Average in 
 
 England and America," London, 1875. 
 De Courcy, Alfred, " Commentaire des Polices franjaises 
 
 d'Assurances niaritimes," 2nd edition, Paris, 1888. 
 De Hart, E. L., and Simcy, R. I., "Arnould on the l^aw of 
 
 Marine Insurance," 8th edition, 2 vols., London, 1908. 
 Do. "Marine Insurance Act, 1906," London, 1907. 
 Desty, Robert, "Shipping and Admiralty," San Francisco, 1879. 
 Douglas, R. R., " Index to Maritime Law Decisions," London, 
 
 1888. 
 Duckworth, Lawrence, " Law Relating to General and Particular 
 
 Average," 2nd edition, London, 1 905. 
 Do. " EncycIoi)2edia of Marine Law," London, 1907. 
 Duer, John, "On Representations in Marine Insurance," New 
 
 York, 1844. 
 Do. "Law and Practice of Marine Insurance," 2 vols.. New 
 
 York, 1845, 1846. 
 
 1 Lut edition iuucti under author's supcriutendence. 
 
 xvii '''
 
 xviu MARINE INSURANCE 
 
 Eldridge, W. II. " Marine Policies," London, 1907, 
 
 limerigon, " Trait6 des Assurances et dcs Contrats k ia Grosse," 
 
 2 vols., 2nd edition hy Boulay Paty, Rennes, 1827. 
 Gourlie, John H., "General Average," New York, 1881. 
 Herzog, ("., " Praxis der Transportversicherung," Berlin, 1909. 
 Holland, T. E., "Manual of Naval Prize Law," London, 18S8. 
 Jacobs, Victor, " Etnde sur les Assurances maritiines et les 
 
 Avaries," Brussels, 1885. 
 Lowndes, Richard, " Practical Treatise on the Law of Marine 
 
 Insurance," 2nd edition, London, 1885.^ 
 Do. " Law of General Average, English and Foreign," 4th 
 
 edition, London, iS88.^ 
 M'Arthur, Charles, "Contract of Marine Insurance," 2nd edition, 
 
 London, 1890. 
 Maclachlan, D., " Arnould on the Law of Marine Insurance," 
 
 2 vols., 6th edition, London, 1887. 
 Marsden, Reginald G., "Admiralty Cases, 1648 to i860," 
 
 London, 1885. 
 Do. " Law of Collisions at Sea," 3rd edition, London, 1891. 
 Marshall, Samuel, "Treatise on the Law of Insurance," 2 vols., 
 
 3rd edition, London, 1823.^ 
 Martin, Frederick, " History of Lloyd's and Marine Insurance in 
 
 Great Britain," London, 1876. 
 Owen, Douglas, " Marine Insurance Notes and Clauses," 3rd 
 
 edition, 1890. 
 Park, J. A., " System of the Law of Marine Insurances," 7th 
 
 edition, London, 1817.^ 
 Parsons, Theophilus, " Law of Marine Insurance and General 
 
 Average," 2 vols., Boston, 1868. 
 Phillips, Willard, "Treatise on the Law of Insurance," 2 vols., 
 
 5th edition. New York, 1867. 
 Pipia, Umberto, "Diritto Marittimo," 2 vols., Milan, 1900, 1901. 
 Reatz, C. F., "Geschichte d. europaischen Seeversicherungs- 
 
 rechts," 1S70. 
 Stevens, Robert, "Essay on Average," 5th edition, London, 1835. 
 Templeiiian, F., " Marine Insurance : Its Principles and Practice," 
 
 2nd edition, London, 1909. 
 Tyser, C. R., "Law relating to Losses under a Policy of Marine 
 
 Insurance," London, 1894. 
 Ulrich, Rudolph, " Grosse Haverei," 2nd edition, with assistance 
 
 of Dr. Paul Briiders, 3 vols., Berlin, 1903, 1905, 1906. 
 Vivante, Cesare, "II Contralto di Assicurazioni," 3 vols., Milan; 
 
 vol. ii., 1890, " Le Assicurazioni Marittime." 
 Weil, G. Denis, "Des Assurances maritimcs et des Avaries," 
 
 Paris, 1879. 
 White, James D., " Marine Insurance Act, 1906," London, 1907. 
 
 ' Last edition issued under author's superintendence.
 
 INDEX OF CASES 
 
 Abrota .... 
 
 Acaster, .... 
 
 Adam .... 
 
 Aikshaw 
 
 Aitchison v. Lohre 
 
 AllisoD V. Bristol Marine 
 
 AllstOQ V. Campbell . 
 
 Alps ..... 
 
 Alsace and Lorraine . 
 
 AUair .... 
 
 Andersen v. Marten . 
 
 Anderson v. Wallis 
 
 ApoUinaris Co. v, Norddeutsche Vers. Ges. 
 
 Arattcania, .... 
 
 Amo ..... 
 
 Arrow Shipping Co. v. Tyne Commissioners 
 
 Ashley, .... 
 
 Astor V. Union Insurance Company . 
 
 Atlantic Mutual v. Huth 
 
 Atwood V. Sellar 
 
 Australasian Steam Navigation Company v. 
 
 Baker v. Towry 
 
 Balmoral, 
 
 Balnacraig 
 
 Barber v. Fletcher 
 
 Baring v. Claggett 
 
 liaring v. Marine Insurance Company 
 
 Barker v. Blalces 
 
 Barker v. Janson 
 
 Rarnslable, 
 
 Barracloufih v. Brown 
 
 Barrow v. Bell 
 
 Hartlett v. Penlland 
 
 Bean v. Stupart 
 
 Bedouin .Steam Navigation Company v. Bradford 
 
 xix 
 
 PAGR 
 143, 24a 
 
 166 [Addenda 424), 300 
 102 
 
 13 
 
 224, 281, 287 
 
 163, 203 
 
 83 
 
 304 
 
 178 
 
 254 
 142 [Addenda 435) 
 
 154 
 
 44 [Addenda 434) 
 
 150 [Addenda 436) 
 
 256 
 
 257 
 211 
 
 173 
 
 123 
 
 289, 292, 294 
 
 123 
 
 175 
 
 • 3" 
 
 352 
 
 268 
 
 262 
 
 28 
 
 Morse 
 
 346 
 
 XS4 
 
 70 
 
 [Addenda 437) 
 
 . 258 
 177 
 132 
 
 262, 263 
 205
 
 XX 
 
 MARINE INSURANCE 
 
 Bensaude v. Thames and Mersey Marine 
 
 Beuson v. Chapman . 
 
 Hirldey v. Presgrave 
 
 Bize V. Fletcher 
 
 Blackburn v. Haslam . 
 
 Blackburn v. Vigors 
 
 Blackett v. Royal Exchange 
 
 Blackhurst v. Cockell . 
 
 Blackwood, Bryson, and Co. v. British and Foreign Company 
 
 Blairmore Sailing Ship Co. v. Macredie . 147, 
 
 Blankenhagen v. London Assurance . . . 103, 114, 
 
 Boehm v. Bell ...... 
 
 Indemnity Marine Insurance Com- 
 113 (Addenda 423), 277, 378 (Addenda 437) 
 
 39a 
 
 PAGB 
 . 167 
 150 
 284, 287, 301 
 361 
 278 
 278 
 
 • 44. 46 
 26a 
 178 
 
 159 
 
 117 
 
 82 
 
 Bolivia, Republic of, 
 
 pany 
 Bona, . 
 
 Bond V. Nutt . 
 Boston Fruit Co. v. 
 
 Company, Ltd. . 
 Bouillon V, Lupton 
 Bowden v. Vaughan . 
 Bowring v. Triton Co. 
 Boyd V. Dubois 
 Brigella, 
 
 Bristol Steam Navigation Company v. 
 Brown v. Carstairs 
 Brown v. Smith 
 Brown v. Tayleur 
 
 Bryant and May v. London Assurance 
 Burger v. Indemnity Mutual Marine 
 Burnett v. Kensington 
 Burton v. English 
 Busk V. Royal Exchange 
 Butler V. VVildman 
 
 Cantillon v. London Assurance 
 
 Canute 
 
 Carinthia, 
 
 Carisbrook Steamship Co. v. London 
 
 Insurance Company 
 Carter v. Boehm 
 Castellain v. Thompson 
 Chandler v. Blogg 
 Chapman v. Royal Netherlands Steam 
 Chevasse ex parte 
 City of Camoridge and Birmah 
 Columbian, 
 
 Corcoran v. Gurney . 
 Cornfoot v. Royal Exchange . 
 
 and 
 
 Navigat 
 
 264 
 
 British and Foreign Marine Insurance 
 
 246 (Addenda 437) 
 
 271 (Addenda 437) 
 
 267, 268 
 
 24 (Addenda 434) 
 
 102 
 
 303 
 
 Indemnity . . 217 
 
 133 
 
 113 
 
 40 
 
 180 
 
 54. 258 
 179 
 281 
 
 lOI 
 
 117 
 
 179 
 
 315 
 437) 
 
 201 
 226 (Addenda 
 Provincial Marine 
 
 303 
 
 34. 277 
 
 357 
 
 182 
 
 251 
 270 
 
 38 
 241 
 177 
 54 (Addenda 434) 
 
 ion Company
 
 INDEX OF CASES 
 
 XXI 
 
 Cory V. Burr .... 
 Cossmann v. West 
 
 Creadon .... 
 
 Crocker v. General Insurance Companj 
 
 Crooks V. Alia a 
 
 Crystal .... 
 
 Cullen V. Butler 
 
 Cunard S.S. Co. v. Marten . 
 
 Da Costa v. Edmonds 
 
 Davis V. Gildart 
 
 Davison v. Bumand . 
 
 De Hahn v. Hartley . 
 
 Delambre, . . . , 
 
 De Vaux v. Salvador . 
 
 Dickenson v. Jardine . 
 
 Dixon V. keid 
 
 Dixon V. Royal Exchange Shipping Company 
 
 Dixon V. Whitworth . 
 
 Dudgeon v. Pembroke 
 
 Duff V. Mackenzie 
 
 Earle v. Rowcroft . 
 
 Earl of Eglinton v. Norman . 
 
 Eden v. Parkinson 
 
 Eden v. Poole 
 
 El la lines 
 
 Iiliortf .... 
 
 Farnworth v. Hyde 
 
 Fawcus V. Sarsfield 
 
 Field Steamship Co. t: Burr . 
 
 F'lelcher v. Alexander . 
 
 Fletcher t. Poole 
 
 French v. Backhouse . 
 
 Furtado v. Rodgers 
 
 CiAINSBOROVCIl 
 
 Gallia, .... 
 
 Gamba v. Le Mcsuricr 
 
 Gambles v. Ocean Marine of Honih.iy . 
 
 Gardiner v. City of London U/wg Association 
 
 Gas Float ll'hitton A'o. z 
 
 General Mutual Insurance Company v. Shcrwoofl 
 
 Gibbs V. I^mport 
 
 Gibson V. .Small 
 
 Gillctt V. Ellis 
 
 Gladstone v. (Jlay , , 
 
 Glazcbrooke, in re . , 
 
 PAG8 
 
 [lO, Il6 
 
 146 
 
 247 
 
 55 
 
 29s 
 
 257 
 
 94, 116, 117 
 226 {Addenda 437) 
 
 44 
 89 
 
 17. 273 
 263, 266 
 
 307 
 13. 243 
 '5, 316 
 
 "3 
 107 
 225 
 
 t39. 140 
 191 
 
 109 
 257 
 273 
 293 
 435 
 57 
 
 156. 158 
 140 
 
 244 
 300 
 
 293 
 81 
 
 t4. 270 
 
 141 
 150 
 114 
 
 54 
 13 
 46 
 
 244 
 297 
 272 
 
 295 
 
 52 
 
 270 
 
 155.
 
 XXII 
 
 MARINE INSURANCE 
 
 Gledstanes v. Royal Exchange 
 
 GUnlivet .... 
 
 Glover v. Hlack 
 
 Godin ~j. London Assurance . 
 
 Gordon v. Riinmington 
 
 Gould V. Oliver 
 
 Gracie v. Marine Insurance Company . 
 
 Grainger v. Martin 
 
 Grand Saini Antoine . 
 
 Gratitudine .... 
 
 Great India Peninsula Railway Company v. 
 
 Gulf of Florida, 
 
 Saunders 
 271 
 
 Hagedorn v. Whitmork 
 
 Haigh V. De La Cour . 
 
 Hall V. Molyneux 
 
 Hamilton v. Pandorf . . . 96, 
 
 Hamilton v. Shedden . 
 
 Hamilton v. Thames and Mersey Marine 
 
 Hammond v. Reed 
 
 Harris v. Scaramanga . 
 
 Harrower v. Hutchinson 
 
 Hart V. Standard Marine , 
 
 Haughton v. Empire Marine . 
 
 Hearne v. Edmunds . 
 
 Henderson v. Shankland 
 
 Heye v. N. G. Lloyd . 
 
 Hibbert v. Pigon 
 
 Hickie v. Rodocanachi 
 
 Hill V. Secretan 
 
 Hill V. Wilson 
 
 Hobbs V. Hannara 
 
 Hodgson V. Glover 
 
 Hoffman v. Marshall . 
 
 Hogg V. Horner 
 
 Home Insurance Company v. Smith . 
 
 Hoskins v. Pickersgill . 
 
 Hough V. Head 
 
 Houlder v. Merchants Marine . 
 
 Hunter v. Potts 
 
 Hurry v. Royal Exchange 
 
 Huth V. Lamport 
 
 Hydarnes Steamship Company v. Indemnity 
 
 Insurance Company, Limited 
 Hyde v. Bruce 
 
 iNCHCAPE Rock, 
 Inmao v. Bischoff 
 
 122, 
 
 98, TOO 
 
 104 
 
 131 
 
 Mutual 
 
 pAua 
 
 35 
 180, 181 
 
 4). 45. 84 
 82 
 
 XOI 
 
 44 
 56 
 
 151 
 
 102 
 
 T23 
 222 
 {^Addenda 437) 
 
 136. 194 
 69 
 
 47 
 {^Addenda 434) 
 
 41 
 
 116, 118, 134 
 
 60 
 
 313 
 
 40 
 
 {^Addenda 435) 
 
 38, 39. 50, 54 
 177 
 30ii 
 
 295 
 261 
 
 153 
 80 
 
 306 
 82 
 8s 
 
 177 
 59 
 13 
 46 
 
 204 
 
 56 
 98 
 
 56 
 297 
 
 Marine 
 
 28 
 264 
 
 54 {Addenda 434) 
 '43- =^03. 204, 205
 
 
 INDEX OF 
 
 CASES 
 
 
 
 sxiii 
 
 
 
 
 
 PAOB 
 
 Investigator, . 
 
 
 . 104, 
 
 117 
 
 118 
 
 lonides v. Universal Marine 
 
 
 . 
 
 
 141 
 
 Irving V. Manning 
 
 
 II, 69 
 
 . 71 
 
 151 
 
 Ining V. Richardson . 
 
 
 • 
 
 
 83 
 
 Jackson v. Union Marinf . 
 
 
 . 
 
 143 
 
 166 
 
 Jamie^on v. Newcastle Steam P'reight 
 
 Insurance Association 
 
 M3 
 
 242 
 
 Job V. Langton 
 
 
 
 
 286 
 
 Johnson v. Sheddon 
 
 . 
 
 
 
 197 
 
 198 
 
 Jourtiu V. Bourdieu 
 
 . 
 
 
 
 
 173 
 
 /. M. Lennard, 
 
 , 
 
 
 
 
 258 
 
 J. W. Parker 
 
 
 
 
 
 285 
 
 Kfxlner v. Le Mesurier . 
 
 
 
 
 114 
 
 Kenyon v. Berthon 
 
 
 
 
 262 
 
 Kidston v. Empire Marine 
 
 
 179. 188. 
 
 221 
 
 223 
 
 King V. Victoria Insurance Company 
 
 
 
 
 170 
 
 Kingsford v. Marshall 
 
 
 
 
 177 
 
 Kirkmichiiel . 
 
 
 
 182. 
 
 246 
 
 Knight of St. Michael 
 
 
 
 
 103 
 
 Knight of the Garter, . 
 
 
 103 (Addenda 
 
 434) 
 
 La Valeur . 
 
 
 . 
 
 . 
 
 243 
 
 Labinovitch v. Pacific Fire and Marin( 
 
 
 
 , 
 
 59 
 
 I abrea, . . 113 [^Addenda 
 
 423). 
 
 277, 278 (Addendn 
 
 437^ 
 
 Laing v. Union Marine Insurance Cor 
 
 Qpany, 
 
 Limited. 13 
 
 . 59. 
 
 ^77 
 
 Langhom v. Hardy . 
 
 
 
 . 
 
 52 
 
 Lavabre v. Wilson 
 
 
 
 
 
 . 
 
 58 
 
 Laveroni v. Drury 
 
 
 
 
 
 . 
 
 98 
 
 Leitrim, 
 
 
 
 
 
 . 
 
 301 
 
 Le Mesurier v. Vaughan 
 
 
 
 
 
 . 
 
 47 
 
 Lewis V. Rucker 
 
 
 
 . 67. 68, 196, 
 
 197. 
 
 198 
 
 Leyland v. British and Foreigi 
 
 1 Marini 
 
 ! Insurance Company 
 
 . 
 
 241 
 
 Lidgett V. Secretan 
 
 
 
 . 55. 68, 69, 
 
 216, 
 
 2[8 
 
 Livie V. Janson 
 
 
 
 
 . 
 
 2 16 
 
 Lloyd V. Guibert 
 
 
 
 
 
 305 
 
 Lodore 
 
 
 
 
 . 
 
 103 
 
 Lohre v. Aitchison 
 
 
 
 
 . 
 
 218 
 
 Ia)ndon Assurance v. Williams 
 
 
 
 , 
 
 201 
 
 London Steamship Owners' Association 
 
 V. Grampian Steamship 
 
 
 Company 
 
 
 » • 
 
 
 252 
 
 Ix>ng V. Allen 
 
 
 . 
 
 . 
 
 133 
 
 Luccna v. Crawfurd 
 
 
 • . 
 
 
 77 
 
 Luke V. Lyde . 
 
 
 ■ • 
 
 • 
 
 8 
 
 M 'Cowan r. Daink . 
 
 
 . 
 
 . 
 
 253 
 
 M'Douglei/. Royal Exchange 
 
 
 • 174. 
 
 »75. 
 
 180 
 
 Mansell v. Hoade 
 
 
 
 
 "5 
 
 (Ad.lenda 435)
 
 XXIV 
 
 MARINE INSURANCE 
 
 Marine Insurance Company v. China Trans-Pacific Steamship 
 
 Company 
 Marsden v. Reed 
 Mason v. Skurray 
 Mead v. Davison 
 
 Mercantile Steamship Company v. Tys< 
 Merchants Trading Company v. Unive: 
 Mersey Shipping Comf>any v. Thames 
 Meyer v. Ralli 
 Mills V. Roebuck 
 Moir V. Royal Exchange 
 Montoya v. London Assurance 
 Moody V. Surridge 
 Morrison v. Universal Marine 
 Motteux V. London Assurance 
 Mount V. Larkins 
 Munroe 
 
 er 
 
 rsal Marine 
 
 and Mersey Marine 
 
 97. 
 
 182, 246 (Addenda 436, 
 Insurance Association v. 
 
 Munro v. Vandam . 
 
 Naylor v. Palmer . 
 
 Nesbitt V. Lushington 
 
 Newman v. Cazalet 
 
 New Orleans, . 
 
 Niobe . 
 
 Nicholson v. Chapman 
 
 Normandy, 
 
 North of England Iron Steamship 
 
 Armstrong ..... 
 
 North of England Oil Cake Company v. Archangel Marine 
 North of Ireland Steamship Company v. London Assurance 
 Notara v. Henderson . 
 Notman v. Anchor Insurance Company 
 
 Olaf Trygvason 
 Osseo . 
 Oxenholne 
 
 Palmer v. Blackburn 
 
 Parmeter v. Todhunter 
 
 Patrick v. Eames 
 
 Paul V. Insurance Co. of North America 
 
 Pawson V. Bariievelt . 
 
 Pawson V. Watson 
 
 Pally V. Royal Exchange 
 
 Peshawur, 
 
 Peters v. Warren Insurance Company 
 
 Pettigrew v. Pringle . 
 
 Phillips V. Barber 
 
 05. 
 
 82. 
 
 317 
 130 
 
 173 
 34 
 
 143 
 95 
 
 204 
 
 222 
 
 273 
 264 
 
 183 
 
 )[73 
 277 
 
 41 
 
 41 
 
 346 
 
 273 
 
 "3 
 
 113. "5 
 
 3"- 312 
 
 215 (Addenda 436) 
 
 . 253 
 
 225 
 
 437) 
 
 168 
 80 
 211 
 123 
 136 
 
 289, 294 
 
 182, 246 
 
 239 
 
 67 
 
 148 
 
 86 
 
 57 
 
 261 
 
 267 
 
 60, 130 
 
 289 
 
 213, 244 
 
 262 
 
 \X7
 
 INDEX OF CASES 
 
 XXV 
 
 Phyllis Angel, 
 
 Pink V. Fleming 
 
 Pipon V. Cope 
 
 Pine V. Middle Dock Company 
 
 Planch^ V. Fletcher 
 
 Powell V. Gudgeon 
 
 Power V. Whitmore . 
 
 Prehn v. Bailey 
 
 Preston v. Greenwood 
 
 Price V. Ai Ship's Small Damage Association . 
 
 Provincial Insurance Company of Canada v. Leduc 
 
 Quebec Marine Insurance Company v. Commercial 
 Bank op Canada 
 
 PAGE 
 
 . 150 ^»J 
 
 107 
 
 no 
 
 103, 281, 285 
 
 269 
 
 . 138 
 
 293. 311. 312 
 
 133 
 174. 315. 316 
 
 Ralli v. Troop 
 Rankin v. Potter 
 Redmond v. Smith 
 Red Sea 
 
 Reid V. Standard Marine 
 Reimer v. Ringrose 
 Reischer v. Borwick 
 
 147. 
 
 J38, 142. 
 
 148 
 
 271 
 
 285 
 
 369 
 
 153 
 
 23S 
 
 185 
 
 Republic of Bolivia v. Indemnity Marine Insurance Company, 
 
 Limited , 1x3 (Addenda 435). 277, 278 (Addenda 437) 
 
 Richardson v. Burrows .... 182, 346. 256 
 
 52 
 39 
 
 Alliance Marine and General 
 
 115 (Addenda 435^ 
 
 Rickman v. Carstairs 
 Robertson v. Clarke . 
 Robertson v. French . 
 Robinson Gold Mining Co. 
 Insurance Company 
 
 Roddick V. Indemnity Mutual Marine Insurance Company 
 Limited . . f y. 
 
 Rodocanachi v. Elliott 
 
 Rodriguez v. Melhuish 
 
 Rodney, 
 
 Romulus, 
 
 Rose V. Bank of Australasia 
 
 Rossetto V. Gurney 
 
 Routledge v. Burrell . 
 
 Roux V. Salvador 
 
 Royal Exchange v. Tod 
 
 Ruabon, 
 
 Rucker v. London Assurance 
 
 Schuster v. Fletcher 
 
 Scott V. Bourdillon 
 
 Scottish Marine Insurance Company v. 
 
 Scripture v. Lowell Mutual P'ire 
 
 142 
 
 Turner 
 
 154. 
 
 239 
 
 155 
 
 38 
 
 292 
 
 (Addenda 435) 
 
 288 
 
 . 158 
 
 263 
 
 147. 154 
 
 39 
 217 
 
 57 
 
 287 
 
 173 
 
 153. 162 
 
 104
 
 XXVI 
 
 MARINE INSURANCE 
 
 Sea Insurancft Company v. Blogg 
 
 Seagrave v. Union Marine 
 
 Shaw V. Fellon 
 
 Silva V. Livingston 
 
 Simon Israel and Company v. Sedgwick 
 
 Simond v. Boydell 
 
 Simpson v. Thompson 
 
 Sir Waller Raleigh . 
 
 Smith V. St. Lawrence Towboat Company 
 
 Sparrow v. Carruthers . . 
 
 Spitta V. Woodman . . 
 
 Steam Hopper No. 66 . 
 
 Steinmann v. Angier Line 
 
 Stewart v. Merchants Marine . 
 
 Stockdale v. Dunlop . 
 
 Stoomvart Maatschappy Nederland v. Peninsular 
 
 Steam Navigation Company 
 Strang v. Scott 
 Sullivan Sawin 
 Svendsen v. Wallace . 
 
 TALAySRA . . 
 
 Taylor v. Dunbar 
 
 Temperley v. Mackinnon 
 
 Thames and Mersey v. Pitts, Sons, and King. 
 
 Thellusson v. Staples . 
 
 Thompson v. Hopper . 
 
 Thompson v. Rowcroft 
 
 Thrumcoes 
 
 Todd V. Ritchie 
 
 Trinder v. Thames and Mersey Marine Insurance Company 
 
 Uhoe v. Walters . 
 Union Marine Insurance Com 
 Uzielli V. Boston Marine 
 
 Vallejo v. Wheeler 
 
 Vancouver 
 
 Victoria 
 
 Voorwarts v. Khedive . 
 
 Walpole v. Ewer . 
 
 Walthew v. Mavrojani 
 
 Warkivorth 
 
 Wavertree 
 
 Webster v. De Tastet . 
 
 Wellman v. Morse 
 
 Wells V. Hopwood 
 
 PAUI 
 
 38 
 80 
 
 55 
 
 166 {^Addenda 436) 
 
 61 
 
 28 
 
 169 
 
 . a88 
 
 aS4 
 
 57 
 
 52 
 
 246 {Addenda 437) 
 
 114 
 235, 236 
 8s 
 and Oriental 
 
 . 251 
 
 281 
 
 289. 294 
 
 . 289, 291, 294 
 
 pany v. Berwick 
 
 55 
 107 
 
 303 
 
 178 
 
 38 
 t39. 140 
 153 
 
 98 
 no 
 141 
 
 39 
 182, 246 
 225 
 
 no 
 217 
 144 
 251 
 
 311 
 
 290 
 
 257 
 296. 305 
 
 87 
 
 297 
 
 96
 
 INDEX OF CASES 
 
 xxvu 
 
 West India and Panama Telegraph Company v. Home and 
 
 Colonial Marine ..... 104, 1 17, 
 WhiUon Gas Float No. 3 
 Wild Rose, . 
 Wilkinson v. Hyde 
 Williams v. North China Company 
 Williams v. Shee 
 Wilson V. Bank of Victoria 
 Wilson V. Smith . 
 
 Xantho 
 Xantho v. Valuta 
 
 Yestor, , 
 
 Zralandia^ • 
 
 118 
 
 46 
 
 19T 
 
 71 
 
 60 
 
 294 
 
 174 
 
 213 
 
 95 
 
 304 
 
 119 (Addenda 435
 
 HISTORICAL INTRODUCTION 
 
 In oversea commerce there are four primary or cardinal 
 documents — 
 
 (i) The invoice embodying the terms of the contract of 
 sale, 
 
 (2)- The bill of exchange, 
 
 (3) The bill of lading, 
 
 (4) The policy of marine insurance. 
 
 All four may be and usually are existent in one form or 
 another in every transaction of oversea trade. But all, 
 except perhaps the invoice, involve a third party in addition 
 to the seller (shipper) and buyer (consignee) ; the bill of 
 exchange involves a banker, the bill of lading a shipowner, 
 the policy of marine insurance an assurer, or, as he is more 
 usually called, an underwriter. Each of these documents 
 becomes in respect of that third party, a separate and dis- 
 tinct contract. Thus the document of marine insurance 
 evidences primarily the contract between the assured 
 (merchant or shipowner) and his underwriter, but it is 
 capable of extension for the protection of any one to whom 
 the assured properly transfers his interest in the contract 
 of insurance, and in the goods or matters to which it refers. 
 
 Marine insurance, according to an Act of Parliament of 
 1 601 (43 Elizabeth, c. 1 2), has existed time out of mind, 
 " by means whereof it cometh to pass that upon the loss or 
 perishing of any ship there foilowt-ih not the undoing of 
 any man, but the loss lightcth rather easily upon many 
 than heavy upon few, and rather upon them that adventure 
 
 & B
 
 MARINE INSURANCE 
 
 not than upon those who do adventure; whereby all mer 
 chants, especially those of the younger sort, are allured to 
 venture more willingly and more freely." It originally 
 occupied in oversea commerce a merely subsidiary position ; 
 it came in only as the last of the arrangements to be made 
 in connection with any venture at sea. But as the method 
 of conducting oversea trade has altered, so has the contract 
 of marine insurance become increasingly important. When 
 large transactions are worked, as is now extremely common, 
 with credits and margins, the amount of the premium of 
 insurance is often the item that decides whether some ven- 
 ture will be attempted or not. The protection which marine 
 insurance affords is now usually regarded as an absolute 
 necessity to the oversea merchant ; and thus by degrees 
 marine insurance has become in one shape or another an 
 integral, almost an essential, factor in oversea commercial 
 transactions. 
 
 The origin of marine insurance is lost in obscurity. In 
 the eighteenth century, when it was felt that nothing could 
 be counted respectable unless its descent were traceable from 
 Rome or Athens, great efforts were made to find in Roman 
 literature some evidence of the existence of marine insur- 
 ance in Republican and in Imperial times. No direct 
 reference has been found either in juridical or in general 
 Roman literature, and the few passages that have been 
 gathered out of historians and orators do not go much 
 beyond saying that in some marine ventures the venturer 
 was in some way secured against loss. The commerce 
 that grew up between Italy and ports of the other Mediter- 
 ranean lands must have been immense, and there is no 
 doubt that certain provisions of the character of marine law 
 were generally respected in the Levant, being known as 
 the Rhodian Laws. From this name it is gathered that 
 they must have been in vogue between 900 and 700 B.C., 
 in the period of Rhodian prosperity. A provision of 
 Rhodian law is mentioned in Justinian's Digest {Hook XIV. 
 Tit. 2, § i), but no reference is made to insurance. In any 
 case, if insurance was practised in the ancient world, we 
 have no direct evidence of it. Indeed no evidence exists
 
 HISTORICAL INTRODUCTION 
 
 that marine insurance prevailed in any commercial com- 
 munity at or before looo A.D. The only Celtic reference 
 of which I am aware is in the Tale of the Two Young 
 Gentletiien} and as it deals with a merchant owning three 
 Ships trading between Britain and the Indies, it is clear 
 that either the tale dates from about the end of the six- 
 teenth century or that this passage in it has been inter- 
 polated after that period. There is also a striking absence 
 of mention of insurance in each and all of the compilations 
 of sea law with which modern European maritime legisla- 
 tion began, whether the compilations be of Romance or of 
 Teutonic origin. This is true of the Consolato del Mare, 
 a code originating in Italy or Spain some time in the eleventh 
 or twelfth century ; the Laws of Oleron, said to be issued 
 by Richard I. of England in 1194, the earliest manuscript 
 dating from 1266 ; the Laws of Wisby, compiled about the 
 close of the thirteenth century ; and the much more recent 
 Hanseatic Laws, published at Liibeck in 1593 or 1597, 
 and again in revised and enlarged form in 1614. But the 
 silence of these codes on the subject of insurance has been 
 ably explained by Judge Duer. All these laws are " laws 
 of navigation, as distinguished from regulations purely 
 commercial." The Consolato is very full in relation to 
 freight and to the duties of master and mariners ; the Laws 
 of Oleron deal expressly with French ships and French 
 navigation ; the Wisby and the Hanseatic Laws are the 
 work of communities engaged principally in the carrying 
 trade. Consequently it would be unsafe to conclude from 
 their silence about insurance that insurance did not exist 
 at the time of their publication. Although evidence of the 
 exact time and place of the origin of insurance in modem 
 Europe does not remain, there can be no reasonable doubt 
 that its invention or rediscovery occurred in Italy at the 
 close of the twelfth or the beginning of the thirteenth 
 century. The Florentine historian, V'illani, who died at an 
 advanced age in 1348, says that when the Jews were ex- 
 pelled by Philip Augustus from France in 1182 they 
 
 ' In Maclnnes and Null's Folk and Hero Tales from Argyleshire, 
 Ix>ndon, 1890.
 
 MARINE INSURANCE 
 
 adopted some system of insurance of their property. What 
 authority he had for this statement does not appear, but 
 the statement itself proves that when Villani wrote insur- 
 ance was an established practice in North Italy. The 
 Jews either invented it for the occasion or took advantage 
 of an institution already established in North Italy. The 
 Lombard merchants of these days had in their hands all 
 the banking and oversea trade of Europe as far as the 
 Crimea on the east and London and Bruges on the 
 north, and in the early part of the thirteenth century their 
 adoption of the business of remitting money by bills of ex- 
 change and of making profit upon loans resulted in the 
 transference to their hands of the trade formerly in pos- 
 session of the Jews. The Lombard merchants, especially 
 the Genoese, spread all over middle Europe ; Lombard 
 bankers, then known as " usurers," established themselves 
 in every country ; as Hallam puts it, " the general progress 
 of commerce wore off the bigotry that had obstructed their 
 reception." 
 
 If we may draw any conclusion from the recorded failures 
 of English traders to exclude Italians from the carrying 
 trade into England, and from the constant mention in early 
 policies of insurance of " the surest writing or policy of 
 insurance heretofore made in Lombard Street," it must be 
 that marine insurance was brought into our country by the 
 Lombards. From Malyne, an English writer of 1622, we 
 learn that the Antwerp policy in his day contained a similar 
 clause referring to Lombard Street in London, from which 
 it may fairly be concluded that whether it was by Lombards, 
 Enghshmen or Flemings that the practice of marine insur- 
 ance was established in Antwerp, it was established on the 
 model adopted in London.* London and Bruges have 
 already been named as places where the Lombards were 
 in force ; it is worth noting that they were also two of the 
 principal factories of the great Hansa league, and at these 
 two points of contact the ships and merchants of Italy and 
 
 ' But the earliest known policy in English {vide p. 323) refers to 
 Antwerp conditions as recognised in England in 1555.
 
 HISTORICAL INTRODUCTION 
 
 Spain transferred to the ships and merchants of the Hansa 
 towns such part of their cargoes as were destined /or a 
 more northern market ; through them oriental produce was 
 transmitted to the furthest parts of the north. 
 
 Introduced by these pioneers of commerce, marine insur- 
 ance took firm root in the different commercial communities 
 of Europe. The firmness of its hold and the reality of its 
 growth can be best seen on consideration of the various 
 ordinances and codes which were compilations in more or 
 less systematic form of the insurance usages that had 
 developed in different commercial centres. The most 
 notable of these are : — 
 
 The Ordinances of Barcelona, 1434, 1458, 1461, 1484. 
 
 „ „ Florence, 1523. 
 
 „ „ Burgos, 1538. 
 
 „ „ Bilbao, 1560. 
 
 Le Guidon de la Mer, Rouen, between 1556 and 1584, 
 published in 1671 by Cleirac. 
 
 The Ordinance of Middelburg, 1600. 
 
 The Ordinances of Rotterdam, 1604, 1635, 1655. 
 
 Us et Coutumes de la .Mer, by Cleirac cf Rouen, 1656. 
 
 These were followed by what is generally allowed to be 
 one of the most perfect achievements in codification ever 
 accomplished, the production of a genius whose name has 
 been utterly forgotten, the great 
 
 Ordonnance de la Marine, 1681. 
 
 This work, one of the grand achievements of Louis 
 XIV. 's reign, was undertaken and completed under the 
 direction of his famous minister, Colbert. For English 
 students it has a peculiar interest, for it has been largely 
 mstrumental in moulding the English law of marine insur- 
 ance.' In France its authority remained so great that when 
 Nap6leon I. issued his codification of French law, great 
 part of Colbert's Ordonnance was assumed into it with but 
 
 ' In this connection one should notice The Underwriting and 
 Averai;e Regulations of the City of Hamburg, 1731. Traaslalioo 
 pubhsbed in Lloyd's List of 12. 17. 19 F-"eb. 1903.
 
 MARINE INSURANCE 
 
 slight alter.'ttion, so that in many respects we have a re- 
 vision and perpetuation of the Ordonnance in the 
 
 Code de Commerce of 1807. 
 
 On the model of this last have been formed all the 
 modern codes of commercial law (including sea insurance) 
 adopted by the different countries of Continental Europe, 
 e.g. the Spanish Commercial Code of 1886, translated into 
 English in 1896 by F. W. Raikes, Q.C. These codes have 
 in their turn been elucidated and more closely defined by 
 judges who have decided cases in accordance with their 
 provisions. The convenience and advantage of a code are 
 not that it makes reference to cases unnecessary, but that 
 it definitely states the law on all points discussed in the 
 code in their proper relation one to another.^ As Judge 
 Duer observes : " Nearly every written law on a complex 
 subject requires a commentary — a commentary that study, 
 reflection, and experience can alone supply." 
 
 Of subsequent local or municipal regulations regarding 
 insurance the most important are the 
 
 Hamburg conditions of marine insurance, 1847, revised 
 
 1867; 
 
 Bremen conditions of marine insurance, 
 
 which have been translated into English, the former by the 
 late Dr. E. E. Wendt of London, the latter by Mr. F. Reck 
 of Bremen. 
 
 To the list of codes must be added that which was in 
 1867 described by the late Mr. Justice Willes (in a paper 
 printed in the Report of Unseaworthy Ships Commission, 
 1874; vol. ii., Appendix, No. Ivii.) as "the latest and per- 
 haps best considered one, being the joint production of the 
 lawyers and merchants of North Germany," namely the 
 
 North German General Mercantile Code of i86r, 
 adopted by Prussia in 1862, accepted by the law of i6th 
 April 1 87 1 constituting the German Empire as imperial 
 German law, and now known as the 
 
 German General Mercantile Code {Deutsches Allgemeines 
 Handelsgesetzbuch ), 
 
 * Cf. Maine's Ancient Law, p. 14.
 
 HISTORICAL INTRODUCTION 
 
 of which Dr. Wendt issued a translation in his work on 
 Maritime Legislation (3rd ed., 1888 — Appendix). 
 
 This code has recently been revised, and we now possess 
 the new 
 
 German Maritime Code, 
 
 part of the new German General Maritime Law, passed 
 May I 897 to take effect from ist Januaiy 1900. Translated 
 into English by W. Arnold, 1900. Addenda. 
 
 Meanwhile matters in England proceeded in a different 
 direction. At present the English-speaking peoples are 
 unique in their failure to compile codes or adapt their legal 
 acquirements and results to that form of expression. There 
 is neither ordinance nor code to refer to, and up to the 
 middle of the eighteenth century there is great dearth of 
 that specially English product, reported judicial decision. 
 In the introduction to his book on Marine Ijisurance, Park 
 says : *' I am sure I rather go beyond bounds if I assert 
 that in all our reporters from the reign of Queen Elizabeth 
 to the year 1756, when Lord Mansfield became Chief 
 Justice of the King's Bench, there are sixty cases upon 
 matters of insurance. Even those cases which are reported 
 are such loose notes, mostly of trials at Nisi Prius, contain- 
 ing a short opinion of a single judge, and very often no 
 opinion at all, but merely a general verdict, that little in- 
 formation can be collected upon the subject. From hence 
 it must necessarily follow that as there have been few 
 positive regulations upon insurances, the principles on 
 which they were founded could never have been widely 
 diffused, nor very generally known." 
 
 The purpose of the Act of Parliament of 1 60 1 (see p. i ) was 
 the institution of a Court of Policies of Insurance, to consist 
 of an Admiralty Judge, the Recorder of London, two doctors 
 of civil law, two common lawyers and eight merchants, any 
 five of whom were empowered to hear and decide all causes 
 arising in London. But there are no traces of much 
 activity on the part of this court : the restriction of its 
 jurisdiction may partly explain this, but a more serious 
 cause is to be found in the fact that it was decided that an
 
 MARINE INSURANCE 
 
 adverse decision in the court did not prevent the reopening 
 of the whole dispute in a court of common law. By 1720 
 the Court of PoUcies of Insurance had fallen entirely into 
 disuse ; the place of regular law proceedings being largely 
 taken by arbitration in which the practice of continental 
 countiies was cited as authoritative or at least deserving 
 attention, and their ordinances and codes were admitted as 
 evidence of custom and practice. This went on till the 
 days of William Murray, Lord Mansfield, who presided in 
 the Court of King's Bench from 1756 to 1788. 
 
 Park, in the introduction to his Marine Insurance 
 already quoted, gives a most interesting account of the 
 changes in procedure introduced by Lord Mansfield. 
 These changes were so radical that they almost amounted 
 to a reconstitution of the court. Before his time the whole 
 case '* was left generally to the jury without any minute 
 statement from the bench of the principles of law on which 
 insurances were established. . . . Lord Mansfield in his 
 statement of the case to the jury enlarged upon the rules 
 and principles of law, as applicable to that case ; and left 
 it to them to make the application of those principles to 
 the facts in evidence before them." Being hampered by 
 few precedents he had a clear field, and his master mind 
 practically created the commercial law of modem England. 
 His decisions and dicta are the foundations of our 
 insurance law, and through the acceptance of them by 
 eminent American judges they lie at the base of the 
 American decisions. He took full advantage of all he 
 could gather from all the continental ordinances and codes 
 existent in his day. accepting his legal principles largely 
 from these sources. The practices and customs of trade 
 he learnt from mercantile special jurors, out of whom he 
 gradually trained a body of experts in insurance matters. 
 To them he most carefully expounded the law, and in his 
 judgments he cited foreign authorities freely. For instance, 
 in the case of Luke v. Lyde (1759, 2 Burr. 883) which 
 dealt with the question of liability for freight due for goods 
 lost at sea, "he cited the Roman Pandects, the Consolato 
 del Mare, laws of Wisby and Oleron, two English and two
 
 HISTORICAL INTRODUCTION 
 
 foreign mercantile writers, and the French ordinance ; and 
 deduced from them the principle which has since been part 
 of the law of England" (Scrutton, Mercantile Law, p. 15). 
 
 As respects the present position of the law of insurance 
 in England, it may be said that the contract of insurance 
 falls under the general rule of English Contract Law, 
 namely, that the determining element of the intent of the 
 contract is the common intention of the contracting parties. 
 As years have gone on the possibility of diversity of in- 
 tention and the difficulty of discovering the actual common 
 intention have both been much reduced by the fact that 
 the decided cases have almost all related to one set insurance 
 formula. In fact the ordinary form of policy prevailing in 
 England since about 16 13 is very like the Lloyd's policy 
 form of to-day. Consequently we have nearly three hundred 
 years of decision and tradition bearing on one set of words, 
 with the resultant certainty of the range and effect in English 
 law of the words used in the customary form of the contract 
 of marine insurance. A fixed form of policy offers the almost 
 invaluable advantage of securing to both parties a certainty 
 of signification in the terms employed, with the consequent 
 stability desirable in all transactions into which it is introduced 
 as a factor. ' On the other hand there may be some reason 
 for doubting whether a form that may have been adequate 
 to the commercial wants of the seventeenth century, can 
 fairly be expected to be flexible enough to adapt itself to the 
 wants of the nineteenth or twentieth. Every day instances 
 occur in which merchants, shipowners, and underwriters are 
 driven to most curious expedients in their endeavours to adapt 
 an ancient, not to say antiquated, document to modern needs. 
 
 In 1894 Lord Herschell (then Lord Chancellor) intro- 
 duced into Parliament a codifying bill dealing with Marine 
 Insurance. The bill was submitted to the various com- 
 mercial bodies whose interests it affects, with the result that 
 a general agreement has in the end been reached on almost 
 every pomt. The bill has been reintroduced session after 
 session, but so far has not become law. Tlicre appears, 
 however, to be a fair prospect that it may be passed by 
 both Houses by the autumn of 1903. Ad.lenJa
 
 CHAPTER I 
 
 ELEMENTARY NOTIONS 
 
 SUp^ Covering Note, Policy y Stamp Act 
 
 Intent of Coatract of Marine Insurance. — As the 
 detemiining element of the intent of a contract is the 
 common intention of the contracting parties, the simplest 
 and surest method of arriving at the true character of the 
 contract of sea insurance is to consider what is the intention 
 common to a merchant or shipowner (or broker acting on 
 his behalf) offering a risk and to an insurer (under\vriter) 
 accepting it. It is that the merchant or shipowner (or 
 broker) desires the underwriter to assume in respect of the 
 article which the merchant or shipowner (or broker) desires 
 to insure, the liability for a certain named proportion of 
 such loss or damage as may chance to accrue to it from 
 certain named perils or dangers, and that the underwriter 
 is content to assume this liability in return for a certain 
 agreed sum of money. 
 
 Good Faith — Actual Interest. — It is almost self- 
 evident that the transaction is assumed to be undertaken 
 in good faith, and that consequently the merchant or ship- 
 owner actually has something which can sustain loss or 
 damage by the dangers arising in the course of navigation. 
 
 The transaction described may also be expressed in the 
 following form : — 
 
 (i) A Contract of Indemnity, 
 
 (2) Made in good faith {in uberrima fide), 
 
 (3) Referring to a defined proportion, 
 
 (4) Of a genuine interest in a named object, 
 
 (5) Being against contingencies definitely expressed, to 
 which that object is actually exposed,
 
 CHAP. I GOOD FAITH — ASSURED AND ASSURER ii 
 
 (6) And in return for a fixed and determined con- 
 sideration.^ 
 
 The salient points of the transaction may be briefly put 
 thus : Insurance is a limited aleatory or contingent 
 contract of indemnity.^ 
 
 Asstired. and Assurer. — The parties to the contract are 
 known as the assured and the assurer, the former of whom 
 is protected by the latter from losses and damage suffered 
 by the property insured in consequence of the perils insured 
 against. The assurer is usually in England named the 
 underwriter, because he subscribes his name to the 
 document of insurance. When a request is made to an 
 underwriter to cover property by insurance, the act is 
 usually expressed by saying that " a risk " has been offered 
 to the underwriter. " Risk " thus comes to mean the 
 liability of an underwriter under his contract. But the 
 word " risk " is also used in a more limited sense to mean 
 a peril or danger insured against, for instance the risk of 
 fire, the risk of jettison, etc. The assured is usually a 
 merchant or a shipowner, and is perhaps best described as 
 a person who has an insurable interest in the property 
 insured. The nature of insurable interest and the various 
 kinds of property, etc., which can be insured will be 
 
 * Cf. Duer i. 58. "It is a contract of indemnity in which the 
 insurer, in consideration of the payment of a certain premium, agrees 
 to make good to the assured all losses, not exceeding a certain 
 amount, that may happen to the subject insured, from the risks 
 enumerated or implied in the policy, during a certain voyage or 
 period of time." Exception might perhaps be taken to the phrase 
 "not exceeding a certain amount." Cf. also the Belgian Insurance 
 law of 1874, " L'assurance est un contrat par lequel I'assureur 
 s'oblige, nioycnnant une prime, k indeniniser I'assur^ des pcrtes ou 
 dommages f|u'^prouvcrait celui-ci par suite de certains ^v^nements 
 fortuils ou dc force majeure." 
 
 The second last European code, the .Spanish Commercial Code of 
 1886, avoids the danjjers and difficulties of definition by silence, in this 
 respect conforming more to the habit and style of linglish commercial 
 law than to that which has prevailed in continental commercial legal 
 practice, especially in Latin countries. 
 
 ' Cf. Mr. Justice Patterson in Irving v. Manning, 1847, "A policy 
 of instu-ance is not a perfect contract of indemnity." Vide p. 70
 
 12 MARINE INSURANCE chap. 
 
 discussed hereafter. Hut the merchant or shipowner need 
 not himself effect the insurance, he may employ some one 
 to do it for him. An agent for this class of business is 
 called an insurance broker, his remuneration consists of a 
 brokerage, being a percentage (usually 5 per cent or 2^ 
 per cent) of the cash paid to the underwriter for covering 
 \ddenda. the risk, which is tenried the premium. 
 
 Offer and. Acceptance of Risk, — A risk may be offered 
 for insurance either orally or in writing ; acceptance by the 
 underwriter may also be signified either orally or in writing ; 
 if in writing it is usually by the underwriter signing or agree- 
 ing to sign a memorandum of the transaction. The insurance 
 regulations of most European countries compel the under- 
 writer to prepare or issue a signed document expressing 
 the contract : this document is known as a policy. But 
 some of these regulations do not make the absence of a 
 policy deprive the assured of the advantage of any arrange- 
 ment made between him and the underwriter — this holds 
 specially of Belgium. In France the majority of the decisions 
 is said to tend to the view that a policy is essential for the 
 purpose of proving the contract (that is, presumably, its 
 extent and intent), but that it is not essential for the pur- 
 pose of giving the contract validity. It is hard to see 
 wherein can lie the value of a legally valid contract of 
 whose contents evidence is not forthcoming, unless, indeed, 
 there are elements so essential to certain insurances that 
 the mere existence of the contract of insurance involves the 
 existence of certain terms or conditions in that contract. 
 
 English Practice. — The English procedure in the offer 
 and acceptance of a risk is unique. It is usual for the 
 broker to offer risks by means of a shorthand description of 
 the venture in question, called a slip (see Appendix A). 
 The underwriter signifies his acceptance of the whole or of 
 a part of the value exposed to peril, by signing or initialling 
 this slip, putting down the amount for which he accepts 
 liability, or by signing and issuing to the assured (whether 
 principal or broker) a similar document made out in his 
 own office called a covering note or insurance note (see 
 Appendix C). But neither slip nor covering note constitutes
 
 I SLIP 13 
 
 the contract. These, documents are merely first sketches 
 of the contract ; memoranda intended to serve as the 
 groundwork of the contract in its finally completed form ; 
 they are simply m^inoircs pour servir, so incomplete that 
 they can only be explained when taken in conjunction with 
 the contract in its definitively elaborated form. 
 
 Slip. — Slips or insurance notes of this kind are in 
 England of no legal value : in the form described they are 
 not admitted in any English court as evidence for anything 
 beyond the date of acceptance of a risk ; ^ this being the 
 result of fiscal arrangements which are enforced partly by 
 invalidating all contracts not fulfilling the requirements of 
 the Revenue Department. Still slips and insurance notes 
 are regarded by the insuring public with the most jealous 
 care. They are taken by the parties concerned as fixing 
 the terms of the contract so far as they are expressed in 
 these documents, and any failure to fulfil what was under- 
 stood to be the agreement would most seriously damage 
 the good name and commercial reputation of the offending 
 party. Slips and covering notes are merely provisional 
 agreements, binding in honour only, to issue a stamped 
 policy on certain terms and conditions on receipt of the 
 necessary information. They cannot be stamped and sued 
 upon as policies.- 
 
 It is expressly provided by 54 «S: 55 Vict. c. 39, that 
 no contract or agreement for a sea insurance shall be valid 
 unless the same is expressed in what is termed a policy. 
 There is thus a complete discrepancy between positive 
 statute law and the traditional and actual practice of daily 
 business. This is carried to such an extent that in marine 
 insurance circles the honourable obligation to fulfil to the 
 utmost any contract for which slip or cover has been initialled 
 or signed by an underwriter, is regarded as so binding that 
 
 * But given in evidence and referred to in judgment of Laing v. 
 Union Marine, Q. B. D. lo Apl. 1895, 11 Times L. K. 359; and in 
 Gardiner v. City of Ixindon Ujwg Assn., and The Aikshaw, 9 TiniL's Arid. n. la 
 L.R. 605. 
 
 * Home Insurance Company \. Smith liSqS), M.athew, J., in Q.B.D. 
 14 Times L. R. 366, see p. 24.
 
 U MARINE INSURANCE chap. 
 
 it is not expected that any information respecting the risk, 
 arriving subsequent to the acceptance of the risk, need be 
 communicated to him, even though it bear on the nature 
 and character of the risk. The ground of that abstention 
 is that it is not fair to tempt any man to swerve from a 
 course to which he is in honour bound. On the side of the 
 assured a much greater laxity has prevailed. Where the 
 venture contemplated cannot be entered upon, there is 
 evidently reasonable cause for the assured to ask the under- 
 writer to consent to cancel the agreement. But if the 
 venture is entered upon in conditions anything like those 
 contemplated when the agreement in question was made, 
 there should not be a request for cancellation without some 
 extremely strong ground, one which ought not to be in any 
 way dependent on the rate of premium paid as compared 
 with that at which the risk might, or could, be insured else- 
 where. There seems, in fact, to be no good ground for 
 holding that the assured on a slip or covering note is not 
 bound in honour equally with the underwriter to complete his 
 contract on the tenns arranged, provided the risk in question 
 reaches the commencement specified for it by the parties. 
 
 Quotation. — The rate at which an underwriter expresses 
 his willingness to assume liability for a venture is termed a 
 "quotation." Obviously a mere quotation of itself imposes 
 no legal obligation until it has been accepted by, or on 
 behalf of, the assured. Apart from the provisions of the 
 statute to which reference has been made, it is clear that 
 until acceptance there has never been any agreement 
 between underwriter and assured, and consequently that it 
 is open to the underwriter at any time before acceptance to 
 withdraw his quotation. This is in law the case even when 
 the underwriter has given to the assured what in the language 
 of commerce is known as a " firm " offer. It is popularly 
 supposed that such an offer imposes a legal obligation on 
 the part of the person making the offer to keep it open 
 until the person to whom it is made either rejects or accepts 
 it. But in law there is no foundation for such a view unless 
 some "consideration" be given to the underwriter for the 
 undertaking on his part to keep his offer open. Considera
 
 QUOTATION 15 
 
 tion is one of the essentials of a contract according to 
 English law, and may be described generally as " some 
 matter agreed upon as a return or equivalent for the promise 
 made, showing that the promise is not made gratuitously." 
 Effect of Quotation. — But it does not follow that 
 because a quotation or a firm offer or the initialling of a 
 slip imposes no legal obligation, it does not give rise to an 
 obligation in honour on the part of the underwriter. Different 
 questions arise as to the duties of an underwriter under the 
 code of honour by which he is bound, most of which are by 
 this time settled by usage. It is evident that the com- 
 plexion of any proposed insurance may be completely 
 altered by the receipt of news. Besides, further information 
 and reflection may cause the underwriter to change his 
 opinion of the conditions and the premium required for 
 the risk proposed. .'\s the offerer has taken away the 
 quotation to consider and remains entirely free of any 
 obligation to accept unless at his own pleasure, it is evidently, 
 on the grounds of ordinary fair dealing, unreasonable to 
 expect that the other party to the proposed agreement, the 
 underwriter, should be placed in a worse position. Besides, 
 it frequently happens that the same business is offered 
 through various hands, without any one knowing definitely 
 through whom it will actually be done. There is no obliga- 
 tion on the underwriter to reserve himself for the first 
 offerer of the risk, although, as a matter of practice, later 
 offerers are often informed that the risk has been shown 
 already. But that is entirely a matter of friendly courtesy. 
 When a broker has reason to expect that the risk will be 
 offered through various hands, or that the rate, if not at 
 once accepted, is likely to be increased, he is accustomed — 
 in case he is on such terms with his principal that his 
 action is sure not to be misunderstood — to accept the rate 
 "subject to approval" (s.a.) and to get the underwriter to 
 sign a slip s.a. This is really changing the q lotation into 
 a signed slip for a risk containing the special clause subject 
 lo apprcnial. Such a slip can be no more valid than any 
 other slip ; it is of no legal validity, it is only better than 
 a quotation in so far as it is a written document evidencing
 
 l6 MARINE INSURANCE chap. 
 
 the intentions of the parties at the time it was signed. But 
 as a mattei of honour, it is expected that if an underwriter 
 aj^rees to the submission of his quotation in this form, he 
 will --for such a time as will permit the broker to receive 
 from his principal a message indicating acceptance or 
 refusal — hold himself ready to go on with the insurance on 
 the terms he named. 
 
 Practice in Quotation. — Generally in practice an under- 
 writer may be expected to confirm within reasonaljle time 
 quotations made la principals or agents (brokers), unless 
 meanwhile exceptional circumstances have arisen, unex- 
 pected news has come in, or the underwriter has already 
 undertaken a risk on the venture from another offerer. 
 But that is a matter entirely of honourable and not of legal 
 obligation, 
 
 The following instance of the course adopted by a 
 Marine Insurance Company in connection with a quotation 
 may be of interest and value : — 
 
 On 2 1st August i8S8, Messrs. H. of B., Lancashire, 
 wrote to the X. Marine Insurance Company, Liverpool, 
 asking their rate on cotton valued ^650 per ship T. D. 
 from P to Liverpool, due to leave P. about the end of June. 
 
 Id reply the X. Company wrote on 22nd August on a 
 memorardum form, bearing the full name of the company 
 and the clause "Quotations available for three days only," 
 the following ; — " In reply to your enquiry of yesterday we 
 beg to quote as follows : T. D., P. to Liverpool, 65 bales 
 cotton, value .£650, 40'. per cent." 
 
 On 24th August the X. Company received a letter from 
 Messrs. H. of B. dated from 23rd August, accepting their 
 quotation. 
 
 On 23rd August a report appeared in the papers that 
 the T. U. had been lost some time before ; and when on 
 24th August the X. Company received Messrs. H.'s accept- 
 ance of the quotation, they replied that the ship was lost 
 and quite uninsurable. 
 
 Messrs. H. answered that they must hold them to theii 
 quotation. 
 
 The X. Company submitted the matter to eminent
 
 QUOTATION 17 
 
 counsel, who advised that the company, having received no 
 consideration to keep the offer open for three days, was at 
 liberty to withdraw the offer any time before acceptance : 
 that not having so withdrawn, the company could not refuse 
 to ratify acceptance if made within three days, even if it 
 reached the company after news of the loss : that in the 
 absence of the three days' clause or other similar clause, 
 the proposed assured would have a reasonable time within 
 which to exercise his option of acceptance or refusal of the 
 quotation, but that such reasonable time would probably 
 not extend beyond the last post of the day on which the 
 offer was received. 
 
 On receipt of this opinion the X. Company issued its 
 policy for ;^65o per T. D. from P. to Liverpool at 40s. per 
 cent and paid the loss. 
 
 Warned by this instance of the dangers that may be 
 contained in a clause apparently rendering a quotation 
 unavailable after a named time, but actually making it 
 available for all that time, unless specially retracted, 
 another Liverpool company has adopted the form of 
 quotation note printed in Appendix D, containing the 
 clause " Subject to acceptance by ... . and no risk until 
 confirmed by us." Under this clause even the payment of 
 a consideration for keeping the quotation open for accept- 
 ance till a named time would not legally oblige the 
 underwriter in case of acceptance to issue his policy on the 
 terms named, as there is the special reserve in the clause 
 providing that no risk attaches until the quotation after 
 acceptance by the assured is confirmed by the underwriter. 
 
 Without any clause naming a period for which a 
 quotation is available, there appears to be no reason to 
 doubt that — provided no withdrawal of the underwriter's 
 quotation comes in meanwhile— an acceptance posted by 
 the last mail of the day on which the offer is received, is 
 acceptance within a reasonable time. 
 
 Policy. — The broker's slip, the underwriter's cover note, 
 or his signed quotation accepted by the intending assured, 
 can be regarded only as a temporary memorandum of the 
 intention of the parties to an insurance : neither of them is 
 
 C
 
 l8 MARINE INSURANCE chap. 
 
 the definitive expression of the contract to insure. That 
 expression is usually found in the shape of what is termed 
 a policy. The name is common to all commercial countries, 
 all having adopted it from the Italian polizza (T assicurazioru 
 (literally, promise of insurance). As the insurer signifies 
 his acceptance of the liabilities detailed in the policy affect- 
 ing the objects mentioned therein as insured, by subscribing 
 his name to the policy, he is called in English the under- 
 writer. 
 
 Classes of Policies. — Policies are divided into various 
 classes in accordance with the different kinds of insurances 
 effected by means of them. The most important of these 
 are voyage policies and time policies, in which property is 
 insured for transit from one point to another, or for a 
 certain period of time. 
 
 Interest policies are those in which it is clear from their 
 form and wording thai they are intended to cover some real 
 interest in ship, goods, freight, or other matter capable of 
 insurance ; while wager policies show from their form and 
 wording that they do not require from the assured any 
 proof of reality of interest in what is stated as the subject of 
 insurance. 
 
 In valued policies, the amount at which the insured 
 object is valued is definitely stated ; while in open policies 
 there is no such statement, and in case of the value being 
 needed for completing the transaction of insurance, it has 
 to be fixed presumably in accordance with the law or usage 
 of the country in which the insurance is effected, unless 
 there be some stipulation to the contrary in the policy. 
 
 Finally, in named policies the vessel on which the risk 
 is taken is definitely stated ; in floating policies there is 
 usually no such limitation, the wording being made wide 
 enough to cover the insured interest by whatever steamer 
 or steamers, ship or ships it may come. The old designa- 
 tion of this kind of insurance was in quovis. But it is not 
 rare nowadays to have floating policies limited to certain 
 named fleets or classes of vessels, or to vessels to be 
 approved by the underwriter before being " declared on 
 the policy" as it is termed.
 
 4 STAMP — STAMP ACT 19 
 
 The ordinary form of English policy will be discussed at 
 length hereafter (pp. 27-129). ■ 
 
 Stamp. — The Revenue authorities of most European 
 countries have laid marine insurances under special taxes. 
 In England the regulations for this purpose have been 
 until lately of exceptionally complicated character, but 
 matters have been considerably simplified by the latest 
 Act of Parliament deahng with the subject, the Stamp Act, 
 1891 [54 & 55 Vict. c. 39]. The importance of these 
 regulations lies in the fact that unless they are complied 
 with, no document, however clear the intention of the 
 parties to it, can be considered valid or of use for the 
 purposes of evidence in any court of the United Kingdom 
 except as regards the date of acceptance of a risk. The 
 provisions of the Act and of the schedule are so short that 
 it is worth while giving them in full, as under : — 
 
 [54 & 55 Vict.] STAMP ACT 1891 [Ch. 39.] 
 
 Policies of Insurance 
 
 91. For the purposes of this Act the expression "policy 
 of insurance " includes every writing whereby any contract 
 of insurance is made or agreed to be made, or is evidenced, 
 and the expression " insurance " includes assurance. 
 
 Policies of Sea Insurance 
 
 92. (1) For the purposes of this Act the expression 
 ** policy of sea insurance " means any insurance (including 
 reinsurance) made upon any ship or vessel, or upon the 
 machinery, tackle, or furniture of any ship or vessel, or 
 upon any goods, merchandise, or property of any descrip- 
 tion whatever on board of any ship or vessel, or upon the 
 freight of, or any other interest which may be lawfully 
 insured in or relating to, any ship or vessel, and includes 
 any insurance of goods, merchandise, or property for any 
 transit which includes not only a sea risk, but also any 
 other risk incidental to the transit insured from tlie com-
 
 lO • MARINE INSURANCE chap 
 
 mencement of the transit to the ultimate destination covered 
 by the insurance. (2) Where any person, in consideration 
 of any sum of money paid or to be paid for additional 
 freight or otherwise, agrees to take upon himself any risk 
 attending goods, merchandise, or property of any description 
 whatever while on board of any ship or vessel, or engages 
 to indemnify the owner of any such goods, merchandise, or 
 property from any risk, loss, or damage, such agreement or 
 engagement shall be deemed to be a contract for sea insurance. 
 
 93. (i) A contract for sea insurance (other than such 
 insurance as is referred to in the fifty-fifth section of the 
 Merchant Shipping Act Amendment Act, 1862) shall not 
 be valid unless the same is expressed in a policy of sea 
 insurance. (2) No policy of sea insurance made for time 
 shall be made for any time exceeding twelve months.^ (3) 
 A policy of sea insurance shall not be valid unless it speci- 
 fies the particular risk or adventure, the names of the 
 subscribers or underwriters, and the sum or sums insured, 
 and is made for a period not exceeding twelve months. 
 
 94. Where any sea insurance is made for a voyage and 
 also for time, or to extend to or cover any time beyond 
 thirty days after the ship shall have arrived at her destina- 
 tion and been there moored at anchor, the policy is to be 
 charged with duty as a policy for a voyage, and also with 
 duty as a policy for time. 
 
 95. (i) A policy of sea insurance may not be stamped 
 at any time after it is signed or underwritten by any person, 
 except in the two cases following ; that is to say, (a) Any 
 policy of mutual insurance having a stamp impressed 
 thereon may, if required, be stamped with an additional 
 stamp, provided that at the time the additional stamp 
 is required the policy has not been signed or underwritten 
 to an amount exceeding the sum or sums which the duty 
 impressed thereon extends to cover : 
 
 (i) Any policy made or executed out of, but bemg in 
 any manner enforceable within, the United Kingdom, may 
 be stamped at any time within ten days after it has been 
 
 ^ But see pp. 236, 237, for provisions re Continuation Clause in 
 Finance Act of 1901 (i lidw. VII. ch. 7).
 
 STAMP ACT 21 
 
 first received in the United Kingdom on payment of the 
 duty only. 
 
 (2) Provided that a policy of sea insurance shall for the 
 purpose of production in evidence be an instrument which 
 may legally be stamped after the execution thereof, and the 
 penalty payable by law on stamping the same shall be the 
 sum of £ 1 00. 
 
 96. Nothing in this Act shall prohibit the making of 
 any alteration which may lawfully be made in the terms 
 and conditions of any policy of sea insurance after the 
 policy has been underwritten ; provided that the alteration 
 be made before notice of the determination of the risk 
 originally insured, and that it do not prolong the time 
 covered by the insurance thereby made beyond the period 
 of six months in the case of a policy made for a less period 
 than six months, or beyond the period of twelve months in 
 the case of a policy made for a greater period than six 
 months, and that the articles insured remain the property 
 of the same person or persons, and that no additional or 
 further sum be insured by reason or means of the alteration. 
 
 97. (l) If any person — 
 
 (a) Becomes an assurer upon any sea insurance, or enters 
 into any contract for sea insurance, or directly or indirectly 
 receives or contracts or takes credit in account for any 
 premium or consideration for any sea insurance, or know- 
 ingly takes upon himself any risk, or renders himself liable 
 to pay, or pays, any sum of money upon any loss, peril, or 
 contingency relative to any sea insurance, unless the in- 
 surance is expressed in a policy of sea insurance duly 
 stamped, or 
 
 {b) Makes or effects, or knowingly procures to be made 
 or effected, any sea insurance, or directly or indirectly gives 
 or pays, or renders himself liable to pay, any premium or 
 consideration for any sea insurance, or enters into any 
 contract for sea insurance, unless the insurance is expressed 
 in a policy of sea insurance duly stamped, or 
 
 (t) Is concerned in any fraudulent contrivance or device, 
 or is guilty of any wilful act, neglect, or omission, with 
 intent to evade the duties payable on policies of sea insur
 
 23 MARINE INSURANCE chap, 
 
 ance, or whereby the duties may be evaded, he shall foi 
 every such oflfence incur a fine of /^loo. 
 
 (2) Every broker, agent, or other person negotiating or 
 transacting any sea insurance contrary to the true intent 
 and meaning of this Act, or writing any policy of sea insur- 
 ance upon material not duly stamped, shall for every such 
 offence incur a fine of one hundred pounds, and shall not 
 have any legal claim to any charge for brokerage, com- 
 mission, or agency, or for any money expended or paid by 
 him with reference to the insurance, and any money paid 
 to him in respect of any such charge shall be deemed to be 
 paid without consideration, and shall remain the property 
 of his employer. 
 
 (3). If any person makes or issues, or causes to be 
 made or issued, any document purporting to be a copy of a 
 policy of sea insurance, and there is not at the time of the 
 making or issue in existence a policy duly stamped whereof 
 the said document is a copy, he shall for such offence, in 
 addition to any other fine or penalty to which he may be 
 liable, incur a fine of ;^ioo. 
 
 [54 & 55 VicL] SCHEDULE [Ch. 39.] 
 
 STAMP ACT I 89 1 
 
 Addenda Stamp duties on policies of sea insurance — 
 
 {i) Where the premium or consideration does 
 not exceed the rate of 2s. 6d. per cent of the 
 sum insured ...... ^o o I 
 
 (2) In any other case — 
 
 (a) For or upon any voyage — 
 
 In respect of every full sum of ;^ 100, 
 and also any fractional part of ^100 
 thereby insured . . ■ . ,003 
 
 {d) For time — 
 
 In respect of every full sum of ^100, 
 and also any fractional part of ;^ 1 00 
 thereby insured —
 
 I CONSIDERATION — SEA RISK 23 
 
 Where the insurance shall be made 
 for any time not exceeding six 
 months . . . . • ;f o o 3 
 
 Where the insurance shall be made 
 for any time exceeding six 
 months and not exceeding twelve 
 months . ..006 
 
 ParticulaJTS of Adventure. — It is clear that the par- 
 ticulars of the adventure, the underwriters and the amounts 
 underwritten, which are by § 93, 3 essential to the 
 validity of a policy of sea insurance, are only what one 
 would expect to find in such a document. They are, in 
 fact, the particulars given in an abbreviated conventional 
 form on the slip already described. 
 
 Limit of Time Policy. — The special limitation of policies 
 for time to a period not exceeding twelve months is one 
 which most underwriters have come to regard as a salutary 
 protection against themselves, though it is simply a matter 
 of revenue regulation. 
 
 Consideration. — The requirements of English Statute 
 Law for the expression of certain particulars in a policy of 
 sea insurance seem, without doubt, to be based on the 
 requirements of Louis XiV.'s Ordonnance de la Marine. 
 The earlier document differed from the later in making 
 no restriction of time policies to a period of twelve months, 
 and in requiring a great number of additional particulars, 
 among them the amount of premium. The absence of 
 this requirement in the English statute is all the more 
 striking because no policy is issued in England or America 
 without some mention of consideration. Still that occurs, 
 not in consequence of any special legislation, but in con- 
 formity with the general contract law of England, by which, 
 without consideration, a promise or agreement cannot be 
 construed into a contract valid at law. If such genuine 
 consideration can be proved, no question will be raised 
 regarding its adequacy or reasonal)!eness, it being always 
 provided that the promise or agreement has been made in 
 good faith and between competent parties.
 
 24 MARINE INSURANCE chap. 
 
 Meaning of "Sea Risk." — In the interpretation of the 
 Stamp Acts dealing with marine insurance the question 
 has arisen, what constitutes a sea risk f From examination 
 of the Customs Regulations, and of correspondence with 
 the Board of Inland Revenue, it appears that the Board do 
 not regard as sea risks the following : — risks by canal or 
 risks on navigable rivers or inland lakes not extending to 
 tidal waters. No doubt this decision was come to after 
 consideration of the topography of the United Kingdom 
 and the parts of the Continent of Europe nearest to it ; 
 within these limits there is little to say against it. But 
 it is worth remarking that this interpretation leaves all 
 insurances effected in the United Kingdom on the hulls, 
 freights, cargoes, disbursements, etc., of vessels engaged in 
 trade on the vast inland lakes of North America subject to 
 no duty beyond id. per policy. 
 
 Slip Stamped. — As a slip or an insurance note almost 
 invariably contains the three essentials of a policy prescribed 
 by the Stamp Act (particulars of the venture, names of the 
 underwriters, and the amounts insured), it seems not im- 
 possible that a slip or an insurance note, if properly stamped, 
 may become legal evidence of a contract of sea insurance. 
 This question suggested itself to Lowndes (Law of M. L, 
 2nd ed., p. 73), but only as affecting the case in which it 
 becomes necessary to submit to the penalty for stamping a 
 document after execution ; such a case as would arise if, 
 for instance, an underwriter refused to issue a policy cover- 
 ing a risk for which he had signed a slip or insurance note. 
 It has on several occasions been suggested that ^Vhen no 
 evidence of an agreement to enter into a contract of sea 
 insurance exists except a slip, that evidence may be rendered 
 valid at law by having the slip properly stamped. This 
 suggestion has been disposed of by the decision of Mathew, J., 
 in Home Marine Insurance Company v. Smith (1898),^ 
 that the " cover note was not a policy . . . neither was it 
 a contract to issue a policy. It was a contract of insurance 
 Addenda, binding in honour only." 
 
 Practical Difficulties. — The difficulties which occur in 
 
 1 14 Times L.R. 366.
 
 I SPOILED STAMPS — SUGGESTIONS SJ 
 
 daily business in connection with the application of the 
 Stamp Act to marine insurance arise not so much from any 
 obscurity in the Act as from the immense variety of cir- 
 cumstances to which it has to be applied. There is also 
 to be considered the diversity of the interests of the assured 
 to whom the stamp is charged : he wishes to have a legally 
 valid document, and yet he has no desire to waste money 
 in unnecessary stamps. 
 
 Spoiled or Unused Stamps. — In the Stamp Management 
 Act of 1 89 1 liberal regulations are announced for the 
 recovery of spoiled or unused stamps. Of these, however, 
 it is frequently impossible to avail oneself, owing to the 
 delay probably inseparable from the proper accurate pro- 
 cedure of a public department, and sometimes from the 
 difficulty of tendering absolute proof of the identity of goods 
 insured by error on more than one policy, or perhaps mis- 
 described in a policy for which another is later substituted. 
 
 Correspondence with Board of Inland Revenue. — 
 A aseful collection of correspondence between the Board of 
 Inland Revenue and underwriters on matters connected 
 with the interpretation of the Stamp Acts may be found in 
 E. K. Allen's Stamp Duties on Sea Insuratices. That 
 book appeared before the Act of 1891, which consequently 
 is only dealt with in an addendum issued with the copies 
 published after the Act passed. 
 
 Suggestions. — It seems a pity that there should be such 
 difficulty in the correct carrying out of the Stamp Act as 
 regards marine insurances. The amount of revenue 
 brought into the Exchequer is comparatively insignificant,^ 
 and the period of time within which documents arriving 
 from abroad must be stamped is so restricted that un- 
 doubtedly some portion of the tax is irretrievably lost. 
 Neither assured nor assurer desires to evade the duly on 
 any policy to which effect may need to be given in this 
 country ; but it often happens that in the ordinary course 
 of business the policy does not come into the hands of the 
 beneficiary in this country till after the period within which 
 the document can be stampeu. 
 
 * Under ;^200, 000 per amiiim ; 111 lyoi 2, ;^i98,5i7.
 
 26 MARINE INSURANCE chap. I 
 
 All this delay in paying stamp, and consequent occasional 
 loss to the Exchequer, could be avoided if it were made 
 incumbent on the holder of the policy to get it impressed 
 on receipt with a stamp of small value, say id. or even 3d. 
 There would be no temptation to evade or delay payment 
 of such a small amount. 
 
 Even after the reduction of the stamp on insurances at a 
 premium of 2s. 6d. per cent and under, to id., there is a 
 possibility that some insurances are placed abroad, even 
 with the foreign agencies of English companies, to avoid 
 the duty of 3d. per cent. On a premium of 3s. per cent 
 the stamp is one-twelfth of the gross premium. As matters 
 stand now the very finest risks are most severely weighted 
 with the impositions of revenue. Is any other business 
 oppressed with an equally heavy tax ? Could not the duties 
 on marine insurances be made the same as those on fire 
 insurances, namely id. per policy, irrespective of duration 
 \dden.ia. and amount ?
 
 CHAPTER II 
 
 THE POLICY : PART I 
 
 Policy Forms, Common English Policy, The Heading, The 
 Assured, Lost or Not Lost, At and From 
 
 As already stated, the usual expression of a contract ol 
 sea insurance is a policy. But before proceeding to the 
 consideration of the usual English form of policy it is 
 desirable to premise that even in its fullest form the policy 
 does not expressly detail the whole of the contract between 
 assured and underwriter. (Cf. Amould, M. I. pp. 40, 41, 
 and see below, pp. 132-134, I44-) 
 
 Early Italian Forms. — Citing Malyne, an English 
 writer of about 1620, Marshall writing in the period be- 
 tween 1802 and 1823 states that it is most probable that a 
 policy form very similar to what was in use in his day was 
 introduced by the Lombards into England. There is a 
 striking resemblance between the phraseology of the policy 
 form prescribed in the ordinance of Florence of 1523 
 (printed in Lowndes, Law of M. I., Appendix A, pp. 233, 
 234) and that of the English policies of the present day. 
 
 Earliest English Form. — The earliest English policy 
 known dates from 1555, discovered in the records of the 
 Admiralty Court by Mr. R. G. Marsden (vide Appendix B, 
 p. 323). Next in antiquity comes the policy of 1557 on 
 the Ele {vide p. 322, note). We have also the policy on 
 the Tiger of 16 13 {vide p. 319), of which the original has 
 not been preserved, but a copy, apparently made for some 
 legal purpose, has been found in the Bodleian Library at 
 Oxford, and is reproduced in Appendix B ; it is eminently 
 worth comparing, clause for clause, with the form now in use.
 
 28 MARINE INSURANCE chap. 
 
 English Practice till about 1865. — Up till within the 
 last twenty-five years it appears to have been customary in 
 England to employ only one form of policy, the old com- 
 mon form adopted by Lloyd's on 12th January 1779, as 
 their standard printed policy. This is the form which 
 appears in the schedule to the Sea Insurance Stamp Act of 
 1795 (35 Geo. III. c. 63). The practice was to use that 
 policy for all interests covered or desired to be covered by 
 a policy of marine insurance. At Lloyd's this still prevails, 
 underwriters inserting whatever further words or clauses 
 may be necessary to adapt the document to the insurance 
 intended. This procedure has called forth expressions 
 of astonishment and disapproval from eminent persons, 
 among them Lord Mansfield in Simondv. Boydell, 1779,' 
 and Lord Esher, M.R., in Baring v. Marine Insurance 
 Company on appeal, 1894,^ and in Hydames Steamship 
 Company v. Indemnity Marine Insurance Company y Limited,^ 
 when the Court proceeded " to construe the policy in a busi- 
 nesslike way so as to give it a sensible meaning " {v. p. 1 30). 
 
 Modem English Practice. — But in the last twenty-five 
 years many marine insurance companies have adopted the 
 plan of keeping in stock skeleton forms of policy, adapted 
 from the common form to suit the requirements of different 
 subjects of insurance, such as ship for voyage, ship for 
 time, freight ; and for goods several forms varying according 
 to the conditions on which the goods are meant to be in- 
 sured This system offers two practical advantages : it 
 removes from the policy on any interest all clauses that do 
 not affect that interest, and it reduces to a minimum the 
 risk of error in the somewhat mechanical work of writing 
 out policies and affixing the proper marginal clauses. 
 
 Lloyd's Form. — The common form of Lloyd's policy 
 being the stem form of all British marine policies, the 
 discussion of its contents will enable us to deal with what 
 are practically the conditions of the great majority of 
 British insurances. The text is as follows : — 
 
 ' I Douglas 268. 
 * 10 Times Law Reports 276. 
 • Court Appeal i6 Jan. 1895, 11 Times L. R. 173.
 
 II LLOYD'S FORM OF POLICY 39 
 
 Be it known that A. B. ""^/^ as Agenty 
 8.G. 
 
 as well in his own name, as for and 
 
 £ in the name and names of all and 
 
 every other person or persons to 
 
 — whom the same doth, may, or shall 
 
 appertain, in part or in all, doth 
 make assurance and cause himself 
 and them and every of them, to be 
 insured, lost or not lost, at and from 
 
 up>on any kind of goods and merchandises, and also upon the body, 
 tackle, apparel, ordnance, munition, artillery, boat and other furni- 
 ture, of and in the good ship or vessel called the 
 
 whereof is master, under God, for this present voyage, 
 or whosoever else shall go for master in the said ship, or by whatso- 
 ever other name or names the same ship, or the master thereof, is 
 or shall be named or called, beginning the adventure upon the said 
 goods and merchandises from the loading thereof aboard the said 
 ship, as above. 
 
 upon the said ship, etc., as above, 
 
 and shall so continue and endure, during 
 her abode there, upon the said ship, etc. ; and furthei-, until the 
 said ship, with all her ordnance, tackle, apparel, etc., and goods 
 and merchandises what.soever, shall be arrived at, as above, 
 
 upon the said ship, etc., until she hath moored at anchor 
 in good safety, and upon the goods and merchandises until the same 
 be there discharged and safely landed ; and it shall be lawful for the 
 said ship, etc, in this voyage to proceed and sail to and touch and 
 stay at any ports or places whatsoever 
 
 without prejudice to this insurance. The said ship, etc., goods and 
 merchandises, etc., for so much as concerns the assured, by agree- 
 ment between the assured and assurers in this policy, are and siiall 
 be valued at as at /oof. 
 
 Touching the adventures and perils which we the assurers are con- 
 tented to bear and do lake upon us in this voyage, they are, of the 
 seas, men-of-war, fire, enemies, pirates, rovers, thieves, jettisons, 
 letters of mart and countermart, surprisals, takings at sea, arrests, 
 restraints and detainments of all kings, princes, and people, of what 
 nation, condition, or rjuaiily soever, l)arrafry of the master and 
 auLriners, and of all other perils, losses, and misfortunes that have
 
 30 MARINE INSURANCE chap. 
 
 or shall come to the hurt, detriment, or damage of the said goods 
 and merchandises and ship, etc., or any part thereof; and in case 
 of any loss or misfortune it shall be lawful to the assured, their 
 factors, servants, and assigns, to sue, labour, and travel for, in, and 
 about the defence, safeguard, and recovery of the said goods and 
 merchandises and ship, etc., or any part thereof, without prejudice 
 to this insurance ; to the charges whereof we, the assurers, will con- 
 tribute each one according to the rate and quantity of his sum herein 
 assured. And it is expressly declared and agreed that no acts of 
 insurer or insured in recovering, saving, or preserving the property 
 insured, shall be considered as a waiver or acceptance of abandon- 
 ment. And it is agreed by us, the insurers, that this writing or 
 policy of assurance shall be of as much force and effect as the surest 
 writing or policy of assurance heretofore made in Lombard Street, 
 or in the Royal Exchange, or elsewhere in London. And so we 
 the assurers arc contented, and do hereby promise and bind our- 
 selves, each one for his own part, our heirs, executors, and goods, to 
 the assured, their executors, administrators, and assigns, for the true 
 performance of the premises, confessing ourselves paid the considera- 
 tion due unto us for this assurance by the assured 
 at and after the rate of 
 
 IN WITNESS whereof, we the assurers have subscribed our names 
 and sums assured in London. 
 
 N.B. — Corn, fish, salt, fruit, flour, and seed are warranted free 
 from average, unless general, or the ship be stranded ; sugar, 
 tobacco, hemp, flax, hides, and skins are warranted firee from 
 average under five pounds per cent ; and all other goods, also the 
 ship and freight, are warranted free from average under three pounds 
 per cent, unless general, or the ship be stranded, sunk, or burnt. 
 
 Detailed Explanation of Lloyd's Form. — As all current 
 English policy ibniis have been developed from this one, 
 which has been the subject of manifold discussions and 
 innumerable decisions of the law-courts of the country, it 
 seems advisable to discuss it section by section, so as to 
 obtain, if possible, firm ground from which to consider on 
 what principles it and similar documents are interpreted by 
 the courts, and on what theoretical basis the contract of 
 marine insurance is deemed to be founded. A policy in 
 the above form is technically known as a clean policy. 
 
 The Headhtg 
 The meaning of the letters S.G. is uncertain ; probably 
 they stand, as has been suggested, for Ship Goods. If
 
 U THE HEADING— THE ASSURED 31 
 
 that is so, it is hardly clear why the third great maritime 
 interest, Freight, is not also represented. But it will be 
 discovered later that until 1749 ^o printed policy form 
 contained the word freight^ so that if these letters occur 
 on earlier policies, the explanation suggested may be correct. 
 Another view is that S.G. stands for Salutis Gratia, i.e. 
 for the sake of safety ; or Somma Grande, i.e. total amount 
 (insured), as suggested by Dr. James Gow of Westminster. 
 The pious heading, " In the Name of God, Amen," 
 which prevailed in all the early French and English policies 
 and in most of the early Italian, is still retained by some 
 English companies. Lloyd's about 1870 adopted instead the 
 formula, " Be it known that," which, however, is merely a 
 recurrence, conscious or unconscious, to the Florentine 
 wording of 1523, Sia noto e manifesto. 
 
 The Assured 
 
 A B. ""^/or as agents, as well in his own name, as for and 
 in the name and names of ail and every other person or persons 
 to whom the same doth, may, or shall appertain in part or in all, 
 doth make assurance and cause himself and them and every of them 
 to be insured. 
 
 By 28 Geo. III. c. 56, it is enacted that 
 
 It shall not be lawfiil for any person or persons to make or 
 effect or cause to be made or effected, any policy or policies of assur- 
 ance upon any ship or ships, vessel or vessels, or upon any goods, 
 merchandises, effects, or other property whatsoever, without first 
 inserting or causing to be inserted, in such policy or policies of assur- 
 ance the name or names, or the usual stile and firm of dealing of one 
 or more of the persons interested in such assurance ; or without, 
 instead thereof first inserting or causing to be inserted in such policy 
 or policies of assurance the name or names or the usual stile and 
 firm of dealing of the consignor or consignors, consignee or con- 
 signees of the goods, merchandises, effects, or property so to be 
 insured ; or the name or names, or the usual stile and firm of deal- 
 ing of the person or persons residing in Great Hritain who shall 
 rcrtivc the order for and effect such policy or policies of assurance, 
 or of the person or persons who shall give tlie order or direction to 
 the agunt or agents immediately employed to negotifttc or effect such 
 policy Of policies of assurance.
 
 3a MARINE INSURANCE chap 
 
 The penalty for not complying with the requirements ol 
 this Act is the nullity and avoidance of the policy. 
 
 It is to be observed that the words " ""^/„ as agents '' 
 are a recent addition to the text of the policy ; they 
 are evidently intended to mean " as principals "'^/o^ as 
 agents." Sometimes in their place is found the phrase 
 ** on behalf of whom it may concern." These two phrases 
 appear merely to be brief modem forms of expression, 
 covering, if anything, more than the content of the long 
 phrase following. The words of that phrase are so wide 
 that they admit to the benefit of any insurance, which has 
 been from the beginning legally and properly effected, all 
 parties who have in whole or in part, at the time of the 
 insurance or thereafter, such an interest in the subject in- 
 sured as the original assured had. They even admit to 
 the benefit of an insurance such persons as may be willing 
 to ratify ex post facto {i.e. after the effecting thereof) an 
 insurance done as it were speculatively, in the hope that 
 when these persons are advised of the insurance they will 
 avail themselves of it. 
 
 The words of the policy taken literally demand that the 
 subject insured " doth, may, or shall appertain " to the 
 person assured ; in other words, property in the subject 
 insured is regarded as the only interest entitling a person 
 to insure it. But there is one class of persons whose 
 interest of this character does not entitle them to the in- 
 demnity afforded by a policy of marine insurance, namely 
 alien enemies. This is simply a matter of public policy. 
 The result is that in time of war no property belonging to 
 a foreigner of a nation carrying on hostilities against Eng- 
 land can be legally protected by an English policy. 
 
 As there are other persons besides those defined in 
 28 Geo. III. c. 56, quoted above, who may be and often 
 are interested in an insurance, so there are other interests 
 besides property, in goods, etc., which it is found desirable 
 to cover by insurance. Consequently it has become the 
 recognised practice to comply with the statute quoted, by 
 naming in the policy some real person actually benefited 
 by the insurance, or acting as agent for some beneficiary,
 
 II THE ASSURED— LOST OR NOT LOST 33 
 
 and to extend the protection to cover real interests, though 
 of a less complete and manifest nature than actual owner- 
 ship of a material object. Such are rights to obtain pos- 
 session of objects at the close of a marine venture, or to 
 obtain certain pa)Tnents in respect of their delivery at 
 destination, or to have the disposal of objects arrived at 
 destination, in such a way that some profit or commission 
 accrues to the disposer. Similarly, an insurance may be 
 arranged to take effect regarding even more distant deriva- 
 tives of property, such as liabilities arising out of owner- 
 ship, e.g. to afford protection against these, or protection 
 against loss by marine peril of lien arising out of liabilities 
 of ownership. All persons exposed to loss in respect of 
 any such interest, excepting alien enemies, are entitled to 
 be assured and to have the benefit of marine insurance. 
 The nature and character of such possession, rights, and 
 liabilities as will entitle their proprietor to effect an insur- 
 ance will form the subject of a later section entitled " In- 
 surable Interest " (pp. 76-86). 
 
 Lost or not Lost 
 
 It has been suggested that this clause was first introduced 
 into the policy to meet the case of what are known as 
 missing ships, that is ships acknowledged at the time they 
 are insured, to be so long at sea unheard of, that theit 
 safety is doubtful. It does not appear in the Florentine 
 form of 1523. But as it is found in the English policy of 
 1613,1 it is rather more likely that it was devised for the 
 protection of merchants against such losses as might occur 
 to their ships or cargoes after starting on cross or home- 
 ward voyages from foreign ports. It is evident that in the 
 conditions of trade in the sixteenth century, insurances of 
 such voyages must frequently have been effected when 
 there was no means of knowing whether the vessel had 
 sailed or not, and almost certainly none of knowing 
 whether at the moment of effecting the insurance the ship 
 was in safety or not. But by 1613 the clause was used 
 
 ' See Appendix B. 
 D
 
 34 MARINE INSURANCE chap, 
 
 also in London policies on outward voyages commencing 
 .n London. 
 
 The clause must be understood to be part of a 
 contract of indemnity made in absolute good faith. If the 
 merchant or shipowner knows that when he offers the risk 
 his cargo or vessel is lost, he knows that he is not at that 
 moment in possession of anything connected with the risk 
 whose loss will further damnify him, and that nothing then 
 exists against loss of which the underwriter can indemnify 
 him. Similarly, if the underwriter knows that the venture 
 proposed for insurance has safely arrived at the time of the 
 proposal, he knows that there are no perils to be run 
 against which he can give insurance. Consequently, in 
 spite of the absolute wording lost or not lost, the under- 
 writer does not propose to pay a loss known to the assured 
 but not to himself, nor the assured to pay premium for the 
 insurance of a risk known by the underwriter, but not by 
 himself, to have run off safely. The effect of the clause is 
 therefore to secure to the assured the insurance, and to the 
 underwriter the premium on all lawful risks, in whatever 
 position of safety or peril they may be at the time the 
 insurance is made, so long as both parties are in a state of 
 equal knowledge or equal ignorance. There is nothing to 
 prevent an underwriter from accepting an insurance on 
 some matter or object that both he and the assured know, 
 when the risk is submitted, has met with some disaster or 
 even total loss. This occasionally occurs in practice, 
 undenvriters accepting insurances after news of a disaster. 
 The courts have upheld such insurances {Mead v. Davison, 
 1835).^ ^s regards the position of the assured in case the 
 underwriter concealed his knowledge of the safe arrival of 
 a risk offered to him for insurance, Lord Mansfield said 
 {Carter v. Bochm, 1766) :2 "The policy would be void 
 against the underwriter if he concealed as having insured a 
 ship which he privately knew to be arrived, and an action 
 would lie to recover the premium." 
 
 In the case of floating policies underwriters frequently 
 receive together notice of interest declared and of disaster 
 
 ' 3 A. & E. 303. * 3 Burr. 1906.
 
 n LOST OR NOT LOST 35 
 
 occurred : and the validity of declarations made in such 
 circumstances has also been upheld by the courts {Gled- 
 stanes V. Royal Exchange, 1864).^ 
 
 Marshall (p. 339) considers that though this clause may 
 not be inserted in the policy yet it must in many cases be 
 necessarily implied in the contract, and Amould (p. 21) 
 reports that if both assured and underwriter were equally 
 ignorant of a loss at the time an insurance was effected, 
 the policy would be, in Mr. Justice Story's opinion, binding 
 without the words lost or not lost. As all English 
 forms now contain the clause, and many if not all of the 
 American contain it, this point is not now likely to arise, 
 but it is worth notice that Mr. Justice Story's view is 
 different from that expressed by Mr. Justice Park. Park 
 says (p. 33) : " It is the general practice to insure lost or 
 not lost, which is certainly very hazardous, because if the 
 ship or goods be lost at the time of the insurance, still the 
 underwriter, provided there be no fraud, is liable. The 
 premium," he continues, " is however in proportion depend- 
 ing upon the circumstances stated to show the probability 
 or improbability of the ship's safety. These words lost or 
 not lost are peculiar to English policies, not being inserted 
 in the policies of foreign nations." The statements 
 contained in the two last sentences may have been exact in 
 1 8 1 7 ; nowadays the peril in question is accepted without 
 any consideration of its being an extraordinary risk. But 
 it is true that the form lost or not lost is peculiar to English 
 and American policies. Still in the French Code de Com- 
 merce (§ 367) provision is made that in case of insurances 
 effected sur bonnes ou mauvaises nouvelles (on good or bad 
 news) the contract is not void unless it is proved that 
 before the signature of the contract either the assured 
 knew of the loss or the underwriter of the arrival. The 
 penalty for such fraud is the payment to the offended 
 by the offending party of double premium and thereafter 
 the criminal (correctional) prosecution of the offender. 
 The German form is similar, auf gate odrr schlechte 
 Nachricht (on good or bad news). The German General 
 » 34 L. J. Q.B. 30. 35.
 
 36 MARINE INSURANCE chap. 
 
 Maritime Code provides in § 785 that "the validity ol 
 the insurance contract is not affected by the question 
 whether at the time of its conclusion there is no longer any 
 possibility of a claim occurring for damage, or whethei 
 claimable damage has already occurred. The contract, 
 however, is invalid as an insurance contract if both con- 
 tracting parties were aware of the position of affairs. If 
 the underwriter alone was aware that the possibility of a 
 claimable damage no longer existed, or if the assured alone 
 was aware that claimable damage had already occurred, 
 the contract is not binding upon the party to whom the 
 position of affairs was not known. In the second case, the 
 underwriter is entitled to the full premium, even when he 
 establishes the invalidity of the contract." The important 
 point of difference between English and German law is in 
 the treatment of cases in which both parties are aware that 
 the risk has either run off or resulted in some disaster ; 
 English law upholds the contract, German law annuls it. 
 
 Insurances lost or not lost are expressly permitted by 
 the Commercial Codes of Holland, Spain, and Portugal. 
 
 At and From 
 
 In the blank following these words is inserted the descrip- 
 tion of the voyage intended to be insured. The formula ai 
 and from is one of considerable antiquity in England, and 
 was adopted in the statutory form of policy for private 
 underwriters appended to the Act of Parliament of 1795 
 (35 Geo. III. c. 63): its very existence implies that it 
 is intended to include more than would be covered by the 
 word from. 
 
 Phillips (§ 927) distinguishes as follows: "Under a 
 policy on a vessel against sea perils ' at ' a place as 
 distinct from a voyage, the risk commences when the 
 vessel is at the place in reasonable safety : and on the 
 goods from the time of their being exposed to sea perils 
 within the conditions of the policy in respect of the vehicle 
 and custody in which they are." 
 
 Amould (p. 23) completes the distinction thus: "An
 
 ri AT AND FROM 37 
 
 insurance expressed in the policy to be from A to B only 
 protects the subject insured from the moment of the ship's 
 sailing from A : an insurance at and from protects the 
 subject insured from the first moment of the ship's arrival 
 at A, and during her whole stay there." This seems too 
 wide an extension, unless it is understood that the subject 
 insured is the ship herself or something on board her when 
 she arrives at A. 
 
 The formula at and from was likely first devised to 
 meet the case of goods laden abroad on a homeward 
 voyage, but being perfectly adaptable to any kind of risk or 
 voyage became part of the general form of policy. 
 
 The voyage for which any subject is insured is 
 described by the mention of its starting and finishing 
 points, known technically as the terminus a quo and the 
 terminus ad quern.. It is notorious that the course of the 
 passage between two named points may not be and 
 ordinarily is not exactly the same in any two cases. But 
 there is in every case a customary manner in which the 
 passage is made ; e.g. the customary passage which a 
 steamer makes from the United Kingdom to Calcutta, or 
 vice versd, is through the Suez Canal, the customary passage 
 of a sailer between the same points being round the Cape of 
 Good Hope. The course at sea of a vessel, especially of 
 a sailing vessel, necessarily varies in accordance with 
 season, weather, political circumstances, disposition of 
 hostile forces, etc., so that the description of the voyage 
 insured must be regarded as compatible with such 
 necessary variation. Consequently the law considers the 
 voyage insured {jfiaggium., from the more classical viaticum) 
 named in the policy to be a course at sea from the starting 
 point {terminus a quo) to the finishing point {terminus ad 
 quern) in a course of navigation prescribed by custom {iter 
 viaggii) with which the passage of the ship {iter navis) 
 must correspond. Speaking generally, the course at sea 
 between any two ports is ordinarily the sea-path over which 
 the one can be reached from the other in the shortest time 
 consistent with the safety and ordinary convenience of the 
 things and persons involved in the venture, the spccia'
 
 38 MARINE INSURANCE chap. 
 
 circumstances of each case being fairly considered. Lord 
 Mansfield speaks {Tfiellusson v. Staples, 1780^) of pro- 
 ceeding "to her port of delivery in a mathematical line, if 
 it were possible." 
 
 In case of insurances from a port, and of such as have 
 their commencement determined by the time of sailing 
 from a port, it becomes important to determine exactly 
 what constitutes such sailing. In giving the Privy 
 Council's decision of a case arising out of the collision of 
 the City of Cambridge^ and the Birmah, 1874,''^ the bench 
 cited with approval the following from Chief Baron 
 Pollock's judgment in Rodriguez v. Melhtiish, 1854:^ "If 
 the vessel had all her cargo on board, and the master 
 ready to get on board, and she had everything ready to 
 commence her voyage forthwith, and left her berth with 
 that intention, it might no doubt be said she was proceed- 
 ing to sea from the time she first left her berth." In 
 Sea Insurance Company v. Blogg, Mr. Justice Mathew 
 remarked that there was " no authority for the proposition 
 that there could be a sailing, as required by the policy, 
 without a clear intention on the part of the master to pro- 
 ceed directly on his voyage."* The Court of Appeal in 
 affirming this judgment held that the date of a ship " sailing " 
 within the meaning of a marine policy is not the day she 
 moves from the wharf to an anchorage in the river with the 
 object of keeping the crew on board, but the day on which 
 she actually proceeds on her voyage.^ 
 
 The moment of the commencement of an at and from 
 risk under a homeward policy on ship from a foreign port 
 has been determined by the decision in Haughton v. Empire 
 Marine Insurajtce Company, 1866.^ The insurance ran "at 
 and from Havana to Greenock." The vessel arrived on 
 her outward voyage within the headlands of the port of 
 Havana, and was towed under the direction of a pilot by a 
 steam tug up the harbour to an anchorage. Before she had 
 cast anchor, she settled down on the anchor of another 
 
 1 I Dougl. 366. '■^ L.R. 5 P.C. 451. ' L.J. Ex. 26. 
 
 * Commercial Court, 5 Nov. 1897, 14 Times L.R. 20. 
 » C.A. (1898) 2 Q.B. 398. • L.R. I Ex. 206.
 
 II GEOGRAPHICAL TERMS 39 
 
 ship and sustained serious damage. Next day she was 
 towed off, taken to another part of the harbour, and dis- 
 charged. The underwriters on the homeward voyage con- 
 tended that their pohcy had not attached when the accident 
 occurred. The court held that it had attached, on the 
 ground that the vessel was plainly at the place ordinarily 
 known as Havana when the casualty befell her, and that 
 the risk under the homeward policy attached the moment 
 she entered within the limits of the port in a state of suffi- 
 cient seaworthiness. At the same time it was agreed that 
 the outward policies had not expired, but they and the 
 homeward policies were regarded as contracts entirely 
 separate and independent, without influence on one another, 
 without reference to one another. To prevent such an 
 overlapping of policies, underwriters usually employ a 
 clause making mention of the expiry of previous policies 
 as a precedent in some way essential to the attaching of 
 those meant to succeed. There are various forms of this 
 clause ; the one which best expresses the intention is, 
 " The risk not to attach before the expiry of previous 
 policies." 
 
 In Houghton v. Einpire Marine Insurance Company, 
 1866,^ the wide geographical range given 10 "Havana" 
 shows that a considerable freedom is allowed in the 
 interpretation of geographical terms. In documents of 
 marine insurance geographical tenns are taken to be 
 intended in their ordinary mercantile sense, that in which 
 business men trading in or with the places named use 
 their names. This mercantile sense must in case of 
 doubt be ascertained from mercantile evidence. As 
 the result of such evidence it has been held {Uhde v. 
 Walters^ about 1811''^) that the Gulf of Finland is in the 
 mercantile world considered to be part of the Baltic Sea, and 
 {^Robertson v. Clarke^ 1824^) that in commercial language 
 Mauritius is included among the Indian Islands. In a more 
 recent case {Royal Exchange v. ToU and of hers, 1892*) it 
 was decided by Mr. Justice Romer that goods loaded on 
 
 ' L. R. 1 Elx. 206. ' 3 Camp. 16. 
 
 • I Bing. 445. * a Times Law Reports 669.
 
 40 MARINE INSURANCE chap. 
 
 board a steamer at a port on the Pacific Coast of Central 
 America are not covered by a policy on goods " from the 
 Pacific " by steamers, which so far as was known by under- 
 writers at the place of insurance had not loaded at any 
 port outside the limits of South America before the voyage 
 on which the loss occurred. The judge was satisfied that 
 when the slip was signed neither party contemplated any 
 risk except on vessels sailing from South American west 
 coast ports. Similar difficulty may arise in the use of the 
 apparently unambiguous words Europe^ Continent {e.g. in 
 the phrase "U.K. Cont."), U?iited States (frequently in 
 the language of some trades restricted to the Atlantic 
 seaboard) ; in the inclusion of Aden under East Indian 
 ports, of Algiers under French Mediterranean ports. The 
 diflficulty in these is to reconcile mercantile custom and 
 geographical description. 
 
 As the geographical description of a port may be found, 
 when tested by commercial usage, to be inadequate or too 
 comprehensive, similarly the official description may fail. 
 The port of Runcorn is for custom-house purposes within 
 the limits of the port or custom-house district of Liverpool. 
 Consequently, as far as revenue is concerned, a ship loading 
 both at Runcorn and at Liverpool is loaded entirely in the 
 port of Liverpool. But as regards marine insurance it has 
 been decided {Broiun v. Tayieur, 1835 ;i Narrower \. 
 Hutchinson, 1869 ■-■') that a policy covering a vessel from "a 
 port of loading in the U.K." does not cover a ship partly 
 loaded at Liverpool and partly at Runcorn. Each of these 
 places is regarded as one port, separate and distinct from 
 the other. It is only in a matter of official arrangement 
 and convenience that they are regarded as one ; by com- 
 mercial usage they are not one place. 
 
 Aji insurance at and from a named port will not cover a 
 vessel or cargo during a period of undue and unreasonable 
 delay at that port. The transit between the termini is, for 
 the ship, regarded as the aim and object of its existence, 
 and the stay at one of the termini is only justifiable in so 
 far as it is necessary for the undertaking of the passage. 
 1 4 A. & E. 241- ' L.R. 4 QB. 523 & s Q.B. 584.
 
 II DELAY, DILIGENCE ON VOYAGE, ETC. 41 
 
 Consequently idle delay at the port of commencement 
 of the voyage will discharge the underwriter (Tindal, C. J., 
 in Mount v. Larkins, 1831).^ But if the delay is caused 
 by genuine preparations for the voyage, such as necessary 
 or desirable repairs, etc., the risk continues covered 
 {Motiettx v. London Assurance, 1 739).^ Similarly, for goods, 
 the object of loading them on the vessel being their con- 
 veyance to the other terminus of the voyage, the vessel 
 must not be regarded as nothing more than a mere floating 
 warehouse ; she is not that, but a vehicle or transport 
 whose essential function is to carry from one port to 
 another. In Hamilton v. Skedden, 1837,^ where a vessel 
 engaged in the palm oil trade, with permission to act as a 
 tender to other vessels in the same employ, was detained 
 over twelve months in the Benin River, the delay was 
 held to be unreasonable. Thus, whenever delay is un- 
 reasonable in length, or is due to causes not connected 
 with the completion of the voyage, it is held to alter the 
 voyage in a way not in the contemplation of the underwriter ; 
 just as much as if after starting on the voyage the vessel 
 turned aside, intending all the time to complete the voyage 
 after doing something else ; the delay and the turning aside 
 are both classed as deviations. 
 
 Similarly, in the course of the whole voyage due diligence 
 to complete the venture must be observed. Undue delay 
 on the voyage, and more particularly at port of call and 
 before discharge at port of discharge, will alter the character 
 of the voyage as respects both ship and cargo. 
 
 A closer definition of the beginning and end of the 
 venture as respects ship as well as goods occurs later in 
 the policy and will be discussed in its proper place. Mean- 
 while there is no doubt that the policy was originally in- 
 tended to cover only marine risks ; all additions and 
 adaptations intended to extend its operation to cover land 
 risks are essentially modem, and do some sort of violence 
 to the general sense of the document. But the reasonable 
 wants of business have had to be met. An inland manu- 
 facturer's goods practically pass from his control when 
 ' 8 Bing. 108. ' I Aik. 545. » 3 M. & W. 49.
 
 43 MARINE INSURANCE chap, ii 
 
 once they are loaded on the railway trucks at his siding ; 
 a merchant's, when they are passed over to the railway or 
 other carrier. On the Continent of Europe where railway, 
 canal, lake, and river tninsit form by far the most important 
 part of the carrying done, the wants of the merchant have 
 been met by the institution of companies for the insurance 
 of such risks as their goods are exposed to, or by the special 
 authorisation of marine insurance companies to extend their 
 operations to cover such risks. As a natural consequence 
 special forms of policy have been devised for such business. 
 In England, on the other hand, the smallness of the country 
 and the nearness of the great producing districts to the 
 seaports, reduce the inland risk to such comparative insig- 
 nificance that it has hardly ever been thought worth while 
 to define its extent and content with any exactness. Such 
 uncertainty has sometimes been found awkward.
 
 CHAPTER III 
 
 THE POLICY : PART I — cojiHnued 
 
 Common English Policy continued^ General Description oj 
 Subject Matter Insured^ Duration of Risk on Goods 
 and Skip, including Touch and Stay and Deviation 
 Clauses. 
 
 Upon any kind of goods and merchandises, and also upon the 
 body, tackle, apparel, ordnance, munition, artillery, boat and other 
 furniture, of and in the good ship or vessel called the . . . 
 
 TTie earliest form of marine policy seems to have been 
 devised for the insurance of goods only, but the extension 
 of protection to shipowners had become usual long before 
 the date when the text of the ordinary English policy was 
 fixed. That text was therefore so drawn as to be applicable 
 both to goods and ship. The way in which this has been 
 done is to make the standing printed text cover both, and 
 to designate in writing at the foot the particular object 
 intended to be covered by the policy. 
 
 (a) Goods and Merchandises. — If the written designa- 
 tion of cargo is not more explicit than these general words, 
 or if either of these words is merely repeated at the foot, 
 the underwriter is held to have willingly acquiesced in the 
 loose description, and to have taken his chance of the 
 nature of the cargo. There are only two points which he 
 can open in such a case ; he can demand satisfactory proof 
 that the assured has an actual property in the interest in- 
 sured, and he can insist that the goods or merchandises be 
 carried in the place properly belonging to them, namely
 
 44 MARINE INSUR-\NCB chap. 
 
 under deck. As regards the former point, Lord Mansfield 
 in Glover v. Black, 1763,^ decided that when a ship and 
 cargo were lost by fire, the plaintiff having lent the captain 
 cash, for which a respondentia bond' in common form was 
 given, could not recover the amount of the loan upon a 
 policy on goods. Lord Mansfield based his decision solely 
 on praciice ; his words were: "In practice bottomry and 
 respondentia have always been considered as a particulai 
 species of insurance, and have taken a particular denomina- 
 tion. . . . The ground of our determination is that by the 
 custom of merchants, respondentia is insured under a 
 special denomination. But we by no means say that under 
 an insurance on goods at large a man may not be permitted 
 to give in evidence a mortgage or other special lien." 
 
 On the second point, as long as maritime custom has 
 determined that the proper place to carry goods and mer- 
 chandises is under deck, it results that wares insured in 
 these general terms are taken to be so laden. Consequently, 
 even in cases where the custom of trade permits the carriage 
 of deck loads, articles insured merely as goods or mer- 
 chandise, or in such terms that their nature is not disclosed, 
 are taken to be laden under deck, unless special mention 
 is made to the contrary. The effect of such special mention 
 is that the underwriter is warned of the special perils of the 
 venture in question^ (see Gould w. Oliver, 1840;'* Lord 
 Addenda. Lyndhurst in Blackettv. Royal Exchange, 1832).^ 
 
 Further, the words " goods and merchandises " plainly 
 denote such material objects as are bought and sold in 
 trade and are conveyed from one port to another for the 
 
 ' 3 Burr. 1394. 
 
 '^ A bond pledging cargo for the repayment on arrival at destina- 
 tion of money borrowed at an intermediate port in emergency, the 
 money not being repayable in case of loss of the venture ; the rate ol 
 interest charged is always high. 
 
 * On the other hand the mere description of the wares insured has 
 been held to be sufficient notice to the underwriter that they are carried 
 on deck ; for instance, in an insurance on carboys of vitriol it was held 
 to be sufficient that they were carefully stowed on deck ; this tjeing the 
 usual place for this article there was no need to inform the underwriter 
 {Da Costa v. Edmonds, 1815). 
 
 * 4 Bing. N.C. 134 ; 2 M. & G. 208. » 2 C. & J. 250.
 
 Ill GOODS AND MERCH/SJSTDISES — SHIP 45 
 
 purposes of trade. They do not therefore include eflfects 
 of the master or spare outfit of the ship. These interests 
 should be defined by name ; so also should live stock and 
 their feed. 
 
 There seems to be now no reason to doubt that even 
 valuables such as gold and silver specie may be insured 
 under the general words " goods or merchandises." But 
 such valuable documents as Mbnds and titles appear to be 
 of an essentially different character ; there is in the material 
 of which they consist no intrinsic value corresponding to 
 that present in gold and silver. In Glover v. Black, 
 1763,^ Lord Mansfield had in \'iew, when he spoke of 
 mortgage or other special lien, some security of that 
 character aftecting objects exposed to marine perils in 
 the venture named. 
 
 Cargo on board a vessel is not covered by a policy on 
 the vessel, even though the cargo may be of the same 
 nature as part of the apparel or other furniture of the 
 ship. For instance, if a ship carries as part of its cargo 
 a shipment of ropes and cables belonging to the ship- 
 owner, and intended to be used eventually as rigging, a 
 loss of these could not be claimed on the ground that they 
 were part of the ship's tackle ; and this even though in case 
 of uncontrollable circumstances {vis major, force majeure, 
 hbhere Gewalf) they might have been used to supplement 
 or replace the ship's stores. 
 
 {b) The ship is described in terms more appropriate to 
 the fleets of last century than to the trading transports of 
 to-day. Nothing is to be made of a consideration of what 
 each separate word of the description was intended to 
 cover. Phillips (§ 463) interprets the purport of the 
 clause thus : — " It is well settled that a policy for a com- 
 mercial voyage on a vessel generally, without any further 
 specification, covers not only the body, but also the rigging, 
 sails, tackle, boat, armament, and provisions, and all the 
 appurtenances necessary, suitable, or usual, and that may 
 be presumed to belong to a vessel of such description, for 
 the purposes of navigation on a voyage such as that 
 
 > 3 Burr. 1394.
 
 <6 MARINE INSURANCE chap. 
 
 described." This exposition is more immediately applic- 
 able to sailing vessels than to steamers, and even in the 
 case of sailers, special exception must be made of fishing 
 vessels. But if for "rigging, sails," we read "engines, 
 boilers, shafting, fuel," the rest of the description will 
 answer all wants. It is to be understood that of the 
 "appurtenances necessary, suitable, or usual," only those 
 which are permanent are t» be considered part of the 
 ship, temporary fittings being classed with such articles as 
 sand ballast and dunnage wood and not regarded as being 
 part of the structure of the vessel. 
 
 In the case of fishing craft, the decision in Hoskins v. 
 Pickersgill, 1783,1 was that "by the usage of trade the 
 meaning of the word furniture did not include fishing 
 stores, in the construction applied to a policy of insurance." 
 
 On the wording of this clause in the policy the most 
 important decision is that in Blackeit v. Royal Exchange^ 
 1832.2 In this case Lord Lyndhurst refused to admit 
 evidence of a usage or custom that underwriters never 
 paid for boats slung on the quarter outside the ship. He 
 held that as the boat was included tiominatim in the 
 policy he ought not to admit evidence at direct variance 
 with the terms of the policy and in plain opposition to the 
 language it used. 
 
 The phrase "ship or vessel " is employed to get over 
 
 a somewhat technical difficulty. The English language 
 
 possesses no word equivalent to the French navire, 
 
 German Fahrzeug, Scandinavian Fartyg, meaning any 
 
 seagoing carrying craft : the English vessel has a wider 
 
 sense, being applicable to any moveable hollow structure 
 
 capable of containing solids, fluids, or gases. ^ The word 
 
 ship had therefore to be brought in ; but it is much too 
 
 definite, being the technical name of a square-rigged 
 
 three-master. If transport were not exclusively used in a 
 
 specially limited sense it would be suitable for this place ; 
 
 craft would be better still, if it were not generally used to 
 
 designate smaller boats. 
 
 1 3 DougL 222. " 2 c. & J. 250. 
 
 ■ Cf. Whitton Gas Float. No. a, 1895, 12 Times L.R. 109.
 
 Ill MASTER 47 
 
 The phrase " good ship or vessel " is common to charter- 
 parties, bills of lading, and policies of marine insurance. 
 The charter-party after thus describing the vessel proceeds 
 to speak of her being " tight, staunch, strong, and in every 
 way fitted for the voyage." Without reading every detail 
 of this into the word good as used in the policy, one may 
 still say that good is more than merely ornamental : it is 
 the mark of the underwriter's exemption from liability for 
 risks on notoriously unfit vessels, the index of what is 
 known technically as the warranty of seaworthiness. 
 
 WTiereof is master, under God, for this present voyage ... or 
 whosoever else shall go for master in the said ship, or by whatso- 
 ever other name or names the same ship, or the master thereof, is 
 or shall be named or called. 
 
 As there are many craft of one and the same name, 
 the policy provides for more minute definition by stating, 
 or giving the chance of stating, the master's name. This is 
 a rough expedient, probably the only one possible at a 
 time before the existence of official signals and registry 
 numbers. The two leading cases connected with the 
 misnaming of a ship are Le Mesurier v. Vaughan, 1805,^ 
 in which a broker instructed to insure goods on board 
 " 7/ie President" and to describe her as an American ship, 
 actually did insure goods on board "the American ship 
 President" the variation was held to be of no moment, 
 the identity of the ship being proved ; and Hall v. 
 Afolyneux, 1744,* in which the Leopard was insured in 
 error instead of the Leonard and the variation again was 
 held to be of no moment, the identity of the vessel being 
 proved by the master's name. 
 
 The provision for naming the master is common to 
 most European policies, but except the English policy 
 none states so fully the apparently contradictory clause 
 "or whosoever else shall go for master." Marshall, in 1823, 
 writes (p. 322) : "The name of the master also should be 
 specified, because his character and ability are material sub- 
 jects of consideration in estimating the risk." But if the 
 
 ' 6 East 38a. • Ibid. 385.
 
 48 MARINE INSURANCE chap. 
 
 fact of the master being one particular man — say one 
 specially acquainted with the trade or voyage in which 
 the vessel is engaged — influences an underwriter's estimate 
 of a risk, it is hardly reasonable to follow the clause 
 naming this master by one dispensing with him. It 
 seems more reasonable to view the clause as merely one 
 of further definition of the ship, be her nan)e and her 
 master's name what they may. As a matter of modem 
 practice, not one policy in ten thousand contains the 
 master's name, consequently special mention of a master 
 nowadays has a much greater significance than it had 
 say sixty years ago. It is therefore likely that the mention 
 of a particular master having charge of a vessel on a 
 named voyage would be binding on the assured in spite 
 of the second part of the clause, unless the substitution of 
 a new master after the completion of an insurance arises 
 from such unavoidable causes as incapacity of the original 
 master through sickness or his resignation after commence- 
 ment of the venture. As Marshall says the shipowner 
 must not change the master " wantonly or unnecessarily ; 
 much less ought he to name one when he means to employ 
 another" (p. 323). 
 
 Beginning the adventure upon the said goods and merchandises 
 from the loading thereof aboard the said ship, as above . . . upon 
 the said ship, etc., as above . . . and shall so continue and endure 
 during her abode there, upon the said ship, etc. ; and further, until 
 the said ship, with all her ordnance, tackle, apparel, etc., and goods 
 and merchandises whatsoever, shall be arrived at, as above . . . 
 upon the said ship, etc., until she hath moored at anchor in good 
 safety, and upon the goods and merchandises until the same be 
 there discharged and safely landed. 
 
 This section of the policy is by no means clear in its 
 construction ; it is unsatisfactory in its arrangement what- 
 ever way it be read. It contains a description of the 
 commencement of the risk mentioning first goods and 
 then ship ; it proceeds with an account of the continuation 
 of the risk at the point of its commencement without 
 making any separate mention of ship or goods ; it ends 
 with a definition of the close of the risk, dealing first with 
 ship and then with goods.
 
 Ill COMMENCEMENT OF ADVENTURE 49 
 
 The wording of the section given above is that of the 
 Act of 1795, ^nd is actually in daily use at Lloyd's and iu 
 companies' policies. But a very slight variation given by 
 Amould (p. 17) in what he gives as the common printed 
 form of policy on ship and goods, helps materially to clear 
 away the difficulty of the section. Where the form in the 
 Act of Parliament of 1795 gives "and so shall continue 
 and endure during her abode there, upon the said ship, 
 etc.," Amould reads "and so shall continue and endure 
 during her abode there on the said ship, etc." The 
 variation as given by Arnould points to the application 
 of the clause in question to goods on board a vessel, 
 while the 1795 form seems to indicate that the subject of 
 insurance intended is " the said ship, etc.," which is the 
 phrase regularly employed in that form to designate what 
 we now term the hull and materials of a vessel insured. If 
 Amould's version be adopted and the section be rearranged 
 by taking ship before goods in the description of the in- 
 ception of the risk, the whole becomes clear, working out 
 thus : — 
 
 I. Beginning the adventure — 
 
 (a) Upon the said ship, etc., as above (i.e. at and from 
 the terminus a quo). 
 
 {b) Upon the said goods and merchandises from 
 the loading thereof aboard the said ship as 
 above {i.e. at the tertninus a quo), and shall so 
 continue and endure during her abode there on 
 the said ship, etc. 
 
 II. And further, until the said ship with all her ordnance, 
 tackle, apparel, etc., and goods and merchandises whatsoever, 
 shall be arrived at, as above (the terminus ad qucm). 
 
 (a) Upon the said ship, etc., until she hath moored at 
 
 anchor in good safety. 
 ifi) And upon the said goods and merchandises 
 
 until the same be there discharged and safely 
 
 landed. 
 
 The sole objection to this arrangement is that it makes 
 
 B
 
 so MARINE INSUI^NCE chap 
 
 ihe "etc." after ship at the end of I.(/') superfluous. The 
 only alternative is to take the "continuing and enduring" 
 clause to apply both to ship and goods, and to do that a 
 sense must be given to "ship, etc.," in that position which 
 it certainly has not in any of the other places where it 
 occurs. 
 
 The discussion of the effect of this clause naturally falls 
 thus — 
 
 Commencement of the risk on ship. 
 
 „ „ on goods. 
 
 Continuation of the risk. 
 Close of the risk on ship 
 „ „ on goods. 
 
 I. Commencement of ihe Risk on Skip 
 
 In the discussion of at and from it was mentioned 
 that in the case of a policy on ship at and from any 
 port the risk attaches the moment the ship enters within the 
 limits of the named port in a state of sufficient seaworthiness 
 {Haughton v. Empire Marine Insurance Cotnpany, 1866).^ 
 In the case cited it was held that the homeward policies 
 attached although the outward policies had not expired. It 
 has consequently been found necessary that there shall not be 
 two sets of policies in force at the same time, and also that 
 the insured vessel shall not be left uncovered for any time 
 between the lapse of the earlier policies and the attachment 
 of the later. To ensure this, clauses have been added to the 
 policy either of positive or negative form : e.g. " risk to 
 commence on expiry of previous policies," or " risk not to 
 commence before expiry of previous policies." The former 
 clause makes any policy in which it is inserted depend 
 absolutely and entirely on the terms of other policies for 
 the determination of its commencement ; the latter provides 
 that the other policies shall run out their full existence 
 before the new policy attaches ; the former clause adopts 
 the terms of preceding policies by inclusion ; the lattei 
 does it by exclusion. 
 
 » L.R. I Ex. 206.
 
 Ill COMMENCEMENT OF RISK ON CARGO 51 
 
 2. Commencement of the Risk on Cargo 
 
 When the carrj-ing vessel is loaded alongside a quay, 
 pier or jetty, the words in the policy are sufficiently 
 definite, and it may be taken that as soon as the goods are 
 in the ship and free of the loading tackle, the risk on the Addenda 
 goods commences. But if vessels are loaded in the stream 
 or in the roads, there is a substantial risk between shore 
 and ship for covering which no provision exists in the text 
 of the policy. It does not matter whether loading in the 
 stream or roads is customary and usual at the port of 
 loading or is only occasional, resulting from some special 
 circumstances or necessities of the case, the printed text of 
 the policy does not cover the stretch between shore and 
 ship. For the proper protection of the cargo owner a 
 clause is put in the margin " including all risk of craft 
 while loading," which alters the point of commencement of 
 the risk from loading on board the ship to loading on board 
 the barge or craft destined to carry the goods from shore to 
 ship. But it is to be observed that this clause is inopera- 
 tive in the case of goods bought f.o.b. (free on board). 
 Any risk or accident occurring to such goods prior to 
 delivery on board the vessel is at the risk of the seller 
 and of his underwriters, the goods not being in any sense 
 the property of the buyer until actually on board the sea- 
 going ship, and consequently not making the intermediate 
 transit at the risk of the buyer or of his underwriters.^ In 
 the case of goods, which are the assured's property when 
 they leave the shore, being conveyed by a common lighter- 
 man (who is answerable for all losses not arising from the 
 act of God or of the Queen's enemies) to the ship, the 
 assured may take recourse either against his underwriter or 
 his lighterman. If he chooses the former then he is bound 
 to give him the benefit of his rights against the latter. 
 There is usually no hardship to the lighterman in this, as 
 he is accustomed as an ordinary matter of business to in- 
 
 ' In the case of pocids bought fret aloni^siJe, the property passfis 
 whrn the goods are laid alongside the ship at quay or brought along- 
 side the ship in craft where the loading is effected in stream or roads.
 
 52 MARINE INSURANCE chap. 
 
 sure his liability with underwriters. Such cases constantly 
 happen in connection with cargoes lightered in the Thames. 
 The policy form is not adapted to cover an interest in 
 goods commencing at a point other than the point of original 
 loading. P'or instance, in Spitta v. Woodtnan^ i8io,^ goods 
 insured on this form of policy from Gothenburg to port or 
 ports of discharge in the Baltic were held never to have 
 been covered, because the goods in question were not loaded 
 in Gothenburg, but in London. In Langhorn v. Hardy, 
 i8i2,2 the decision was the same, although it appeared that 
 the underwriter knew that the goods had been loaded at 
 Addenda. London, Lord Mansfield observing that " the Court could 
 not make the construction of a written instrument depend 
 upon the knowledge which the defendant might possess of 
 facts." In Gladstone v. Clay, 1813,8 the Court dealt with a 
 policy on a cargo for a homeward voyage " at and from 
 Pemambuco to Maranham, and at and from thence to 
 Liverpool, beginning the adventure on the said goods from 
 the loading thereof on board the said ship wheresoever^'' and 
 held that this wording protected goods loaded at Liverpool, 
 and still on board after the ship left Pemambuco, not having 
 found a market there. Trading voyages of the kind con- 
 templated in this decision are by no means usual in modem 
 business. In the African trade difficulties of a similar 
 kind arise, as the vessels engaged in it after discharging 
 their outward cargo load homeward cargo at each port as they 
 go along in their voyage. In Rickman v. Carstairs, 1833,* 
 the Court decided an action on a policy on ship and goods 
 for a homeward voyage from the coast of Africa to a port 
 in the United Kingdom, beginning the risk on the goods 
 " from the loading thereof on board the said ship twenty- 
 four hours after her arrival on the coast of Africa," Lord 
 Denman holding that without distinct words to the contrary 
 inserted in the policy it could not attach to outward cargo, 
 remaining on board the vessel twenty-four hours after her 
 arrival on the coast of Africa. In his judgment Lord 
 Uenman admitted that probably the assured had intended 
 
 ^ a Taunt. 416. '4 Taunt. 628. 
 
 « 1 M. & Sel. 418. * S n. & Ad. 651.
 
 Ill CONTINUATION OF RISK 53 
 
 both outward and homeward cargo to be insured by this 
 policy, but he added a most important remark : " Unfor- 
 tunately they have used words which will not, we think, 
 effectuate that intention. The question in this and other 
 cases of the construction of written instruments is not what 
 was the intention of the parties^ but what is the meaning oj 
 tJie words they have used f " To meet the requirements of 
 this dictum it has become usual to insert in African trading 
 policies a clause such as "outward cargo to be deemed 
 homeward interest twenty-four hours after the vessel's arrival 
 at her first port of discharge," or " the outward cargo to be 
 deemed homeward interest in this policy until bartered, 
 sold, or exchanged." 
 
 3. Continuation of the Risk 
 
 As has already been pointed out under " at and from," 
 the risk on ship and goods once commenced at the starting- 
 point of the voyage remains in force while the venture 
 remains there, but only so long as the intention of complet- 
 ing the intended voyage lasts, and the delay at the starting- 
 point arises from causes connected with the voyage and its 
 object. Consequently a ship and goods insured on voyage 
 policies at and from .A., to B. containing this clause respecting 
 the continuance and endurance of the risk at A., cease to be 
 covered at it by these policies as soon as the intention of 
 proceeding to B. is abandoned. They similarly cease to be 
 covered should the vessel perform an intermediate voyage, 
 or engage in any service not essentially connected with 
 the voyage for which she has been insured, or be delayed 
 by wilful and unnecessary waste of time. 
 
 4. Close of the Risk on Ship 
 
 There does not at first sight appear to be any reason 
 why the risk shall continue until the said ship with all her 
 ordnance, tackle, apparel, etc., and goods and merchandises 
 whatsoever, shall be arrived at destinntion. But the 
 idea underlying this formula is probably that the only
 
 54 MARINE INSURANCE chap. 
 
 arrival which involves an immediate and complete discharge 
 of the underwriters is one in which the whole venture arrives 
 at the intended destination without either diminution or de- 
 terioration ; and that consequently any arrival in less perfect 
 condition does not release the underwriter. The mention 
 of ship and goods, as if they were insured together, is merely 
 the accidental result of drawing one policy form to cover all 
 kinds of interest. The moment of arrival at a port being, 
 as has been seen m Haughto7i v. Empire Marine^ 1866,^ 
 possibly reached a long time and space before the vessel 
 reaches the place where she is intended to lie or discharge, 
 the policy defines the moment of the close of the risk on 
 ship by a reference to the moment of the vessel's " mooring 
 at anchor in good safety." The policy of 1795 extends 
 the ship underwriter's liability to twenty-four hours after 
 arrival of the vessel in good safety. But it was found in 
 practice awkward for shipowners to have outward policies 
 expire so soon as twenty-four hours after an arrival of which 
 they might have no advice. Consequently, when the Stamp 
 Act of 1884 permitted the extension of voyage policies for 
 thirty days after arrival without extra stamp duty, shipowners 
 began to ask for the inclusion of the thirty days in their 
 Addenda, voyage policies. Cases arose in which vessels insured for 
 thirty days after arrival began, before the expiry of the thirty 
 days, new voyages, for which they were separately insured. 
 It became difficult to determine the proper incidence of loss 
 and damage : underwriters finding themselves sometimes 
 held liable under the absolute thirty days clause for ventures 
 which they did not wittingly assume (cf. Gambles v. Ocean 
 Marine of Bombay^ 1876,2 on a policy with a fifteen days 
 clause, held to be a time policy added to a voyage policy). In 
 1885 Liverpool underwriters made a move for the adoption 
 of a uniform clause, which would prevent the overlapping 
 of policies and the consequent difficulties of adjustment. 
 The form of clause proposed by the writer was adopted : 
 " Moored at anchor in good safety at her above-named 
 place of destination, and while there until expiry of thirty 
 days after arrival, or until sailing on next voyage, which- 
 ^ L.R. T Ex. ao6 * i Ex. Div. 141,
 
 Ill CLOSE OF RISK ON SHIP 55 
 
 ever may first occur." Sometimes the words "however 
 employed" are added after "while there." In the case of 
 a vessel destined to only one port, Mr. Justice Mathew 
 decided that " it was idle to insert the words koweTer 
 employed, which seemed to imply other employment than 
 mere discharge."^ The only point that requires further 
 examination in this clause is the effect of the words " good 
 safety." They cannot mean " absolute security," for there 
 would be no object in extending a contract of indemnity 
 against perils to include a period of absolute security. 
 They do mean the safety necessary to a vessel for the 
 discharge of her inward cargo and the carrying out of 
 the ordinary business of a ship at the port of destination. 
 The arrival of a vessel in the Mersey in tow as a wreck, 
 and her mooring in the Sloyne, did not constitute an 
 arrival in good safety {Shaw v. Fel/on, l8oi)."^ The 
 leading modem case on the words is that of the Charlemagne 
 {Lidgett V. Secretan, i87o).3 In this case the vessel insured 
 from London to Calcutta and thirty days with the clause 
 " until she hath moored twenty-four hours in good safety," 
 struck a bank at the mouth of the Hooghly, and was only 
 kept afloat by constant pumping. She arrived thus at 
 Calcutta on 28th October, and was moored. After discharge 
 of her cargo she was on 12th November moved to dr)' dock, 
 v/here on 5th December she was destroyed by fire. The 
 destrjction by fire occurred on the thirty-eighth day after 
 mooring at Calcutta. The Court held that the policy had 
 terminated before the loss, the vessel having been kept 
 afloat for over twenty -four hours after arrival, and was 
 moored at the usual place for discharge of cargo, remaining 
 all the while in the possession and control of her owners : 
 and she had remained a ship, and in her owner's possession 
 for over thirty days thereafter. 
 
 It is to be observed that in the case of the Charlemagne 
 the policy ran for twenty-four hours and thirty days after 
 arrival. The Stamp Act of 1884 cited above docs not 
 
 • The Talavera, 1897 [Crocker \. General Ins. Co. Ld.), 13 Time* 
 L. R. 96 ; confirmed by Court of Appeal, 14 Times L. K. 113. 
 » 2 East 109. * L.R. s C.P. 190 ; 6 C.P. 616.
 
 56 MARINE INSURANCE chak 
 
 provide for covering more than thirty days without payment 
 of extra stamp duty, so that in most modern policies there 
 is no twenty-four hours clause. 
 
 5. Close of the Risk on Goods 
 
 By the terms of the policy goods and merchandises are 
 covered until the same be " discharged and safely landed " 
 at the terfnifius ad quetn. When discharge is effected at a 
 quay, wharf, pier, or jetty, alongside which the carrying 
 vessel lies, the risk thus defined does not extend beyond 
 the time when the goods are free of the unloading tackles 
 and rest on the ground or in the place or vehicle in which 
 they are meant to be put immediately on discharge. H 
 goods are not discharged from the ship on to a quay, pier, 
 etc., but into a barge or lighter, then the moment of dis- 
 charge from the ship is not simultaneous with that of safe 
 landing, as safe landing implies delivery at the customary 
 place for bringing goods ashore (Phillips, § 971, quoting 
 the American case Grade v. Marine Insurance Company'). 
 The question of liability for the lighterage risk came before 
 the courts in Hurry v. Royal Exchange, 1801,^ on a policy 
 on hemp from St. Petersburg to London, which was landed, 
 according to the constant practice of merchants in the 
 Russian trade, in public lighters. It was decided that if it 
 is the custom of the trade to land goods by lighters or 
 launches, the goods are during such supplemental transport 
 covered by a policy of insurance containing the words 
 " until safely landed." But there are limits to this general 
 proposition. If, for example, cargo be discharged from a 
 vessel into craft, that cargo is not covered under the policy 
 during delays not necessarily connected with the voyage 
 which is insured, such as would be, for instance, incurred 
 by awaiting transhipment to a vessel bound on an outward 
 voyage {Moulder v. Merchants Marine, i886).2 In the case 
 oi Hurry \. Royal Exchange, iSoi,^ the lighters employed 
 were common public lighters. Similarly in the earlier case, 
 
 > 2 B. & P. 430. « 17 Q.B.D. 354.
 
 Ill CLOSE OF RISK ON GOODS 57 
 
 Ruckcrv. London Assurance^ 1784.^ In both cases goods 
 were insured to London till discharged and safely landed ; 
 in both the goods were discharged into public lighters, and 
 were damaged between ship and shore ; in both cases the 
 loss was held to be recoverable under the policies. In his 
 decision of the latter case, Mr. Justice Buller said : " If a 
 merchant will not send public lighters, it shall be a delivery 
 to him when the goods are put on board his own lighter." 
 This is a statement of the decision of judge and jury in 
 Sparrow \.Carruthers, 1745,^ Lord Chief Justice Lee holding 
 the underwriter discharged. In modern commerce these 
 decisions are of value at such ports as Malta, Port Said, 
 Busreh, and perhaps at some ports in Asia Minor and 
 Syria. The ground of the decision is that the consignee 
 goes out of his way to anticipate the customary course of 
 trade at his port by his own act, voluntarily assuming charge 
 of his property earlier than he need do. Any damage or 
 loss between ship and shore is thus done to goods under 
 the consignee's control ; and it is a principle of law that no 
 one shall profit by his own misdeed or misfortune.^ 
 
 Again, if the assured's property in goods ceases before 
 their safe landing (if, for instance, they are sold on such 
 terms that they become the buyer's property as soon as the 
 ship carrying them reaches her destination), then unless the 
 terms of sale include the transfer of the insurance, the 
 assured cannot transfer to a third party any insurance 
 between ship and shore which he may have effected ; he 
 cannot, for the advantage of a third party, claim from his 
 underwriter indemnity for any loss or damage occurring 
 after the expiry of his interest in the goods. 
 
 To meet cases in which goods are for convenience dis- 
 charged into lighter or other craft, although such discharge 
 is not the ordinary custom of the port, an expansion of the 
 craft clause already given in section 2 (p. 51) has been 
 devised. In some cargo policy forms there is now found 
 the clause, " Including all risk of craft to and from the 
 vessel." And in Paul v. Insurance Co. 0/ North America^ 
 
 ' a }'. & P. 432, notes. ' 2 Sir. 1236. 
 
 » The Elton,: y.B.D. 9 Aug. iSgg.
 
 58 MARINE INSURANCE chap. 
 
 this clause has been held by Mr. Justice Mathew to 
 cover risk of craft in a lighter of the owner of the goods. 
 
 It is worth notint,' that in many cases {e.g. West Coast of 
 South America) freight on goods is due as soon as the 
 goods are delivered to the Hghter into which they are dis- 
 charged. As will be seen in the discussion of particular 
 average, this fact has an important bearing on the indemnity 
 payable in case of goods damaged in lighter between ship 
 and shore. 
 
 And it shall be lawful for the said ship, etc., in this voyage to 
 proceed and sail to and touch and stay at any port or places whatso- 
 ever . . . without prejudice to this insurance. 
 
 This paragraph of the policy is based on the provision 
 of the Florentine policy of 1523, which permits "the ship 
 to touch at any other place, and to navigate forwards or 
 backwards, to the right or the left at the captain's 
 pleasure, and to do all his requirements." Where this kind 
 of Hberty is given in the earliest English policies it is usually 
 limited, e.g. " to touch and stay at any ports and places on 
 this side Zante, as well on the Barbary as the Christian 
 shore " ; from which it may be concluded that the vessel 
 was not expected to touch and stay anywhere in her voyage 
 from London before reaching the Mediterranean. But the 
 modern English form introduces the words " in this voyage," 
 which control the whole of the rest of the clause ; the word 
 " voyage " being used here not as equivalent to the passage 
 of the ship, whatever that may happen to be, but in its 
 close technical sense of the course of navigation prescribed 
 by custom between the termini named. This view was 
 most unmistakably expressed by Lord Mansfield in Lavabre 
 V. Wilson, 1779;^ Park (p. 86) and Marshall (p. 187) agree 
 in their statement of his clearly intimated opinion "that 
 these general words were, by the expressions outward and 
 homeward bound voyages, and in this voyage, qualified and 
 restrained so as to mean only places in the usual course oj 
 the voyage to and from the places mentioned in the policy." 
 This view has been maintained strictly by succeeding judges. 
 
 ' I DougU 384.
 
 Ill TOUCH AND STAY 59 
 
 In Hogg V. Hortier, 1797,^ a ship was insured at and from 
 Lisbon to a port in England, with Hberty to call at any one 
 port in Portugal for any purpose whatsoever. The ship 
 sailed from Lisbon to Faro to complete her loading, Faro 
 being a port in Portugal, to the southward of Lisbon, and 
 therefore quite out of the course of the voyage to England. 
 Lord Kenyon held that the liberty given by the policy to 
 call at any one port of Portugal must be restrained to a 
 permission to call at some port to the north of Lisbon, in 
 the course of the voyage to England, and that going to the 
 southward was a deviation. 2 Similarly in Labinovitch v. 
 Pacific Fire and Marine^ 1887,2 Mr. Justice Smith held 
 that a policy covering iron on the voyage Antwerp to 
 Odessa, did not cover iron from Antwerp to Constantinople, 
 and thence vid Batoum and Nicolaieff to Odessa. This case 
 is somewhat complicated by the words in the policy "all 
 liberties as per bills of lading," which it was decided must 
 be taken as referring to the bills of lading for the particular 
 goods insured by the policy.* 
 
 Further, the liberty to touch and stay is limited by its 
 close application to the main object of the voyage ; it cannot 
 be availed of except for matters essentially connected with 
 the voyage ; in other words, the option cannot be exercised 
 outside the limits of the venture described in the policy. 
 The master is free to turn off this prescribed course of his 
 voyage in case of extraordmary emergency, or to avoid 
 threatened disaster or capture or other peril insured against, 
 all without prejudice to the insurance. To use the language 
 
 * Park 444, 475 ; Marshall 184. 
 
 * It would be difficult to know how to apply Lord Kenyon's test in 
 the following case of a steamer's actual voyage : "At and from Kotka 
 (Finland) »'"i/or Snarven (Xiania) to Bushire ""''/or Bussorah ; with leave 
 to call at Barrow-in-P'urness, '"''/o, Manchester »°''/or any other ports 
 or places en route (including Jeddah) for any purpose whatsoever." 
 
 ' Queen's Bench, 28 Feb. 1887. 
 
 * See Laings. Union Marine, Q. B.D. 1895, 11 Times L.R. 359, 
 in which a policy " from Haiphong to any ports or places in any order 
 in Japan, with leave to call at any ports or places in or out of the. 
 customary route in any order and for all purposes," was held NOT to 
 cover a vessel from Haiphong to Hongay, and Ibcnce with coal to 
 Hongkong, and thence to Japan.
 
 6o MARINE INSURANCE chap. 
 
 of Lord Mansfield in Pelly v. Royal Exchange, 1787 t^ " Is 
 this like a deviation ? No : 'tis ex justa causa which always 
 excuses." In the same judgment the following exposition 
 of the liberty to touch and stay, granted by the custom of 
 certain trades, occurs : " The insurer . . . must have under 
 his consideration the nature of the voyage to be performed, 
 and the usual course and manner of doing it. Everything 
 done in the usual course must have been foreseen, and in 
 contemplation at the time he engaged, he took the risk upon 
 a supposition that what was usual or necessary should be 
 done. In general, what is usually done by such a ship, 
 with such a cargo, in such a voyage, is understood to be 
 referred to by every policy, and to make a part of it, as 
 much as if it were expressed. The usage being foreseen, 
 is rather allowed to be done, than what is left to the master's 
 discretion, upon unforeseen events, yet if the master ex justa 
 causa go out of the way, the insurance continues." No 
 doubt the saving of life would be held to justify touching 
 and staying out of the customary course, and certainly 
 putting in in consequence of, or for the repair of, damage 
 arising from peril insured against. On the other hand, a 
 ship insured from London to Berbice was held to have 
 deviated when she put in to Madeira to unload goods and 
 take in wine ( Williams v. Shee, 1 8 1 3, before Lord Ellen- 
 borough).2 Also a vessel insured from Park to New York, 
 with leave not only to call but to discharge, exchange, and 
 embark cargo at all or any of the Windward or Leeward 
 Islands, was held to deviate when after sailing from Park on 
 her passage to New York she put in to St. Thomas and St. 
 Bartholomew's in order to obtain information for the owner 
 of the state of the markets there, in order to enable him to 
 decide about another proposed venture in another vessel of 
 his and that one sailing /row New York {Hammond v. Reed, 
 r82o).3 In neither of these cases was the touching and 
 staying accomplished for an object connected with the 
 venture on which the insurance was effected. 
 
 Still less is the assured covered by this clause if, instead 
 of going on the voyage named in the policy, the vessel 
 1 I Burr. 341. * 3 Camp. 460. » 4 B. & Aid. 72.
 
 Ill DEVIATION OR CHANGE OF VOYAGE 6i 
 
 undertakes an absolutely different voyage. For instance, 
 goods insured from Liverpool to Melbourne loaded on board 
 a vessel sailing from Liverpool to Sydney are never at any 
 moment of the passage covered ; and a loss even on this 
 side of the Cape at a point within that part of the passage 
 common to both voyages cannot be recovered under the 
 policy. In the eye of the law the voyages are absolutely 
 and entirely different. 
 
 To prevent hardship to cargo-owners who may have their 
 policies invalidated through deviation or change of voyage 
 over which they have no control, there has been added to 
 the policy on goods a clause to the following effect: — 
 
 In the event of the vessel making any deviation or change of 
 voyage, it is mutually agreed that such deviation or change shall be 
 held covered at a premium to be arranged, provided due notice be 
 given by the assured on receipt of advice of such deviation or change 
 of voyage. 
 
 The clause has in some cases been added to ship policies 
 also, with less necessity, but not unfairly perhaps as regards 
 insurances from a foreign port. Even on outward voyages 
 the shipowner may have some claim for protection against 
 his policies being rendered valueless by a whim of the captain 
 or by a piece of ignorance on his part which does not take 
 effect until after he has passed from the immediate control 
 of the owner. But here again the whole contract is con- 
 trolled by the primary condition of perfect good faith 
 between assured and underwriter. 
 
 The effect of the " change of voyage " clause on floating 
 policies on cargo has lately been determined in the case of 
 Simon Israel and Company v. Sedgwick and otliers (before 
 Mr. Justice Wright in Q.B.D., 23rd July 1892 ; confirmed in 
 Court of Appeal by Lords Justices Lindley, Bowen, and A. L. 
 Smith, on 9th November 1 892).^ The action was brought on 
 a policy of insurance on merchandise, " as interest may 
 appear or be hereinafter declared : at and from the Mersey 
 or London to any port in Portugal or Spain this side of 
 Gibraltar, and thence by any inland conveyances to any 
 
 * 8 Times I-aw Reports 726.
 
 62 MARINE INSURANCE chap. 
 
 place in the interior of Spain or Portugal, including all 
 risks whatever from the time of leaving the warehouse in 
 the United Kingdom, and all risks of every kind until 
 safely delivered at the warehouses of the consignee, with 
 liberty to touch and stay at any ports or places whatsoever 
 for any purpose necessary or otherwise." There was a 
 marginal note in these tenns. " Deviation '""^j^ change of 
 voyage ""^l„, transhipment not included in the policy to 
 be held covered at a premium to be arranged." The goods 
 in question were on or before 2nd March 1892 despatched 
 from Leeds to Madrid. On former occasions goods of the 
 same shipper for Madrid were shipped at Liverpool foi 
 Seville and carried thence by land to Madrid, On 3rd 
 March the shipper declared these goods on his policy : 
 on 7th March he learnt that the goods would go by the 
 Lope de Vega, : on i oth March he caused that vessel's 
 name to be inserted in the declaration, and intending the 
 same course to be observed with those goods as with 
 former shipments to Madrid, he instructed the insurance 
 broker that the voyage was to Seville. The vessel 
 had left Liverpool on 6th March and was lost on that 
 part of the voyage, common to vessels bound for the 
 Atlantic ports of Spain and those for the Mediterranean 
 ports. It was then discovered that the Lope de Vega, was 
 not going to Seville at all, but only to Carril and Huelva on 
 the west coast of Spain, and to Carthagena and other ports 
 on the east coast ; and that the bill of lading for these 
 goods had been made out for Carthagena. The shipper 
 informed the underwriter of his mistake, tendered the 
 customary extra premium for Carthagena, which was re- 
 fused, solely on the ground that the voyage to Carthagena 
 was not covered by the policy. Without the deviation or 
 change of voyage clause there could have been no question 
 on this point ; but the assured, relying on that clause in 
 their policy, contended that when the goods left the ware- 
 house, being intended by the shippers to proceed by a 
 route covered by the policy, the declaration was rightly 
 made and the policy attached ; and further, that the 
 assured were entitled to change the voyage in terms of
 
 [II 
 
 CHANGE OF VOYAGE 63 
 
 the clause, and on paying a proper extra premium for 
 Carthagena, the amount of which was not in dispute. The 
 underwriters contended that the words " change of voyage " 
 in the clause apply only to a change after the policy has 
 once attached by the commencement of a voyage of such 
 a kind that, if not changed, it would have been within 
 the policy, that a shipment of goods and an initial declara- 
 tion of insurance on any other voyage is outside the policy, 
 and that therefore the "change of voyage" never takes 
 effect at all in such a case. Mr. Justice Wright's decision 
 in favour of the underwriters was confirmed by the Court of 
 Appeal. The law therefore now stands (in absence of 
 reverse of the Court of Appeal's judgment by the House of 
 Lords, to which as far as is known this case is not in- 
 tended to proceed) that the deviation or change of voyage 
 clause in a floating policy on merchandise is restricted to 
 apply only when the policy has attached by the commence- 
 ment of a voyage which, if not changed, would be within the 
 policy. 
 
 There does not appear to be anything in the decision 
 limiting the application of the principle to open policies 
 only ; it seems to bear the wider general application that 
 the words " a changed voyage " are not equivalent to the 
 words a " different voyage " ; the former did at one period 
 attach to the policy, while the latter did not at any period 
 attach.
 
 CHAPTER IV 
 
 THE POLICY : PART 1 — continued 
 
 Common English Policy contittued. Valuation 
 
 The said ship, etc., goods and merchandises, etc., for as much 
 as concerns the assured, by agreement between the assured and the 
 assurers in this policy, a.re and shall be valued at ;i^ . . . . 
 
 English law does not impose any obligation on assured 
 or underwriter to fill up the blank at the end of this clause 
 with any sum. Policies consequently fall into two classes 
 — (i) opc7i^ in which no value is given ; and (2) valued^ in 
 which a value is given. 
 
 The earliest Italian and English policies make no state- 
 ment of the value of the goods or vessel insured ; at the 
 most they provide that a certain proportion, usually 10 per 
 cent of the value, shall remain uninsured, stated to be " at 
 the assured's adventure." This provision was embodied 
 in the Guidon de la Mer, and it was stipulated in the 
 Ordinance of Louis XIV. (Tit. vi. Art. 18) that the 
 assured should always bear the risk of the tenth of the 
 goods which they shipped, unless there was an express 
 declaration on the policy that they meant the whole value 
 to be insured. The French Code de Commerce of 1807 
 did not reproduce this restriction, which had fallen into 
 disuse, express declaration of complete insurance having 
 become usual. 
 
 In consideration of the subject of valuations it soon 
 becomes apparent that some regard must be had to the 
 intention of the contract of insurance. TBe aim of the
 
 CHAP. IV VALUATION 65 
 
 contract being to secure indemnity to the assured, indemnity 
 should be the Hmitation of the obHgations of the under- 
 writer. As Lord Mansfield put it in Godin v. Londott 
 Assurance, 1758: "Before the introduction of wagering 
 policies it was upon principles of convenience, ver>' wisely 
 established, that a man should not recover more than he 
 had lost. Insurance was considered as an indemnity only 
 in case of a loss, and therefore the insurance ought not to 
 exceed the loss. This rule was calculated to prevent fraud, 
 lest the temptation of gain should occasion unfair and 
 wilful losses." But the application of this principle is not 
 easy. What constitutes indemnity in case of loss to a 
 merchant engaged in oversea trade ? He conducts certain 
 commercial operations, acting on his knowledge of foreign 
 markets and his skill in estimating the course of trade. If 
 he ships goods and loses them by marine perils, whether is 
 he indemnified by recovery from his marine underwriters of 
 the sum lie paid for these goods plus all the shipping ex- 
 penses or of the sum which, but for the perils of the sea, 
 he would have obtained for them at destination ? It is 
 evident that all the impetus would be removed from trade 
 if the merchant had at the commencement of a venture no 
 expectation of obtaining more at the end than he expended 
 at the beginning. Therefore there is considerable reason 
 for asserting that any repayment for lost goods which leaves 
 the assured in a worse plight than he would be if the 
 venture had been completed is an imperfect indemnity. 
 The first person who drew public attention to the ambiguity 
 of the word "indemnity" was Wilhelm Benecke of Hamburg, 
 who published between 1805 and 1 82 1 his great System 
 of Marine Insurance and Bottomry.^ Removing to Lon- 
 don about 18 1 4 or 181 5, he published in 1824 his Treatise 
 on the Principles of Indemnity in Marine Insurance, 
 Bottomry, and Respondentia. Benecke concluded that 
 to secure perfect indemnity the merchant must word his 
 valuation thus : " Valued at so much as the gross proceeds 
 of the goods specified will be at the port of discharge," 
 
 ' and edition, ptlited and rearranged by Vincent Nolle, a vols. 
 Hamburg, 1851 and 185a. 
 
 I'
 
 66 MARINE INSURANCE chap. 
 
 stipulating specially whether the duty-paid price or the price 
 in bond is intended. As a merchant would hardly ever 
 be able to deteniiine exactly what price his goods would 
 fetch at destination, he would need for his own protection 
 to insure an amount in excess of his expectation, and to 
 reduce this at the close of the venture by declaring a short 
 interest and getting a return of premium. Then, from the 
 nature of this method of valuation, it is plain that it will not 
 act fairly between assured and underwriter, unless the goods 
 insured are such that the market to which they are shipped 
 is neither raised by their loss nor depressed by their arrival ; 
 in other words, it is hardly applicable except " in the con- 
 veyance of current merchandise to and from important 
 commercial places " (Benecke, p. 1 2). A middle course 
 between the somewhat elaborate and inconvenient system 
 proposed by Benecke, and the stricter ancient system of 
 permitting the merchant to insure nothing beyond the cost 
 of his shipment, is often adopted, namely, the valuing of 
 the goods at invoice cost and an agreed percentage, which 
 may be taken to represent out-of-pocket expenses and 
 anticipated profit. The adoption of such a system simpli- 
 fies the matter immensely, but it involves the abandonment 
 of the idea of indemnity in either sense, and if the assured 
 covers the whole sum of his valuation he is left either 
 under-insured or over-insured as the market at destination 
 goes up or down. It has, however, become the ahnost 
 universal practice in England to use valued policies for 
 goods and ships, while of freight policies a considerable 
 proportion is open. 
 
 I. Open policies. Between 1760 and 1825 various 
 cases went to the courts ; we are consequently in possession 
 of a series of decisions by Lord Mansfield and his suc- 
 cessors on the valuations attached by English law to 
 different interests. As might be expected, from the date 0/ 
 the earliest of this series of decisions, they are based on 
 practices founded on the theory and jurisprudence of the 
 French system of maritime and commercial law. As 
 French legislators before that period based their work on 
 such maxims of Roman law as Nemo debet aliena jactura
 
 IV VALUATION IN OPEN POLICIES 67 
 
 locupleiari (no one ought to be profited by another's loss), 
 it is only to be expected that these decisions will leave the 
 merchant indemnified only to the extent of this actual cost 
 and shipping expenses of his goods. The decisions are 
 that in an open policy the valuations attached to different 
 interests are : 
 
 (a) Goods or merchandise : the prime cost (say invoice 
 
 cost) plus shipping expenses and cost of insurance 
 
 {Lewis \. Rucker, 1761).^ 
 ip) Ship: the value at the commencement of the voyage, 
 
 including the outfit, stores and provisions for crew, 
 
 advances made against crew's wages and cost of 
 
 insurance (Marshall, p. 633 -.^ Stevens on Average, 
 
 5 th ed. p. 190). 
 (r) Freight : the gross freight due to the ship on her 
 
 arrival abroad plus cost of insurance {Palmer v. 
 
 Blackburn^ 1822).^ 
 {d) Other objects of insurance : the value to the assured 
 
 at the commencement of the voyage plus cost of 
 
 insurance. 
 
 On examination of these four classes of interests, it is 
 evident that owners of cargo {a) and parties interested in 
 whatever may fall under class {d) get under these decisions 
 the very barest provision that can be termed indemnity. 
 On the other hand, by the provisions of {b) and {c), a ship- 
 owner using open policies would be permitted by law to be 
 in a better position through losing his ship at sea than by 
 having her complete her voyage in safety, the difference 
 being the cost of the outfit, stores, provisions, advances, 
 in fact nearly all the expenses of earning the freight, and, 
 in addition, the cost of insurance of ship and freight. The 
 state of the law is thus an inducement both to assured on 
 
 ' 3 Burr. 1167. 
 
 ' "A ship is valued at the sum she is worth at tlie time slie sails on 
 the voyape insured, including the expenses of repairs, the value of tho 
 furniture, provisions and stores, the money advanced to the sailors, 
 and, in general, every exp<;nse of the outfit, to which is added the 
 preniiiim of msurance," 
 
 ' I Bin;;. 61.
 
 68 MARINE INSURANCE chap. 
 
 goods and to underwriters on ship and freight not to use 
 open policies, and indeed they are now but rarely used. 
 
 2. Valued policies. The advantages and limitations of 
 the system of valued policies were well set forth by Mr. 
 Justice Willes in Lidgett v. Secrcian, 187 1 :' " Nobody has 
 been able to improve on the practice as to valued policies, 
 which hjas been recognised and adopted by shipowners and 
 underwriters, and has, at least among honest men, the 
 advantage of giving the assured the full value of the thing 
 insured and of enabling the underwriter to obtain a larger 
 amount of profit." 
 
 The most authoritative document on the English law of 
 valuations is the memorandum on Over-Insurance, Valued 
 Policy, and Constructive Total Loss, written by Mr. Justice 
 Willes in 1867, and printed as Appendix Ivii. in vc.lume 2 
 of Report of the Unseaworthy Ships Commission of 1874. 
 In § 2 of this memorandum we find : 
 
 In the absence of proof that the value fixed by the contract is 
 so exaggerated as to be a mere cloak for gambling, in representing 
 more than any possible interest which the assured could have in the 
 ship and outfit, or that the exaggeration was fraudulent with a view 
 to cheat the underwriter, the latter is bound in case of total loss to 
 pay the agreed sum. It is only when the over-valuation is so ex- 
 aggerated as to show to the satisfaction of a jury that it must have 
 been designed in order to obtain more than a just and complete 
 indemnity that the insurance is void. 
 
 That Lord Mansfield would have acted on this principle 
 IS clear from his words in Lewis v. Rucker : ^ "If it should 
 come out in proof that a man had insured ^2000 and had 
 mterest on board to the value of a cable only, there never 
 has been, and I believe there never will be, a determination 
 that by such an evasion the Act of Parliament may be 
 defeated." (The Act referred to is 19 Geo. II. c. 37, pro- 
 hibiting wager policies.) "There are many conveniences 
 from allowing valued policies, but where they are used 
 merely as a cover to a wager they would be considered as 
 an evasion." 
 
 It must be confessed to be impossible to define a priori 
 
 » L.R. 6 C.P. 616. ' a Burr. 1167.
 
 IV 
 
 VALUED POLICIES 69 
 
 the exact point at which excessive valuation becomes 
 fraudulent. Indeed it is questionable whether it is ever 
 from figiires alone that one arrives at conclusions respecting 
 fraud ; ^ but figures read in the light of the facts preceding, 
 accompanying and succeeding the insurance, may help to 
 establish conclusively a charge of fraud. In the case of 
 Haigh V. De La Cour, 1812,2 ,{ ^as found that goods on 
 board the Afaria were insured for ^5000, invoices for that 
 amount being shown to the underwriters. Claim was made 
 against the undenvriters. It was discovered that the goods 
 were worth only ^1400, and it was contended that up to 
 that amount at least the underwriters were liable. But the 
 invoices proved to be fictitious, and the bills of lading 
 interpolated, and when something like barratrous handling 
 of the ship was proved, the insured value became evidently 
 fraudulent. Chief Justice Sir J. Mansfield said, " If the 
 plaintiffs intended from the beginning to cheat the under 
 writers, the assignees can recover nothing. The fraud 
 entirely vitiates the contract." Cases have occurred in the 
 history of commerce in which the insurance of four times 
 the amount of invoice would be quite justifiable ; for in- 
 stance, that of shipments of silver to Japan, made for the 
 purpose of obtaining in exchange gold at the Japanese ratio 
 of 4 to I, when the prevailing ratio in the rest of the world 
 was about 15^ to i (H. Cemuschi, Motietary Diplomacy 
 in 1878, p. 16). Similarly, in such insurances as those 
 of contraband cargoes, or cargoes destined to run a 
 blockade, one can imagine a very high valuation put on 
 goods whose value would be enormously enhanced by their 
 mere arrival at their intended destination. 
 
 The case oi Irving v. Afanning {House of Lords, 1847 3) 
 referred to the policy value of the General Kidil^ £^7,'ioo. 
 The vessel was so damaged that after an expenditure of 
 ^10,500 in repairs she would be worth only ^^9000. This 
 was held to constitute a total loss, and to justify a claim foi 
 
 ' Mr. Justice Willes in lAdgett v. Secretan, 1870 (L. R. 6C. I'. ), 
 S()ealcs of a value " so outrageously large as to make it plain that the 
 assured intended a fraud on iheir underwriters." 
 
 ' 3 Camp. 319. ' I H. of L. Cas. 287.
 
 70 MARINE INSURANCE chap 
 
 the full valuation insured, ;^ 17, 500. In the course of the 
 case it was brought out that the words of the policy merely 
 stating the value do not amount to an agreement '* that for 
 all purposes connected with the voyage, at least for the 
 purpose of ascertaining whether the ship is a total loss or 
 not, the ship should be taken to be of that value " ; ^ but 
 they " mean only that, for the purpose of ascertaining the 
 amount of compensation to be paid to the assured when the 
 loss has happened, the value shall be taken to be the sum 
 fixed, in order to avoid disputes as to the quantum of the 
 assure'd's interest." Dealing with the point raised that by 
 this means the assured would under a contract of mere 
 indemnity obtain more than a compensation for his loss, the 
 judges replied that it was so, that " a policy of insurance 
 is not a perfect contract of indemnity. It must be taken 
 with this qualification, that the parties may agree before- 
 hand in estimating the value of the subject assured by way 
 of liquidated damages." 
 
 In Barker v. Janson, 1868,2 another important judg- 
 ment was given. The ship Sir William Eyre was much 
 damaged on her outward voyage from Glasgow to New 
 Zealand, and was sent for repairs to Calcutta. She was 
 insured for ^8000 at and from Calcutta for three months, 
 commencing thirty days after her arrival there. On reach- 
 ing Calcutta she was dry-docked, and found to be not worth 
 repair, the underwriters on the outward policy paying 
 £,7000. While the vessel was still in dry dock, and before 
 expiry of the three months, for which the second policies 
 covered her, she was totally destroyed by a cyclone. Claim 
 was made for the full amount insured, ;^8ooo ; against 
 this it was contended that the policy value being enormously 
 above the true worth of the vessel should be reopened. 
 Chief Justice Bovill held that the transaction was made in 
 good faith ; he said " an exorbitant valuation may be 
 evidence of fraud, but when the transaction is bond fide the 
 
 ^ "So that when a question arises whether it would be worth while 
 to repair, it must be assumed that the vessel would be worth that sure 
 when repaired." 
 
 " L.R. 3 OP 300.
 
 MISTAKE AS AFFECTING VALUATION 71 
 
 valuation agreed upon is binding." Mr. Justice Willes 
 remarked in his judgment, " Here tliere was no wager, the 
 insurance having been bond fide ; and it having been settled 
 by Irving v. Mantling that valued policies are valid if there 
 be no fraud or wagering, I think it would be wrong to 
 make any doubt in this case." Earlier he remarked, " It 
 is said that there was a mistake as to the state of the ship ; 
 but a mistake, to entitle the parties to reopen a contract of 
 valuation, must be such as would entitle the parties to 
 proceed in equity for relief. It must have been a mistake 
 of both parties in respect of something which was material 
 to the contract." 
 
 The consideration of mistake as affecting valuation came 
 before the courts in Williatns v. North China Company, 1 876.1 
 The ship Queen of the Colonies was chartered from Batavia 
 to the United Kingdom. The assignees in Java of the 
 charter-party insured the estimated amount of the freight, 
 valued ;^594i ; and on the same day with the same office 
 their advance against freight valued ;[{^5I3. Taking the 
 terms of the charter-party into consideration, the Court of 
 Appeal decided that the former insurance was intended for 
 the protection of the shipowners, the charterers having pro- 
 tected themselves by the second insurance for the amount 
 of the advances they had made in accordance with the 
 charter-party. The shipowners were therefore interested 
 in the freight less advances, not in the advances at all. In 
 his judgment Chief Justice Cockbuni said, "You cannot 
 open the policy to inquire into the question whether or not 
 there has been over-valuation, but you can do so to see if 
 the claim of the assured is coextensive with the subject 
 matter of the insurance. Here it is not." The Master of 
 the Rolls (Jessel) added, " In a valued policy you cannot 
 open the policy ; but that does not touch the question of 
 what it was that was valued." It is consequently only in 
 a very limited sense that it can be said that mistake is a 
 ground for opening the valuation of a valued policy. 
 
 In the United States of America the law respecting 
 
 ' 35 L.T. N.S. 884 ; 3 Asp. Mar. L. Cases 343
 
 72 MARINE INSURANCE CHAP. 
 
 valuation is substantially the same as in England. Phillips 
 (§ 1 1 83) gives the following: " If the valuation is neither 
 intended as a cover for i\ wager djf both parties^ nor fraudu- 
 lently made, it is binding on the parties, in case it can be 
 carried into effect, and will as between them determine the 
 value of the property. And the circumstance of the pro- 
 perty being valued very high has not in itself been held to 
 be a sufficient proof of a wager, or of a fraudulent intention 
 on the part of the assured." Mr. Justice Willes, in the 
 memorandum already quoted, says : " Upon the general 
 subject of valued policies the laws of the United States thus 
 appear to be identical with those of England." 
 
 The French Code de Commerce is very meagre on the 
 subject of valuation ; § 339 provides that, " If the value of 
 the goods is not fixed by the contract, it maybe established 
 by the invoices or by the books, in default (of these) the 
 valuation of them is made in accordance with the price 
 current at the time and place of loading, inclusive of all duties 
 paid and expenses incurred until on board." The French 
 policy on merchandise contains a special clause providing 
 that in case of goods insured with a certain valuation, 
 underwriters in case of loss or average demand proof of the 
 real values, and in case the valuation is found to be exces- 
 sive they may reduce it to cost price plus 10 per cent, 
 unless they have expressly agreed to a higher increase and 
 fixed its amount. This in effect forces merchants who 
 desire to insure more than invoice and 10 per cent to 
 declare the percentage they want added to invoiced 
 prices. 
 
 The General German Commercial Code is very full in its 
 provisions on the subject. For open policies the provisions 
 of§ 786 hold: 
 
 § 786. The full value of the insured object is the insurable value, 
 The sum insured shall not exceed the insurable value. 
 The sum insured has no validity so far as it exceeds the 
 insurable value. ^ 
 
 ^n §§ 795, 797, and 799 provision is made for the 
 ' Arnold's trauslatiou.
 
 IV FOREIGN LAW RESPECTING VALUATION 73 
 
 valuation of ship, freight, and cargo when no special 
 contract exists respecting the values : 
 
 Ship. Its actual value when the underwriter's risk began. 
 
 Freight. The amount of freight as per the vessel's freight con- 
 tracts, or if none exist or the cargo is on shipowner's 
 account then the customarj' freight. 
 
 Goods. Their value at time and place of shipment, plus all costs 
 till on boau^d and including insurance. 
 
 By § 793 it is provided that in case of valued policies 
 when the parties have agreed on a value for insurance, that 
 value is taken as binding between the parties. But the 
 underwriter is entitled to demand a reduction of the valua- 
 tion if he can prove that it is seriously excessive, and the 
 words in §§ 795 and 799, "This rule applies also when the 
 insurable value of the vessel (goods) has been inserted," ^ 
 seem to indicate that anything much exceeding the values 
 named in these sections would be considered excessive. As 
 regards freight, § 798 provides that when an insurance is 
 done on freight without specifying whether gross or net 
 freight is intended, it is taken to be done on gross freight. 
 
 The Dutch and Portuguese codes and the Belgian law 
 are said by Victor Jacobs (^Etude sur les assurances tnari- 
 times et les avaries, Brussels, 1885) to permit the under- 
 writer in every case to reopen the valuation in the policy, 
 unless it be fixed by arbitrators appointed by the two parties. 
 The Italian code (§ 612) regards a valuation as exclusively 
 the work of the assured, unless it has been preceded by a 
 survey accepted by the underwriter. In that case the 
 underwriters cannot impugn the valuation, unless for fraud, 
 dissimulation, or falsification (§ 435, pt. ii.). The new 
 .Spanish code of 1885 limits (5^ 747) insurances on freight 
 to the amount appearing in the contract of affreightment ; 
 and on ship (§ 751) to four-fifths of the vessel's value. In 
 cases of evident over-valuation a distinction is drawn 
 between over-valuation in error and by fraud ; in the former 
 the insurance is reduced to the genuine worth of the article 
 insured, as fixed by common accord of the parties or by 
 ^ Arnold's Iranslatioo.
 
 74 MARINE INSURANCE chap. 
 
 appointed experts ; in the latter the poHcy is rendered null 
 and void, the underwriter retaining the premium, " without 
 prejudice to the suitable criminal proceedings" (§ 752, 
 Kaikes's translation). 
 
 Closely connected with these questions of valuations is 
 the theory of the true value of a ship put forward by 
 Lowndes (Law of M. I. p. 13), namely that a ship being 
 merely a freight-earning machine, her true worth is the 
 present value of all her freights plus what she will fetch for 
 breaking up, that is as old metal and timber. If this is taken 
 to be the proper basis for the valuation of ships, then, when 
 a vessel is fully insured up to this valuation, there evidently 
 ought to be no separate insurance of freight. No doubt 
 the market values of ships tend more and more, as they 
 approach the end of their career, to fix themselves on this 
 basis ; but in the early years of a vessel's life it is much 
 more the rule to value a ship at what she cost less what she 
 has earned net for her owners, and to correct that value up 
 or down in accordance with the variation in the cost of 
 building vessels of similar size and equipment. It may 
 even be doubted whether a policy valuation based on such 
 a calculation as that suggested by Lowndes (supposing 
 it to be possible) would be unimpeachable from a legal 
 point of view. For in the discussion of insurable interest it 
 will be found that a mere expectation of possession of property 
 or profit is not substantial enough to justify an insurance ; 
 there must be actual pecuniary interest in the insured 
 object or some firm engagement providing for such interest. 
 Consequently the only freight engagements that could be 
 reduced to a present value for the purpose of valuing a ship 
 in a policy would be firm freight contracts that could be 
 enforced by the courts. As a matter of fact it is clear that 
 the firm freight engagements of any named ship are in 
 amount far inferior to what is usually called her selling or 
 commercial value. 
 
 Valuation Clause. — The validity of the valuation given 
 for a ship in a policy is sometimes made of greater strength 
 and effect by the addition of such a clause as the following :— •
 
 IV VALUATION CLAUSE 7S 
 
 The valuation stated herein shall by mutual consent in all ques- 
 tions under this policy be taken to be the value of the vessel. 
 
 This form of the clause has now been almost universally 
 abandoned, but clauses of a similar character are in frequent 
 use, and will be discussed below under the heading of Con- 
 structive Total Loss (p. 152}.
 
 CHAPTER V 
 
 INSURABLE INTEREST — SUBJECTS OF INSURANCE — 
 MULTIPLE INSURANCE 
 
 Before proceeding further in the discussion of the policj 
 it seems better to consider at this point two subjects closely 
 connected with Valuation, namely Insurable Interest, and 
 Subjects of Insurance. 
 
 (i) Insurable Interest. — As the contract of insurance is 
 essentially a contract of indemnity, it follows that before 
 this contract can take any effect there must first have been 
 exposure to loss ; in other words, without a previously exist- 
 ing chance of loss or exposure to loss, no merchant would 
 think of becoming party to a contract the object of which is 
 to indemnify him for loss and so protect him from loss. It 
 is this element in insurance that differentiates it from all 
 quasi-contracts such as wagering or betting. The assured 
 and the underwriter do not say about a venture in which 
 neither is concerned " we make an agreement that if this 
 vessel or cargo (or whatever it may be) arrives you pay me 
 so much, and if it is lost I pay you so much." That would 
 be a simple wager. They do not even agree that in the 
 case of loss of a vessel or cargo in which the assured is 
 actually interested, the underwriter shall pay an arbitrarily 
 fixed sum, having previously received as the consideration 
 for the agreement a certain proportion of this sum, to be 
 retained by him whether the venture is lost or arrives in 
 safety. That would merely be a more limited and defined 
 wager. An appreciation of the fundamental difference 
 between such wagers and insurance joined to considerations 
 of public policy and a desire to repress the wild speculation 
 that accompanied and survived the South Sea Company,
 
 CH. V INSURANCE A CONTRACT OF INDEMNITY 77 
 
 resulted in the passing of an Act of Parliament on the 
 subject in 1746 (19 Geo. II. c. 37). The preamble of the 
 Act points out that the intention was to put an end to the 
 clandestine export of prohibited articles, such as wool, and 
 to engaging in prohibited or suspected trades, parties con- 
 cerned in these securing themselves " under pretence of 
 insuring against the risk on shipping and fair trade against 
 loss and producing a diminution of the pubhc revenue." 
 The Act enacted " That no insurance shall be made on any 
 ship or ships belonging to His Majesty or any of his 
 subjects, or any goods or effects laden on board such ships, 
 interest or no interest, or without further proof of interest 
 than the policy^ or by way of gaming or wagering, or with- 
 out benefit of salvage to the insurer, and that every such 
 insurance shall be void." In spite of this illegality such 
 policies continue to be executed ; they are in themselves 
 valueless in a court of law, being without any legally obliging 
 effect on the under\vriter, and perhaps on that account are 
 respected with the most studious care. They are simply 
 deliberately drawn memoranda of an obligation of honour 
 between the two parties. ^ AAleada. 
 
 The difference between such " pretended " insurances and 
 the genuine insurances which Parliament meant to encourage 
 is most clearly explained in the words of Mr. Justice 
 Lawrence in Lucenav. Crawfurd, 1802.2 Arnould (p. 282) 
 reports them as follows: "A man is interested in a thing 
 to whom advantage may arise or prejudice happen from the 
 circumstances which may attend it, and whom it importeth 
 that its condition as to safety or other quality should con- 
 tinue. Interest does not necessarily imply a right to the 
 whole or part of the thing, nor necessarily and exclusively 
 
 • In Thf Oxenholme (Roddick v. fndi-mnily Marine Insurance 
 Company, Apixsil Court, 1895) Smith, L.J., was "very strongly of the 
 opinion that tiie lionour policy, which was altogether null and void, 
 could not h>c put forward by the insurance company as a defence, and 
 thai in that respect he di(Tercd from Mr. Justice Kennedy " (in lower 
 court). Cf. Kay, L.J., in same case, " p.p.i. [xjlicies, tliat is to say, 
 policies upon which no action could be maintained, but the terms of 
 which were certain of Ixiing observed." 
 
 » a B. & P.N.k. 369; I Taunt. 324.
 
 78 MARINE INSURANCE chap. 
 
 that which may be the subject of privation, but the having 
 some relation to, or concern in, tlie subject of the insurance, 
 which relation or concern by the happening of the perils 
 insured against may be so aflfected as to produce the 
 damage, detriment, or prejudice to the person insuring. . . . 
 To be interested in the preser\'ation of a thing is to be so 
 circumstanced with respect to it as to have benefit from its 
 existence, prejudice from its destruction. The property of 
 the thing and the interest derived from it may be very 
 different. Of the first, the price is generally the measure ; 
 but by interest in a thing every benefit and advantage aris- 
 ing out of or depending on such thing may be considered 
 as being comprehended." The words " benefit from its exist- 
 ence, prejudice from its destruction," taken in connection 
 with a marine venture may be paraphrased " benefit from 
 the safe arrival of the venture in question, prejudice from 
 loss or damage suffered by it." But that benefit or pre- 
 judice must not consist solely of the good or bad result of 
 the insurance itself; it must pre-exist and be the precedent 
 cause of the effecting of the insurance. 
 
 The ideal of insurable interest is absolute ownership, and 
 
 the nearer one comes to that the clearer is the right to 
 
 effect an insurance. But short of property there are many 
 
 relations in which people may stand to goods, vessels, 
 
 advances, profits, and freights that fairly and equitably 
 
 entitle one to the protection of an insurance policy. These 
 
 may be divided into relations of responsibility and relations 
 
 of risk of profit and of loss as in the following cases : — 
 
 A. Goods. (a) Relations of responsibility. If goods 
 
 are put in charge of a lighterman for conveyance 
 
 from shore to ship, or zn'ce versd, or for transit 
 
 across a river, the lighterman, being a common 
 
 carrier, is liable for all and every loss and damage 
 
 to these goods unless proceeding from the Act o( 
 
 God (vis major, force majeure) or of the King's 
 
 enemies. The goods may or may not be insured by 
 
 their owners, but that is a matter in which the 
 
 lighterman has no concern, he cannot claim the pro 
 
 tection of their policy even if such a policy exists,
 
 V INSURABLE INTEREST IN GOODS 79 
 
 He is therefore " so circumstanced in respect of 
 these goods as to have benefit from their existence, 
 prejudice from their destruction " (to use Mr. Justice 
 Lawrence's words), and if he is not willing to bear 
 this risk on his own shoulders he is entitled to pass 
 it on to another person by insurance, namely to an 
 underwriter.! Similarly, in the case of a wharfinger 
 or any other bailee of goods. If a salvor working 
 under contract with a shipowner or shipmaster, act- 
 ing on behalf of all concerned in a wrecked venture, 
 is asked to remove salved goods to some market for 
 sale, it is usual and proper that these goods should 
 be insured, unless the owners or underwriters of 
 certain parcels or shipments declare that they do 
 not want them insured against this risk of removal. 
 Similarly, if a salvor has incurred certain expenses 
 for which he is responsible to third parties, in saving 
 goods and forwarding them to a proper place for 
 sale or reshipment, he is entitled to insure at least 
 his out-of-pocket disbursements incurred in the 
 operation of salving. If a shipmaster, acting as 
 agent for all concerned in any venture, finds it 
 necessary to tranship cargo from his own vessel to 
 another for conveyance to destination, he is entitled 
 to insure the cargo for the part of the voyage to be 
 performed in the other vessel if the original bill of 
 lading does not give permission for such tran- 
 shipment. 
 
 (d) Relations of risk. Ownership of goods when 
 they are exposed to sea perils evidently constitutes 
 an insurable interest of the most unmistakable kind. 
 But as soon and in so far as the property passes 
 from seller to buyer so does the insurable interest of 
 
 ^ But, however this underwriter may word his policy, he can 
 never tie called to make good any loss or damage proceeding from 
 the Act of God or of the King's eDcniics, because the lighterman 
 b<:ing never damnified by either of these causes can never be in need 
 of indemnity against their effects, and is not entitled to claim inderanitj 
 from bis underwriter on behalf of a third party.
 
 %o MARINE INSURANCE chap. 
 
 the seller cease, and he cannot transfer to the buyer 
 the interest in any insurance he has effected unless 
 such transfer is specially contained in the contract of 
 sale {North of England Oil Cake Company v. Arch- 
 angel Marine Insurance Company^ 1875).^ Similarly 
 a seller who contracts, for example, to deliver goods 
 free on board ship, cannot obtain protection from a 
 buyer's policy even should it cover the risk of tran- 
 sit from shore to ship ; the buyer having no pecuni- 
 ary interest in the goods at that time has no claim 
 for indemnity which he can transfer to the seller, as 
 it was not possible that he should be damnified at 
 the period when the goods were at the seller's risk. 
 Similarly, if a consignee of goods has made an 
 advance against their value he is entitled to protect 
 himself by insurance against the risk of the loss of his 
 advance which might result from the loss of the 
 goods {Hill V. Secrelan, I798).2 Lowndes (Law of 
 M. L p. 9, note) quotes the rule given by Mr. 
 Justice Willes in Seagrave v. Union Marine^ 1 866.8 
 " The general rule is clear, that to constitute interest 
 insurable against a peril it must be an interest such 
 that the peril would by its proximate effect cause 
 damage to the assured." If, therefore, the consignee 
 has no other concern in the goods than merely 
 getting possession on behalf of the owners, whether 
 shippers or consignees, then he is not damnified by 
 the loss of the goods at sea, and consequently can 
 never have the need of indemnity against that loss 
 (except perhaps the amount of the commissions 
 which he would certainly secure for the handling of 
 the goods if they did arrive at destination). Further, 
 in the case of a wrecked venture, if a salvor has 
 contracted for payment in a lump sum or in a stated 
 percentage of the value of salved goods payable 
 when they reach a place selected for sale or reship- 
 ment, he is evidently pecuniarily concerned in the 
 
 L.R. xo Q.B. 249. « I B. & P. 315. 
 
 » 3 L.R. 1 C.P. 320.
 
 INSURABLE INTEREST IN SHIP 8i 
 
 safe arrival of the goods at that place, and is conse- 
 quently entitled to insure his interest in them. 
 
 It is to be noted that in the case of goods 
 transferred in whole or in part of their value from 
 one party to another, the total amount insured by 
 all the parties should not exceed the full value of 
 the goods. But this limitation evidently does not 
 extend to the case of any subsequent interest 
 arising, like that of the salvor just mentioned, out 
 of the consequences of a sea peril. The original 
 relations of buyer, seller, and their underwriters are 
 not mixed up with those of the salvor and his 
 underwriter. 
 B. Ship. The owner of the whole of a ship is obviously 
 entitled under Mr. Justice Lawrence's dictum to 
 msure his property ; and it was decided by Lord 
 Ellenborough in French v. Backhouse^ I77i, that 
 the owner of a share or shares in a ship is entitled 
 to insure his share or shares. " Each separate 
 share in the ship is the distinct property of each 
 individual part owner, whose business it is to 
 protect it by insurance, so that the insurance of 
 another cannot be binding on such proprietors 
 without some evidence importing an authority by 
 them." Consequently without precedent authority 
 or subsequent ratification, no insurance effected by a 
 part owner or managing owner on the shares 
 belonging to other part owners is binding on them. 
 In the case of ship companies or single-ship 
 companies there is usually a clause in the Articles 
 of Association "^/„ the resolution appointing the 
 managers, conferring on them the authority to effect 
 insurances, and in some cases stipulating that the 
 amount insured shall not fall below a named 
 amount Where it is not very inconvenient and 
 unworkable it is most desirable that the insurances 
 on a ship should .dl be effected by one person, or at 
 least all on the same conditions, especially of 
 ' 5 Burr. 2727.
 
 R2 MARINE INSURANCE chap. 
 
 valuation. The confusion, annoyance, and disap- 
 pointment arising from variation of valuation in the 
 policies of part owners are incredible. 
 
 (a) Relations of responsibility. The plainest 
 case is that of a charterer who hires a vessel from 
 her owner, agreeing to return her to her owner at 
 the end of the time for which she is hired ; the 
 charterer having the use of the vessel at his own 
 risk. He is entitled to insure the vessel as he is 
 pro tempore in the position of owner, being 
 absolutely responsible to the owner for the property 
 hired. In such an arrangement a value will prob- 
 ably be mentioned in the charter, and it would be 
 expected to be only for the excess of the vessel's 
 whole worth to the owner beyond the amount stated 
 in the charter that the real owner has an insurable 
 interest : but this is not so.i Captors of a vessel 
 incur certain responsibilities to pay costs and 
 charges in case the vessel turns out to have been 
 improperly taken as a prize : they have therefore a 
 proper insurable interest {Boehm v. Bell, I799)-' 
 Similarly, a shipmaster moving his ship for repairs 
 to a port other than the nearest convenient port 
 becomes responsible for the safety of the ship, and 
 is therefore entitled to insure her value. If a ship's 
 agent at destination is instructed to sell the vessel 
 and can only do so on condition of delivering her 
 at another port before obtaining the purchase money, 
 he is evidently entitled to insure the vessel for at 
 least the price agreed ; so that if the vessel is lost 
 her owners are placed in as good a position as if 
 the vessel had been sold and delivered at original 
 destination. 
 
 • The ground given Is that the owner is not bound to trust 
 exclusively to the credit of the charterer, but may likewise protect 
 himself by a policy of insurance (Hobbs v. Hannam, 3 Camp. 93). 
 But if in case of a loss both owner and charterer recovered and the 
 latter remained solvent and paid the owner the value of the ship, 
 surely the matter would be treated as a caf^e of double insurance ; see 
 Godin V. London Assurance, 1758 (i Burr. 489). ' 8 T. R. 154.
 
 INSURABLE INTEREST IN ADVANCES 83 
 
 {b) Relations of risk. An Insurable interest exists 
 in any case in which the ship herself is the security 
 upon which money has been lent : such is the 
 interest of a mortgagee. The mortgagee need not 
 specify the nature of his interest, he can recover 
 on an ordinary policy on the ship (^Irving v. 
 Richardson, 1831).^ A mortgagee is not entitled 
 to insure more than the sum he has advanced, un- 
 less the excess of this amount is insured on account 
 of the mortgagor. The position of the mortgagor 
 is different : he is entitled to insure his ship 
 for her full value ; for although in case of her 
 loss the security of the mortgagee is gone, the 
 mortgagor is still liable for the debt (Amould, 
 p. 307, citing Allston v. Campbell, 1779.)^ But 
 what if the mortgagor is a single ship company with 
 liability limited and capital fully paid up ? The 
 assets of the company may consist of the ship her- 
 self and nothing more. If the vessel in such a case 
 be lost, can the mortgagee claim the benefit of the 
 company's insurances, and by instituting legal pro- 
 ceedings (say in bankruptcy), get the policies included 
 among the assets of the company ? 
 Advances. The most general form in which this 
 interest nowadays presents itself is that of general 
 average expenses. A vessel meets with some 
 accident in her voyage which compels her to return 
 to her sailing port or put into an intermediate port 
 of refuge : wliile she is there certain expenses are 
 incurred which are paid by the ship's agent on 
 behalf of all interests. But these expenses are 
 payable by ship cargo and freight in certain pro- 
 portions, to be determined at the close of the 
 venture and at the destination. There is therefore 
 an insurable interest for the payer of these expenses 
 from tlie port of refuge to the destination. 
 
 In former times the most ordinary form of 
 
 • r Mood. & Rob. 153; 2 B. & Ad. 193. 
 => 4 Brown's P.C 476.
 
 84 MARINE INSURANCE chap. 
 
 advance was the bottomry bond. When a captain 
 found himself unable to defray his expenses in a 
 foreign port and could raise no money on his own 
 credit or the shipowner's, he was " in his instant 
 unprovided necessity " (in fact, in direst need) em- 
 powered ipso facto to raise money by pledging his 
 ship for repayment. The cash thus obtained was 
 repayable within a fixed number of days after arrival 
 at destination; if the vessel did not arrive the bottomry 
 bond remained unpaid. The lender of money an 
 bottomry had thus an insurable interest : but in 
 accordance with Lord Mansfield's decision in Glovet 
 V. Black in 1763,^ "respondentia and bottomry must 
 be mentioned and specified in the policy of 
 msiirance." ^ The respondentia bond was a similar 
 document in which the cargo was pledged. It 
 sometimes happened that both ship and cargo were 
 pledged, in which case the document embodying the 
 contract was called a bottomry and respondentia 
 bond. By the Ordinance of Louis XIV. (Book III. 
 Tit. 6, Art. 16) borrowers on bottomry were for- 
 bidden to insure the amount lent to them, under 
 penalty of nullity of the policy and corporal punish- 
 ment. Lenders on bottomry were restrained by the 
 same penalties from insuring their expected profits 
 on their ventures. The Code de Commerce forbids 
 the borrower on bottomry to insure the amount he 
 borrowed. The German code permits the lender 
 on bottomry to insure his loan and the maritime 
 interest. The Italian and new Spanish codes 
 provide that on ship and goods only the excess of 
 
 * 3 Burr. 1394. 
 
 ' The question whether the borrower or lender on bottomry has an 
 insurable interest is easily solved by applying the ordinary principles 
 which govern insurable interest in general, and taking into consideration 
 the nature and effect of the particular instrument of hypothecation, and 
 that no rules other than the ordinary rules of insurance law are re- 
 quired for its solution. — Arthur Cohen in Law Quarterly Review, 
 April 1895.
 
 INSURABLE INTEREST IN PROFITS— FREIGHT 85 
 
 what is covered by bottomry *"**/„, respondentia 
 may be insured. 
 
 Profits being derivatives of the material subjects 
 concerned in a marine venture are with them 
 exposed to perils, and consequently those concerned 
 in them have an insurable interest. The amount of 
 such interest is not usually shown separately in 
 policies, it is generally added to the valuation of the 
 article on which the profit is expected. When the 
 insurance on profit is done in this form it benefits 
 only parties who have an interest in the goods. To 
 make sure that insurances on profit alone represent 
 a genuine interest in goods, it was decided in 
 Stockdale v. Dunhp, 1840,^ that the assured to 
 secure payment must be legally interested in the 
 goods when they were lost. In the case oi 
 Hodgson V. Giot'er, 1805,2 Mr. Justice Lawrence 
 decided that the assured on profit must show that 
 if there had been no shipwreck there would have 
 been some profit (Amould, p. 291, note f). 
 Freight. It is impossible to avoid introducing hers 
 the great maritime interest freight, which was 
 nowhere mentioned in the printed matter of the 
 English policy prior to 1749. There is no interest 
 concerning which more diverse views have been 
 entertained or regulations devised. Bearing in 
 mind Lowndes' view of the true value of a ship 
 (p. 74), it is apparent that if the valuation of a 
 ship is fixed at such an amount as will include her 
 net earnings on the voyages for which she has firm 
 freight contracts, the freight ought not to be insured 
 separately. But as has been pointed out already, 
 the valuation of ships is fixed in a very rough and 
 ready way, cost of building, amount of shipping in 
 the market, etc. etc., all influencing the price fixed, 
 and as a named freight is a definite sum it has been 
 found convenient to deal with it separately from 
 ship. The one rule upon which English law insists 
 » 6 M. & VV. 224. » 6 HAst 3f6.
 
 86 MARINE INSURANCE chap. 
 
 is that to constitute an insurable interest in freight 
 there must exist some legally enforceable bargain or 
 contract. In Patrick v. Eames^ 1 8 1 3 ^ (the orchella- 
 weed case), Lord EUenborough stated that, " If such 
 contract had been proved, the assured would have 
 been deprived by the loss of a profit which they 
 otherwise must certainly have received, and for 
 which they would have been entitled to an 
 indemnity." Consequently, whatever be the state of 
 the freight market when a vessel leaves in the hope 
 of getting a freight elsewhere, there is no insurable 
 interest ort freight until she has been fixed for her 
 next voyage for some particular employment. In 
 France there have been many difficulties on this 
 subject, a very sharp distinction being drawn 
 between fret d. /aire and fret acquis^ the insurance 
 of the former being forbidden. But by the law of 
 14th August 1885, permission was given to insure 
 {inter alia) net freight. 
 (2) Subjects of Insurance. — The discussion of the 
 meaning to be attached to the general words in the 
 policy intended to describe briefly the various subjects 
 insurable by the policy and of the nature of insurable 
 interest has resulted in the enumeration of many subjects 
 which may be insured. But there is not in any docu- 
 ment or enactment of English law, an enumeration 
 seriatim of the various classes of things that may be 
 insured such as is found in the commercial codes of 
 France, Germany, Italy, Spain, and other continental 
 countries. In the absence of such an enumeration, the 
 best plan that can be adopted is to take Mr. Justice 
 Lawrence's definition of insurable interest, and to say that 
 every object or relation to which this definition can be 
 applied is one on which insurance may legally be asked 
 and effected, unless there is some statutory prohibition or 
 some valid decision against the legality of the assurance. 
 
 In the examination of the words of the policy "any 
 kinds of goods and merchandises," it was stated thai 
 
 ' 3 Camp. 441.
 
 V SUBJECTS OF INSURANCE 87 
 
 limitations have been placed on the use of these words 
 as describing subjects of insurance : but that must be 
 taken in the sense that certain subjects must be de- 
 scribed by their specific name when it is intended that 
 they shall be covered by policy of marine insurance. For 
 instance, the absence of the word " freight " or " hire " 
 from the printed words of the policy does not mean that 
 this interest cannot be covered by the policy. It is 
 evident that the interest meant to be protected by an 
 insurance of freight would be misdescribed by the words 
 "goods or merchandises." The interest "freight" must 
 therefore be specially designated in writing in the policy. 
 Similarly, live stock has been decided not to be properly 
 included under the words "goods and merchandises," and 
 it seems likely that the same holds true of fresh or frozen 
 beef or mutton, which is now so largely imported from 
 North and South America and New Zealand. These 
 interests must therefore be fully specified. 
 
 But of the objects in which the would-be assured has an 
 interest properly describable as an insurable interest in 
 terms of Mr. Justice Lawrence's definition, some even if 
 specifically described are not admitted to be legally insur- 
 able. Such are slaves, the insurance of whom as articles of 
 trade was prohibited in this country by the same Act of 
 Parliament of 1806 (47 Geo. III. c. 36) which abolished 
 the African slave trade. This prohibition can now only be 
 regarded as due to the same spirit as succeeded in 
 abolishing the slave trade : it would evidently have been 
 futile to forbid the carr>'ing on of a trade in British vessels, 
 which might be carried on in foreign ships protected by 
 British insurance policies. The other subject on which 
 insurance is forbidden in almost all maritime states is 
 seamen's wages. As Marshall puts it, " It seems to be the 
 policy of all maritime states to use every precaution to 
 prevent the desertion of the seamen, to interest them in the 
 preservation of the ship, and to invite them to the most 
 vigorous exertions in times of danger." The English case 
 cited by Marshall is IVebsfcrv. De 7'astct, decided in 1797.' 
 
 » 7 T.R. i£7.
 
 S8 MARINE INSURANCE chap. 
 
 This prohibition extends to every member of the crew 
 under the master. But the master being considered oi 
 too good a position to be influenced solely by his own 
 immediate interest in the venture is permitted to insure his 
 pay or commission as well as any share he may have in the 
 vessel.! With these two exceptions it may be taken that 
 there is no illegality in insuring any object in which an 
 insurable interest fulfilling Mr. Justice Lawrence's dictum 
 can be proved to exist. 
 
 The prohibition of the insurance of seamen's wages 
 recalls the somewhat similar prohibition in France, until 
 14th August 1885, of insurance on freight at risk (/rei d 
 /aire). The shipper or charterer was permitted to include 
 in his insurance the amount of freight prepaid or guaranteed 
 (_/>■(?/ acquis) ; but the shipowner was not allowed to insure 
 the balance of the freight. One reason given in the 
 French books for this regulation is that it was hoped by 
 means of it to secure the care and diligence of shipowner, 
 master and crew. But what the great Emerigon gives as 
 the real reason is that the freight at risk (/re/ d faire) 
 being an uncertain profit, the result of good fortune on the 
 voyage, does not exist until the voyage is closed, and 
 therefore cannot become a subject of insurance for the 
 voyage. This is subtle ; but the strict application of this 
 principle would prohibit the insurance of any profit or 
 increase of value on ship or goods, which would be 
 entirely alien to the spirit of English insurance law.^ 
 
 Multiple Insurance. — In close connection with the 
 questions of insurable interest and subjects of insurance 
 
 * Cf. Shakespeare, Measure, ii. 2, 130. 
 
 ' Prior to 1885 M. Alfred de Courcy of Paris, the most eminent 
 French underwriter of his day, used to hold that it was an error to say 
 that French law prohibited the insurance of freight : he said that all it 
 did was to refuse to such insurances legal sanction and recourse to the 
 courts. It is true there was no penalty beyond the nullity and 
 voidance of tiie policy, or rather the absence of legal sanction ; but is 
 DOt that in itself to some extent a deterrent provided by the law? See 
 also casein Marseilles Tribunal of Commerce, 1897, Companies repre- 
 sented by Raymond de Campou and Ytier & Rocoffort against Bank 
 of Antwerp.
 
 V MULTIPLE INSURANCE 89 
 
 lie the problems arising from the insurance of the same 
 interest twice or several times over with different under- 
 writers. The principle adopted in England is that the 
 assured has the right to make his choice of the policy 
 against which he will make his claim for any loss that 
 may occur ; but the underwriters on that policy are 
 entitled to claim from the other underwriters on the 
 same interest a rateable contribution to their loss. In 
 Davis V. Gildarty 1776,^ a merchant insured his interest, 
 whose value was ;^2 2oo, first m Liverpool for ^1700 and 
 then in London for ^{^2200, the evidence showing that there 
 was no fraudulent intention in effecting the second policy. 
 It was held by Lord Mansfield that the merchant could 
 recover from his London underwriters the full ^2200 in- 
 sured by them, subrogating them in his rights against the 
 Liverpool underwriters. 
 
 In cases where the same amount is without fraudulent 
 intention insured with two sets of underwriters, the solution 
 is extremely simple, the assured claims his loss in full from 
 whichever set he pleases, and they in turn claim one half 
 from the other set. Cases in which the amount is not the 
 same are treated as cases of double insurance of the amount 
 insured on the smaller of the two policies. 
 
 It is extremely unusual to find any interest more than 
 doubly insured ; but in cases of triple, quadruple, or other 
 multiple insurance the principles now prevailing regarding 
 double insurance would apply. 
 
 The cases of multiple insurance that most generally 
 occur are those in which buyer and seller, shipper and 
 consignee, or others in similar relationship, have each 
 insured the same goods or interest without knowing that 
 the other has done the same. If the fact of double insur- 
 ance becomes known before the lapse of the risk insured, 
 the best course to adopt is to advise both sets of under- 
 writers of the fact, to ask each of them to reduce his amount 
 insured by one half and to return one half of the premium. 
 If, on the other hand, both insurances are effected by the 
 same person, and that without fraudulent intention and nor 
 
 ' Park 434.
 
 90 MARINE INSURANCE chap. 
 
 in sheer forgetfiilness, it is only fair to assume that he had 
 some reason for effecting the additional insurance (such 
 as dissatisfaction with the security of his first policy), and 
 there does not appear to be any fair ground for claiming 
 return of premium, although the final incidence of the claim 
 is the same. 
 
 French Law. — The law of France differs entirely from 
 that of England. In France the incidence of the loss is 
 determined by the date of the policy, the earlier policy 
 alone is liable if its amount is equivalent to the value of the 
 interest insured, the later policies do not come in except for 
 the difference between the value and the amount insured 
 with the earlier underwriters. For any further amount the 
 later under\vriters incur no liability, and they return the 
 premium less | per cent on the amounts then treated as null 
 
 American Law. — In the United States the practice is 
 to adopt the French rule ; it is said that clauses to this 
 effect are very generally introduced Into the policies : the 
 question arises whether the practice has now become a 
 custom of American insurance so strong as to need no 
 specification in the policy. 
 
 German Law. — In Germany the general rule laid down 
 in the Maritime Code, Art. 788, is that the earlier insur- 
 ance alone is valid up to its full amount, the later taking 
 up the balance of the value, if any. But in the following 
 exceptional cases the later policy is legally valid : — 
 
 Section 789. — The later insurance is, however, legally valid not- 
 withstanding the previous insurance — 
 
 (i) When at the conclusion of the later insurance it is agreed with 
 the underwriter that rights arising out of the previous insurance shall 
 be ceded to him. 
 
 (2) When the later insurance is concluded with the condition that 
 the underwriter shall only be answerable so far as the assured may 
 be unable to enforce payment against the former underwriter on 
 account of insolvency, or so far as the former insurance is legally 
 invalid. 
 
 (3) When the former underwriter is by formal notice released 
 from liability so far as is necessary to avoid a double insurance, the 
 later underwriter being informed thereof at the conclusion of the 
 later insurance. In this case the former underwriter is entitled to 
 the full premium although he is freed from his obligation.
 
 V MULTIPLE LNSURANCE FOREIGN LAW 91 
 
 Section 790. — In case of double insurance the later insurance, not 
 the previous one, is legally valid, when the previous insurance has 
 been taken as agent without authorisation ; the later insurance, on 
 the other hand, being effected by the assured himself, provided the 
 assured at the time of effecting the later insurance was not informed 
 of the previous one, or gives notice to the underwriter at the time of 
 its conclusion that he repudiates the previous insurance.^ 
 
 In all other cases of genuine double insurance, the code 
 provides that the return for short interest shall be | per 
 cent of the sum insured, or when the premium is under i 
 per cent then one half of the premium, unless some other 
 proportion is named in the contract or is customary in the 
 place where the insurance is effected (§§ 894, 895). 
 
 Italian Law, — Art. 608 of the Italian Code of Com- 
 merce reads : — 
 
 If several insurances on the same thing are without fraud effected 
 by different parties interested, or by several representatives of the 
 same interested party who have acted without special instructions, 
 all the insurances are valid, but only to the amount of the value of 
 the thing. The parties interested have action against any one of 
 the underwriters at their choice with recourse of the underwriter who 
 has paid against the others in proportion to their interest. 
 
 SpaJiish Law. — The Code of 1885 provides : — 
 
 Section 782. — If several insurances have been made without fraud 
 on the same thing, the first only will be effective, if it covers the 
 whole value. The subsequent insurers are free from liability and 
 will receive ^ per cent of the sum insured. 
 
 If the first policy does not cover the whole value of the thing 
 insured, the liability for the residue will fall on subsequent insurers 
 according to the date of the execution of the policies. 
 
 Section 783. — The assured is not absolved from payment of the 
 premiums in full to the several insurers if he has not given the later 
 ones information of the rescission of their contracts prior to the 
 arrival of the article insured at its port of destination (Raikes'i 
 translation). 
 
 ' Arnold's translation.
 
 CHAPTER VI 
 
 THE POLICY : PART II 
 
 The Perils Insured against 
 
 So far the policy has merely detailed the person and objects 
 insured, the valuation, the amount of it covered by the 
 underwriters concerned, the commencement, duration, and 
 end of the adventure for which the insurance is made. 
 The second part of the policy describes the kind of 
 risk against which the underwriter grants the assurance, 
 the perils insured against. The formula in which the 
 risks are detailed is very striking : the underwriters 
 or assurers are represented as being content to bear 
 and as actually taking upon themselves certain risks 
 here specified as adventures or perils. It is as if they 
 were replying to definite questions put to them asking 
 whether they agreed to accept the risk of each of the perils 
 named one by one, and were answering to each question, 
 «• Content, we take that upon ourselves." The result is 
 that while the underwriters assent categorically to cover all 
 the named perils, they are just as plainly exempt from 
 liability to indemnify the assured against loss arising from 
 any peril not specified. Care has therefore been taken to 
 make the formula as comprehensive as possible. Amould 
 says (p. 31) of the words as we now know them: "The 
 clause in its present state may fairly be regarded as afford- 
 ing a protection against almost every casualty which can 
 possibly happen in the course of any voyage " ; but when 
 he adds the remark, " and for which it is meant that the
 
 CHAP. VI THE PERILS INSURED AGAINST 93 
 
 underwriter shall be answerable," he suggests the inquiry 
 whose meaning or intention is to be taken as determining 
 the perils that ought to be covered. That the formula 
 contained in the policy has been found fairly adequate to 
 the requirements of the commercial community is proved 
 not only by its almost universal acceptance in English 
 insurance, but even more from the fact that in all its 
 essentials it is the form adopted in the United States. 
 
 This paragraph of the policy falls into two parts : the 
 first enumerates certain definitely named adventures or 
 perils ; the second contains what are termed " the general 
 words." 
 
 Touching the adventures and perils which we the assurers are 
 contented to bear and do take upon us in this voyage, they are . . . 
 
 In this introduction to the description of the risks 
 assumed by the underwriters there are two points to be 
 specially noticed. First, the designation of these risks as 
 " adventures and perils " indicates that contingencies con- 
 templated are not the ordinary inevitable occurrences com- 
 mon to all navigation, but are such extraordinary fortuitous 
 events as may be reckoned accidental. This principle will 
 be found of great importance in the consideration of the 
 amounts recoverable from underwriters, excluding as it does 
 loss or damage arising from wear and tear and from in- 
 herent defect {vice propre). Next, the mtroduction of the 
 seemingly unnecessary words "in this voyage" deserves 
 attention ; the words are not found in the Florentine form 
 of 1523, but as they occur in a London form of 161 3, the 
 introduction of them may be entirely the work of English 
 underwriters. Their effect is obvious : they give additional 
 definiteness to the limitations of space and time within 
 which the underwriter's liability is in force ; they imply that 
 not merely are the undervvriters liable for the accidents 
 occurring between certain termini in the course of naviga- 
 tion in the usual way between them, but that it is only for 
 such accidents as do so occur, not for the consequences of 
 eariier or the causes of later disasters. This sharp and 
 insistent definition of what may be called the sphere of the
 
 94 MARINE INSURANCE CHAP. 
 
 policy coming into view so early as the beginning of the 
 seventeenth century, sufficiently indicates the frame of mind 
 that is ready to accept and carry out in its entirety the 
 maxim, " Regard the immediate cause and not the remote 
 one " {causa proxima non remota spectetur). 
 
 . . . (perils) of the -eas. . . . 
 
 It is natural that the first class of perils enumerated in a 
 marine policy should be perils of the seas ; so natural, that 
 it is more than probable that ninety-nine out of every 
 hundred readers of a marine policy never pause to consider 
 the exact intention of the words. The first impression of 
 the meaning is usually that they cover everything that 
 happens at sea. But clearly everything that happens at 
 sea is not a peril, nor is it a peril " of" the seas. Evidently 
 the framers of the policy (who in this section have most 
 closely followed the Florentine model of 1523) were 
 of this opinion, for they proceed to name other adventures, 
 some of which could not happen except at sea — such as 
 perils of men-of-war, pirates, jettisons, takings at sea — with 
 others which could happen either on land or at sea, such as 
 fire, restraints and detainments of kings, etc. In Cullen v. 
 Butler, 181 5, Lord Ellenborough distinguished strongly 
 between "peril on the seas" and "perils <5/"the seas." ^ It 
 therefore becomes necessary to learn exactly what is covered 
 by the words "perils of the sea," and since July 1887 
 assured and underwriters have been able to know what the 
 House of Lords considers is contained in the words, and 
 consequently to be sure of the sense in which the words 
 will now be interpreted in every court inferior to the House 
 of Lords. 
 
 In the case of the Xantho^ 1887,2 an action was brought 
 
 1 5 M. & Sel. Phillips remarks (§ 1099): "The distinction la 
 fanciful, since it would put winds and lightnings out of the class of 
 perils of the seas, as being those of the atmosphere," etc. ; but this 
 seems over subtle, as Lord Ellenborough was merely showing that 
 one could only claim under the general words and not as "perils 
 of the sea," damage resulting from being fired into through mistake 
 in being taken for an enemy. 
 
 * L.R. la App. Cases 50a.
 
 >ri PERILS OF THE SEAS 95 
 
 against the ouTiers of the Xantho^ by owners of cargo on 
 board that vessel lost by a collision with the Valuta ^^ arising 
 from the careless navigation of the Xaniho^. The question 
 arose out of the contract of affreightment, in which the words 
 " perils of the seas " occur. In his judgment Lord Herschell 
 put his view of the meaning of the words " perils of the 
 seas " in the following terms : " I think it clear that the 
 term ' perils of the seas ' does not cover every accident or 
 casualty which may happen to the subject matter of the 
 insurance on the sea. It must be a peril 'of the sea. 
 Again, it is well settled, that it is not every loss or damage 
 of which the sea is the immediate cause that is covered by 
 these words. They do not protect, for example, against 
 that natural and inevitable action, which results in what may 
 be described as wear and tear. There must be some 
 casualty, something which could not be foreseen as one of 
 the necessary incidents of the adventure. The purpose of 
 the policy is to secure an indemnity against accidents which 
 may happen, not against events which must happen." The 
 judgments of the other Lords practically concurred with 
 this ; and it was clearly laid down that as respects the 
 casualty of collision, " perils of the seas " had the same 
 meaning in a contract of affreightment as in a policy of 
 insurance. These expressions of Lord Herschell are almost 
 a reproduction of what was said by Mr. Justice Lush in 
 Merchants Trading Company v. Universal Marine Insurance 
 Company^ 1 870 :i " The term ' perils of the sea ' denotes all 
 marine casualties resulting from the violent action of the 
 elements, as distinguished from their natural, silent in- 
 fluence upon the fabric of the vessel — casualties which may, 
 and not consequences which must, occur." Lowndes 
 (Law of M. I. p. 107) justly objected to the word 
 " violent " in this definition, for he said a calm or a fog may 
 be as dangerous as a storm. In reality a far greater 
 objection attaches to the word " natural," for surely tempest 
 and mist are as natural as gentle breezes and brightness. 
 But the second part of the definition is, with the exception 
 
 ' M'Arthur, p. iii, refers L. R. 9Q.B. 596.
 
 96 MARINE INSURANCE chap. 
 
 of one word, admirable. It is not clear what induced Mr. 
 Justice Lush to use the word " consequences," involving 
 as it does reference to unnamed causes, instead of some 
 less intensive and merely descriptive but perfectly ade- 
 quate word, such as " incidents." This defmition com- 
 pletely disposes of the adequacy of such explanations 
 as make inevitableness ' of an occurrence the test ol 
 its being a peril of the sea ; if it is really inevitable, it 
 is too completely a part of the ordinary, necessary routine 
 of the voyage to be accidental. Similarly, Mr, Justice 
 Lush's definition excludes from perils of the sea all ordinary 
 tear and wear arising from the nature of the objects in- 
 sured, and all the incidental results of such ordinary 
 occurrences as must take place in the course of the specified 
 adventure. In the Inchrhona case {^Hamilton v. Paiidorf, 
 House of Lords, 14th July 1887 2) Lord Bramwell said, " I 
 think the definition of Lord Justice Lopes very good. ' It 
 is a sea damage, occurring at sea, and nobody's fault.' " But 
 " sea damage " seems vague. 
 
 To illustrate the class of damage excluded by the defini- • 
 tions of Mr. Justice Lush and Lord Herschell. If a vessel 
 undertakes a voyage to a port, the approach to which is 
 notoriously such that the vessel must ground every low 
 water, loss or damage from such grounding is not charge- 
 able to underwriters as the consequence of a peril of the 
 seas. Using the words of Lord Tenterden in Wells v. 
 Hopwood, 18328 (Lowndes, Law of M. I. p. 198), the ground 
 is not " taken under any extraordinary circumstances of time 
 or place, by reason of some unusual or accidental occur- 
 rence." Of such a character is the approach to Limerick. 
 There are also many tidal harbours in which it is impossible 
 for vessels above a certain size to lie safely always afloat. 
 If a vessel above that size is sent to such a harbour the 
 underwriter is not responsible for the results of such ground- 
 ing as occurs in the ordinary course of such a vessel's stay 
 at that port. But the intervention of a comparatively 
 
 ' See Phillips' definition below, p. 99. 
 » T, R. TO App. Cases i;i8 » ^ R. & Ad «x
 
 VI PERILS OF THE SEAS 97 
 
 unimportant accident, involving, say, a slight change of the 
 position of the vessel, may be sufficient to take the ground- 
 ing out of the category of ordinary. There is often much 
 difSculty experienced in determining the point of transition 
 from the ordinary' operation of the powers of nature and 
 their perilous action. This whole class of questions will 
 come up later in the discussion of stranding. 
 
 Similarly in the insurance of a cargo, if it turns out at 
 the end of a venture that a cargo has perished or deterior- 
 ated through the operation of causes originating entirely 
 within the article itself, the loss is not attributed to perils 
 of the seas. Take, for instance, the case of a grain cargo 
 shipped in what is externally good order and condition, but 
 in reality too soon after cutting to have become quite hard 
 and dry. After a voyage of some length it will be found that 
 this grain has become seriously affected by what grain 
 merchants and surveyors know as " sweat." This damage 
 is not the result of anything except the nature of the grain 
 itself; no such result would show itself in a cargo of ore, 
 pig-iron, coal, or timber , so that evidently it arises from 
 what is known as the vice propre or " inherent defect " of 
 the article shipped and insured, perhaps better described as 
 the " essential character" or " inherent quality" or " inherent 
 nature " of the goods. 
 
 It is not only sometimes difficult, as has been said above, 
 to determine the point at which the operation of an elemental 
 power becomes a periV but it is occasionally found hard to 
 decide whether what is admitted to be an accident pro- 
 ceeds from a peril of the sea or from something else. 
 In this connection the case of Montoya v. London Assur- 
 ance^ 1851,2 is valuable as leading up to an important 
 theoretical principle. In the words of Amould (p. 789), 
 and Maclachlan's Amould, 6th ed., p. 754): "A vessel 
 loaded with hides and tobacco shipped a quantity of sea- 
 water, which rotted the hides, but did not come directly 
 
 • Cf. Phillips, § 1087. What is to be considered ordinaiy and 
 what extraordinary, in the degree and cfTccts of the perils, is a 
 question of fact for the jury often of much difficulty. 
 
 • 6 Exch. 451. See Parsons, i. 546. 
 
 H
 
 98 MARINE INSURANCK chap 
 
 into contact with the tobacco or the packages in which it 
 was contained. The tobacco, however, was spoilt by the 
 reek of the putrid hides. It was held that in this case the 
 perils of the sea were the proxitnate cause of the loss on the 
 tobacco as well as on the hides." In this case the goods 
 were damaged not by sea-water directly, but by the effects 
 of sea-water damage done to other goods. But it should be 
 noticed that this damage did not result from any quality or 
 character inherent in the tobacco, such as fermentation or 
 evaporation might indicate, but from a cause quite external to 
 the tobacco.i See Thrunscoe^ (1897, 8 Asp. Mar. L.C. 313). 
 There is another set of cases on the interpretation of the 
 words "perils of the seas" of interest as showing how they 
 are applied in cases of loss or damage at sea. They deal 
 with damage sustained by ships =^7or cargoes from rats 
 or other vermin. In Hunter v. Foiis, 1 8 1 5,2 on a policy on 
 goods from London to Honduras, the vessel was detained 
 during the voyage by the sickness of the crew at Antigua. 
 While she lay there, rats ate holes in her transoms and 
 bottom, whereby she was rendered unfit for proceeding upon 
 the voyage, and the cargo was sold at Antigua, Lord 
 EUenborough held that the consequent loss was not one for 
 which underwriters on the goods insuring them against 
 perils of the seas were liable (Phillips, § iioo). In the 
 case of the Inchrhona^ {Ha??iilton v. Pandorf^ House of 
 Lords, 1887),^ merchants sued shipowners for damage to a 
 cargo of rice during transit from Akyab to Bremen. The 
 rice was damaged by sea-water, which found its way into 
 the hold of the steamer through a hole gnawed by a rat in 
 a leaden pipe connected with the bathroom. The ship- 
 owners contended that the damage was occasioned by a 
 danger or accident of the seas ; and in the House of Lords 
 it was finally decided that they were right in their contention. 
 Lord Herschell declared his concurrence with the view 
 expressed in Laveroni v. Drury, 1852,* that damage done 
 
 1 It is worth special mention that the ordinary American form of 
 policy expressly excludes in the case of certain delicate goods such a 
 liability as this. * 4 Camp. 203. 
 
 » I.. R. 12 App. Cas. 518. * 8 Exch. 166.
 
 n PERILS OF THE SEAS 99 
 
 by rats to a vessel or its cargo is not damage by perils ol 
 the sea. But he remarked that in that very case Chief 
 Baron Pollock had said : "If indeed the rats made a ho e 
 in the ship, through which the water came and damaged the 
 cargo, that might very likely be a case of sea damage." 
 Thereafter Lord Herschell proceeded to say with regard to 
 the Inchrhona, case, " I entertain no doubt that the loss 
 was one which would in this country be recoverable under a 
 marine policy as due to a peril of the sea. It arose directly 
 from the action of the sea. It was not due to wear and 
 tear, nor to the operation of any cause ordinarily incidental 
 to the voyage, and therefore to be anticipated." Lord 
 Macnaghten added, "It was an accidental and unforeseen 
 incursion of the sea that could not have been guarded 
 against by the exercise of reasonable care." 
 
 From the principles enounced in the cases cited above, 
 it is evident that among the perils of the sea are included 
 foundering, stranding, loss by collision with another ship or 
 vessel, or through stress of weather. Phillips (§ 1099) 
 g^ves a long catalogue of casualties which have been held 
 to be perils of the seas, most of them based upon reported 
 decisions, some, however, referring more exactly to the 
 words of the general clause to be discussed hereafter, on 
 which many important decisions have been given. His 
 definition is : " Perils of the seas . . . comprehend those 
 of the winds, waves, lightning, rocks, shoals, coUision, and, 
 in general, all causes of loss and damage to the property 
 insured arising from the elements, and inevitable accidents,^ 
 though sometimes considered not to include capture and 
 detention." He does not mention such perils as upheaval 
 of reefs by earthquake, or rise of sea-bottom from the same 
 cause resulting in ships being left high and dry on a hillside, 
 as on the Chilian coast. 
 
 The mention of perils of the seas is followed in the 
 policy by long enumeration of other perils strung together 
 without very obvious connection, occurring much in the 
 same order as in the Florentine policy of 1523. The only 
 explanation of this order that oflfers itself as at all likely, is 
 ' A5 to "inevitable," see above, p. 96
 
 100 MARINE INSURANCE chap. 
 
 that the perils were added one by one simply as they were 
 found in the history of insurance to become necessary for 
 the proper protection of the assured. The policy runs ; — 
 
 Men-of-war, fire, enemies, pirates, rovers, thieves, jettisons, letters 
 of mart and countermart, surprisals, takings at sea, arrests, restraints 
 and detainments of all kings, princes, and people, of what nation, 
 condition, or quality soever, barratry of the master and mariners. 
 
 In the discussion of these, this arbitrary arrangement 
 will be discarded, and the perils named will be classed under 
 three heads — 
 
 I. Perils of nature or of the elements — seas, fire. 
 II. Perils arising from the actions of persons on board 
 
 the insured vessel — ^jettison, barratry, 
 III. Perils arising from the actions of persons not on 
 board the insured vessel — men-of-war, enemies, 
 pirates, rovers, thieves, letters of mart and counter- 
 mart, surprisals, takings at sea, arrests, restraints 
 and detainments of all kings, princes, and people, 
 of what nation, condition, or quality soever, 
 
 I, Perils of Nature or of the Elements 
 
 Fire. — The perils of the seas having been already dis- 
 cussed, fire remains to be dealt with. 
 
 Phillips (§ 1099), after giving the definition of perils of 
 the seas quoted above, goes on to remark that a policy 
 against these perils covers damage by fire. For this state- 
 ment he quotes no authority and cites no decision ; but he 
 adds in a footnote, "This would be the construction, 
 no doubt, though the peril were not specifically insured 
 Addenda, against." Be that as it may, it is still somewhat striking 
 that the only elemental peril named in the policy besides 
 those of the seas is fire. To explain this it is necessary to 
 recall the conditions of navigation under which commerce 
 was conducted at the time the policy was devised. Marine 
 ventures were made by sailing ships of what is now regarded 
 as very moderate size. All the extraordinary dangers of 
 winds, waves, rocks, fogs, tempests, calms, being already
 
 Fi FIRE lOi 
 
 included in the class perils of the seas, there remained for 
 the merchants and shipowners of the sixteenth, seventeenth, 
 and eighteenth centuries, no other danger from the forces 
 of nature with which they were acquainted except fire, either 
 in the shape of flame or ignition, or of lightning or other 
 form Of electrical incandescence. 
 
 But fire once admitted as a peril insured against, received 
 the most extensive application. In his decision in Gordon 
 V. Rimmington, 1807,^ Lord Ellenborough says: *' Fire is 
 expressly mentioned in the policy as one of the perils 
 against which the underwriters undertake to indemnify the 
 assured, and if the ship be destroyed by fire it is of no 
 consequence whether this is occasioned by a common 
 accident, or by lightning, or by an act done in duty to the 
 state." The case on which the judgment containing this 
 statement was delivered was one in which an insurance had 
 been effected on the commissions of a captain on a voyage 
 from Bristol to the African coast and thence to the West 
 Indies. The vessel was chased by a French privateer of 
 much greater strength, and when escape was seen to be 
 impossible the captain and crew burnt their ship to prevent 
 her falling into the hands of the enemy. The policy was 
 held to cover this loss. 
 
 Similarly in Busk v. Royal Exchange, 1818,2 an action 
 on a policy in which the loss arose from the negligence of 
 the mate in lighting a fire in the cabin and not seeing it 
 properly extinguished, Mr. Justice Bayley said (as reported 
 by Marshall, 496): "It had been argued that they (the 
 underwriters) were only liable where the ship had been 
 wilfully set on fire, because barratry was one of the risks 
 expressly mentioned in the policy, and negligence of the 
 master was not ; but there was no authority, in our law at least, 
 which said that they were not liable for a loss, \h& proximate 
 cause of which was one of the enumerated risks, though the 
 remote cause might be traced to the negligence of the master 
 and mariners." The Court held the underwriters liable. 
 
 Both .Arnould (p. 831) and Phillips (§ 1094) state that 
 the assured is entitled to indemnity in case of a vessel being 
 burnt by thr municipal authorities from fear of its being 
 ' I Camp laj. * a B. & Aid. 73
 
 I02 MARINE INSURANCE chap 
 
 infected and causing a pestilence. This statement, how- 
 ever, is not based on any Enghsh or American legislation 
 or decision, but is taken from Emerigon (i. 429), who 
 mentions the case of the Dutch vessel AdattK, with rice 
 from Damietta to Marseilles, about the year 1748. The 
 vessel experienced a storm oflf Majorca, and the captain 
 tried to run into port for safety. But the Spanish authori- 
 ties learning that the vessel came from the Levant declined 
 to permit their entry, and after sending craft to take the 
 captain, crew, and cargo on to Marseilles, set fire to the 
 ship. The underwriters paid the loss without demur, be- 
 cause, as Emerigon says, "neither captain nor crew were 
 in fault." He proceeds to report another case, that of the 
 Grand Saint *A?itoine in 17 19, in which the captain's fault 
 released the underwriters. After declaring at Leghorn that 
 some of his crew had died of " pestilential fever," he pro- 
 ceeded to Marseilles, did not stop at the quarantine ground, 
 but going to the health office declared on 25th May 1720 
 that the deaths had been caused by bad provisions. How- 
 ever, the tvatchmen and stevedores died ; in consequence 
 the ship was removed to the quarantine ground and burnt 
 by ministerial order on 20th September. In December 
 1723 the Admiralty Court of Marseilles condemned the 
 underwriters to pay the loss, but this sentence was reversed 
 by decree of February 1725. It thus appears that the 
 only decided case reported is against the opinion stated 
 absolutely by Amould and Phillips. In the present state 
 of sanitary science such a case is not likely to occur again ; 
 but even if it did, it is not certain that an underwriter would 
 be held liable for the loss. 
 
 It is evident from what precedes that intentional as well 
 as accidental burnings may be covered by the word " fire " 
 in the policy. 
 
 But Certain non-intentional burnings cannot properly be 
 called accidental. Such are those occasioned by the 
 damaged state of the cargo. In Boyd v. Dubois, 18 ii,^ 
 Lord Ellenborough said : " If the hemp was put on board 
 in a state liable to effervesce, and it did effervesce and 
 generate the fire which consumed it, upon the common prin- 
 
 • 3 Camp. 133.
 
 n FIRE, SPONTANEOUS COMBUSTION, ETC. 103 
 
 ciple of insurance law the assured cannot recover for a loss 
 which he has himself occasioned " (M'Arthur, p. 1 1 6). Some- 
 what akin to this decision is that of Pirie v. Middle Dock 
 Company, 1881,1 which referred to a cargo of coal in which 
 fire broke out spontaneously ; it was held that the owner of 
 cargo cannot take advantage of his own wrongdoing. Spon- 
 taneous combustion is the most serious form of vice propre 
 or inherent defect. As M. de Courcy {Cotnrnentaire, p. 218) 
 most admirably remarks, " Spontaneous combustion is a 
 form of words employed to indicate a production of internal 
 facts without known external agents. It is never certain 
 that the combustion has been spontaneous." As a matte: 
 of fact " spontaneous " combustion is the cause which is 
 assumed to have occasioned a fire when no other real cause 
 is proved to have in fact existed. Speaking generally, it 
 would appear that underwriters on goods are not responsible 
 for damage done to these goods by a fire resulting from the 
 condition in which they were shipped. Amould (p. 831) 
 gives it as his opinion that the underwriters on a ship would 
 be liable for loss by fire occasioned to the ship by this cause. 
 Apparently it would be fair to assume that the underwriters 
 on other cargo in the ship would likewise be liable for a 
 loss occasioned to these goods by this cause. 
 
 By the decision in the case of The Knight of St. Michael^ 
 (Barnes, J., in Admiralty Division, 25th January 1898) under- 
 writers on freight were held liable for loss of freight conse- 
 quent on discharge of cargo to prevent probable damage by 
 fire, although the fire had not actually occurred. The case is 
 peculiar and not exactly analogous to that of any other peril. 
 
 In the Lodore^ case, Bigham, J., held that loss of freight 
 arising from condemnation of cargo so heated as to be 
 unfit to carry on to destination is claimable on freight policies 
 without set off of contribution in General Average. 
 
 There is much similarity between fire and ex[)losion. 
 This point was elaborated by Lord Esher (Brett, L.J.) in 
 
 > 4 Asp. Mar. L.C. 388. 
 
 '■* 14 Times L. R. 191. Hut compare and contrast this with Lord 
 Ellenborough's judgment in lilankenhagen v. London Assurance, 1808 
 (i Camp. 453) thai " fear of capture" is not a risk contemplated under 
 \i\r. policy {vide pp. 114, i 17). 
 
 * Ircdale v. China Traders, Q. IJ. D. 4 July 1899 (15 Times L. R. 460) 
 
 Addenda
 
 I04 MARINE INSURANCE CHAP. 
 
 his judgment in tlie case West India and Panama Telegraph 
 Company v. Home and Colonial Marine Insurance Coy., 1 88o.^ 
 In that case " the steam in the boilers burst the boilers, and 
 the steam escaped, and the steam escaping into the ship 
 destroyed the ship ; it blew up the deck of the ship and 
 wrecked the ship so that she was a complete wreck." 
 These are Lord fisher's own words as given in his judgment 
 in the Court of Appeal in Hamilton v. Thames and Mersey 
 Marine Instirance Company, Limited^ 1887.'^ He pro- 
 ceeded : " There, with considerable difficulty, I as a matter 
 of fact came to the conclusion that an explosion of steam 
 getting into the ship and destroying the ship was sufficiently 
 like the effects of fire upon a ship — and fire was one of the 
 terms of the policy — to allow it to come under the general 
 words. . . . Now I am perfectly willing to say — indeed I 
 have it strongly in my mind — that in coming to that con- 
 clusion of fact, I went to the verge of imagination ; I should 
 not be surprised, on the contrary I think my mind would 
 most obediently and willingly acquiesce, if that view of the 
 case were overruled." In Hamilton v. Thames and Mersey^ 
 in the House of Lords, Lord Herschell expressed his decided 
 preference for the later view of Lord Esher. In America 
 it has been decided that underwriters are not liable for 
 damage done by the explosion of a steam boiler. Parsons 
 (vol. i. p. 560, note) discusses ignition and explosion at 
 considerable length, citing, infer alia, the decision in 
 Scripture v. Lowell Mutual Fire. It is worth notice 
 that the common explosives like gunpowder actually re- 
 quire a spark or flame (that is, something of the nature of 
 fire) to release their imprisoned forces and bring about a 
 sudden violent burst. But it is quite different with the 
 explosives that act only when aflfected by impact or per- 
 cussion, for instance djTiamite. The action in this ex- 
 plosive is entirely diflerent from that of fire , so that a 
 wreck caused by an explosion of dynamite could certainly 
 not be successfully claimed as a loss by fire.* 
 
 ' L.R. 6 Q.B.D. SI. 
 
 ' L.R. 17 Q.B.D. 198, » L. R. 12 App. Cas. 484. 
 
 * Cf. Parsons, i. p. 561, note, where in reviewing the case of 
 ^criflure v. Lowell Mutual {10 Gushing 356) the following occurs:
 
 VI FIRE, EXPLOSION, JETTISON 105 
 
 So far, the fire has been taken to be on board the ship 
 carrjnng out the assured venture. But the case has arisen 
 in which an explosion arising from fire has done serious 
 damage to a steamer lying some distance from the point 
 where the explosion occurred. In the great petroleum fire 
 and explosion at Antwerp in 1889 one of the Red Star 
 Compan/s steamers was damaged, although she was l>'ing 
 some distance from the petroleum tanks, and on the side of 
 the dock farthest from the tanks. Underwriters settled the 
 claim " without prejudice," considering the explosion suffi- 
 ciently akin to a result of fire to justify their pa>TT>ent of 
 the damage. But it is not certain that they would have 
 admitted liabiHty had the substance whose e.xplosion 
 undoubtedly caused the damage been one which a severe 
 stroke or a mere fall could set off. 
 
 In connection with the peril of fire it may be remarked 
 that underwriters have lately had some examples of claims 
 for damage done to delicate articles like flour, by smoke 
 arising from accidental fires occurring on board Atlantic 
 steamers, or resulting from the measures taken to extinguish 
 such fires. Without for the moment taking into account 
 the final incidence of the loss in such cases, and without 
 admitting that the alleged damage is in all cases actual or 
 serious, it may still be suggested that if real damage of any 
 serious extent were found, the principle on which liability 
 would be determined would be akin to that adopted in the 
 decision of Montoya v. London Assurance, 1851.^ 
 
 II. Perils arising from the Actions of Persons 
 ON Board the Insured Vessel 
 
 {a) Jettison. — It is remarkable that the most ancient 
 scrap of marine law that has come down to modem times 
 deals with jettison and with the method in which loss by 
 jettison was to be made good and apportioned. Justinian's 
 
 The court said their opinion excluded " all damage by mere explosions 
 not involving ignition and combustion of the agent of explosion, such 
 ft3 the case of steam, or any other substance acting by expansion 
 without combustion." ' 6 Kxcb. 451.
 
 I06 MARINE INSURANCE CHAP. 
 
 Digest, Book XIV., Tit 3, Sect, i, reads as follows: "It 
 is decreed by Rhodian law that if to lighten a ship a jettison 
 of goods has occurred, that which has been given for all 
 shall be replaced by the contribution of all." ^ Rhodes 
 early became an important place in Levantine trade, and 
 was a crossing point of all the commercial interests of the 
 Mediterranean east of Carthage. So " Rhodian law " is 
 probably simply an expression of early Mediterranean 
 practice or tradition. Apart from any question of final 
 incidence and apportionment the thing itself is simple ; it 
 is merely the throwing overboard of part of a vessel's tackle 
 or cargo to lighten or relieve her when she is in emergency. 
 If there is real emergency, and a merchant's goods are 
 sacrificed to prevent threatened loss becoming real loss, 
 that merchant is in no worse a position than if the loss had 
 actually occurred, nor is his underwriter. The question of 
 the profit derived by the other parties of the venture from 
 his loss is another matter that demands separate treatment. 
 But to justify a merchant in making claim for such loss by 
 jettison, the Lombard underwriters held that the sacrifice 
 must have been made in circumstances of absolute necessity. 
 It is evident that unnecessary jettison might easily become 
 a source of gain to unscrupulous assured. On the other 
 hand, if a merchant was not fully protected by insurance 
 he might be unwilling to have his goods sacrificed. The 
 result of this was the creation of an elaborate etiquette of 
 " regular " jettison,^ so elaborate that Emerigon reports 
 (i. 591) that Targa during sixteen years' magistracy at 
 Genoa saw only four or five cases of it, and these were 
 suspected of fraud simply because the formalities had been 
 too well observed. It is evident that in cases of imminent 
 peril any spending of time on formalities would be senseless 
 trifling. Consequently, irregular jettison was recognised as 
 having legal and commercial validity. M. de Courcy re- 
 marks (Weil, § 293) on the puerility of the distinction, 
 
 ' Lege Rhodia cavetur ut si L-vanda: navis gratia jnctus mercium 
 foetus est omnium contributione sarciatur quod pro omnibus datum est 
 
 * See Rolls of Oleron, Art. B ; quoted by Lowndes, General 
 Average, p. 6.
 
 ri JETTISON 107 
 
 from which it would result that the more legitimate and 
 necessary a jettison is the more " irregular " must it be. 
 
 But assuming that jettison has been made in good faith 
 and honesty, it does not follow that the value of the goods 
 is claimable from the underwriter on a policy of the ordinary 
 form. For the only goods covered by a policy, unless 
 express stipulation to the contrary is made, or it is the 
 notorious custom of the trade to carry cargo on deck, are 
 goods stowed under the vessel's deck. Consequently, on an 
 ordinary policy an underwriter is not responsible for jettison 
 of deck cargo. In the recent case of Dixon v. Royal 
 Exchange Shipping Co7npany, House of Lords, December 
 1886,^ arising out of the jettison of cotton from a deck 
 house of the Egyptian Monarch„ it was held that cargo 
 in deck houses is, as far as jettison is concerned, equivalent 
 to deck cargo. Consequently, in case such cargo has been 
 thrown overboard its value can neither be recovered from 
 the underwriter on the ordinary form of policy, nor by way 
 of contribution from the other parties in the adventure.^ 
 Again, I'oods thrown overboard in consequence of inherent 
 defect, or of the undue development of their inherent 
 qualities {vice propre), cannot be recovered from under- 
 writers using the ordinary form of policy, e.g. meat that 
 has become putrid and dangerous {Taylor v. Dunbar, 
 1 869). 3 The test question is, " Is there a loss from perils 
 insured against?" .See Pink v. Fleming, 1890.* 
 
 With regard to cargo carried on deck in accordance 
 with the universal custom of a trade, there appears to be 
 no doubt that if the whole cargo belongs to one person, 
 or if it belongs to several persons all engaged in the same 
 trade, cargo thrown overboard may be claimed for as 
 jettisoned ; it is only because it has been admitted to be 
 jettisoned that it can become the subject of general average 
 or general contribution. But some classes of goods (vitriol, 
 ether, carbolic acid, and other chemicals of inflammable, 
 
 * la A.C. n. 
 
 * It remains at the risk of the party by whom or with whose consent 
 It was loa'it;d in an improper place. 
 
 » L.R. 4 CP. 206. * 25 y.B.D. 396.
 
 io8 MARINE INSURANCE CHAr 
 
 volatile, or corrosive character) are in all trades properly 
 carried on deck and nowhere else. The existence of such 
 goods on board a ship is not necessarily known to any one 
 except the loading broker, the shipper of the goods, and 
 the shipper's underwriter. The latter in taking the risk on 
 the goods is aware of the exceptional perils to which they 
 are by their position exposed. In case of an ordinary 
 jettison, where such articles as carboys of vitriol are jetti- 
 soned from deck simply to lighten the ship, the underwriter 
 of the vitriol is no doubt responsible for the loss. But if 
 the jettison occurred, not to lighten the ship, but to remove 
 from the ship and the rest of the cargo the danger that 
 would arise from the carboys or other vessels being broken, 
 the loss would seem to be more truly due to the vice propre 
 of the fluids, and therefore the custom has now arisen to 
 state specially that they are insured against all risks of 
 jettison and washing overboard. 
 
 Under all other circumstances, unless these be brought 
 about by the negligence or default of the owner of the 
 property sacrificed, jettison is recoverable from the under- 
 writer on the common policy. 
 
 A dishonest jettison perfonned with the shipowner's con- 
 sent or under his instructions renders him liable for the value 
 of the goods so disposed of; he cannot plead the exception 
 in his bill of lading. But if performed by the master or 
 crew on their own motion, and without the approval or con- 
 nivance of the shipowner, it becomes what is known as 
 barratry. 
 
 {b) Barratry of tJu Master and Mariners. — On this 
 subject the old text-books go into great detail, and with 
 reason. The world in those days was not mapped, buoyed, 
 and lighted as it is now ; there was no regular postal 
 system, no network of telegraphs existed ; agents in foreign 
 ports knew no one connected with a maritime venture 
 except the master of the ship ; in short, ship and cargo 
 were infinitely more at the mercy of the captain and crew 
 than they are to-day. That is one reason why most of the 
 reported decisions on this subject are old. Another is that 
 during the long period that England has been at peace
 
 ▼I BARRATRY 109 
 
 with the maritime nations of Europe, there have not been 
 for badly-inclined shipmasters the same convenient oppor- 
 tunities of committing barratry. Prize ^ court business, 
 blockade running, illegal traffic, smuggling wholesale are 
 accomplishments for the present forgotten, or at least 
 dormant ; they need war to shock them into activity. 
 
 Barratry is excessively difficult to define ; the definition 
 must exclude everything of the nature of mere mistake, 
 misjudgment, even to a certain point, negligence ; it must 
 be wide enough to embrace actions of the master against 
 owners ""*/o, co-owners, of the crew against the master 
 ""'/or owners, and to include an element of criminality or 
 gross malversation. An early definition, that of Lord 
 Hardwicke, that barratry is "an act of wrong done by 
 the master against the ship and goods," is described by 
 Axnould as " the tersest and (perhaps) best " ; but in view 
 of later decisions one has to read so much into it that it 
 seems incomplete and inadequate. Arnould (p. 844) gives 
 his view as follows : " Barratry in English law may be said 
 to comprehend not only every species of fraud and knavery 
 consciously committed by the master with the intention of 
 benefiting himself at the expense of his owners, but every 
 wilful act on his part of known illegality, gross malversation, or 
 criminal negligence, by whatever motive induced, whereby the 
 owners or the charterers of the ship (in cases where the latter 
 are considered owners pro tempore) are, in fact, damnified." 
 In this definition the words by whatever motive induced are 
 most important. If a master lost his ship, or had it cap- 
 tured, or in some way taken away from its owners in conse- 
 quence of his wilfully and on his own motion endeavouring 
 by some illegal act to gain some advantage for himself, or 
 even to make a profit for the owners of ship and cargo, the 
 act would be a barratrous act, the loss a loss by barratry. 
 But there can be no barratry if the owner consents to the 
 illegal act or connives at it. 
 
 Such acts as the following are barratrous : scuttling a 
 
 ship, intr-ntionaily running a ship ashore with the object of 
 
 throwing her away, setting a ship on fire, abandoning the 
 
 voyage on which the venture started {Earle v. Rowcro/t, 
 
 * Vid* p. Ill, note.
 
 CIO MARINE INSURANCE chap. 
 
 1806),^ illegally selling a ship and cargo and appropriating 
 tli6 proceeds, deviating from the vessel's proper course for 
 the captain's private business or convenience ( Vallejo v. 
 Wheeler^ I774).2 This last case brings out the distinctive 
 note of barratry ; mere deviation does not constitute 
 barratry, deviation with criminal intent does. As Lord 
 Ellenborough said in Todd v. Ritchie^ i8i6,3 "To constitute 
 barratry, which is a cnme, the captain must be pro%cd to 
 have acted against his better judgment." Similarly, simple 
 negligence on the part of a master resulting in the seizure 
 of his vessel by foreign customs' authorities in consequence 
 of smuggling by the crew is not, in English law, barratry,'' 
 but any intentional omission of any watchfulness or com- 
 mission of any negligence on his part with the object of 
 getting the ship confiscated would constitute the case one 
 of barratry. The last important case on this subject is 
 Cory V. Burr, House of Lords, April 1883,* in which the 
 vessel concerned was seized by the Spanish customs' 
 authorities in consequence of the barratrous act of the 
 master in smuggling abroad without the consent of his 
 owners. But if the owner's negligence is such that '■the 
 sailors are enabled to continue smuggling without his inter- 
 ference, then he is debarred from the protection of his 
 policy against barratry ; as Lord EUenborough put it in 
 Pipon V. Cape, 1 808,^ it was the duty of the assured to put 
 down these repeated acts of smuggling for which the ship 
 had been seized no less than three times ; and by his neg- 
 lecting to do so, and allowing the risk to be so monstrously 
 enhanced, the underwriters were discharged. 
 
 In the last paragraph devoted by Phillips to the dis- 
 cussion of barratry (§ 1084) he quotes a remark of Lord 
 Mansfield, " It is strange that barratry should have ever 
 crept into insurance." In spite of Phillips' attempted dis- 
 proof of the strangeness of a merchant's or shipowner's wish 
 
 1 8 East 126. 2 Cowp. 154. » I Stark 240. 
 
 * Herein English law differs from French, fimerigon says with 
 Valin and Potljier that the term "barratry" includes all varieties of 
 fraud as well as of simple imprudence, want of care, and want of skill 
 both of the master and of the crew (Weil, § 169). 
 
 ' 8 App. Cas. 393, • I Camp. 434.
 
 VI MEN-OF-WAR lU 
 
 to secure himself against the risk of the dishonesty of the 
 master, it does seem curious that underwriters should be 
 ready, as they are, to insert in their common form of policy 
 what practically amounts to a guarantee of the commercial 
 morals of any captain and crew, with whom they are in less 
 intimate connection, whom they have much less chance of 
 knowing than the shipowner has. There is much less diffi- 
 culty in comprehending the reasonableness of indemnifying 
 cargo-owners against the barratry of master and crew. 
 
 in. Perils arising from the Action of People noi 
 ON Board the Insured Vessel 
 
 Men-of-war, enemies, pirates, rovers, thieves, letters of mart and 
 countermart, surprisals, takings at sea, arrests, restraints and detain- 
 ments of all kings, princes, and people, of what nation, condition, 
 or quality soever. 
 
 To realise the full meaning l>f these words, one must 
 think of a condition of affairs in which states made sea-war 
 with one another, not only with their fleets of warships, but 
 also with the armed vessels of private persons making a 
 trade of war, and with ships licensed to attempt to do 
 damage within the enemy's frontier. To that must be 
 added such figures as Paul Jones, the Moors of Algiers, the 
 Sallee rovers, and the Chinese sea pirates. Then it must 
 be borne in mind how slowly news spread before the estab- 
 lishment of a regular postal and telegraph service, and 
 how slow all locomotion was by land and sea before the 
 introduction of steam as a motor. Vessels toiled to their 
 port of destination only to find it blockaded against their 
 fl'ig. or got in just in time to be captured and put up to 
 prize' court and condemned as good prize,' and by the 
 time the court had done with them, port and vessels might 
 be recaptured by the ship's own nation or by a friendly 
 power. 
 
 The intent of this paragraph of the policy would be 
 
 > Should be pHie, bcinj; the Latin prensm, through the French 
 priu : not prixe, which is the L.ilin pretium through the French prix
 
 lie MARINE INSURANCE CHAf 
 
 made clearer jf the wording were slightly rearranged and 
 made to read : — 
 
 Surprisals and takings at sea liy all men-of-war, enemies, Ictteri 
 of mart and counUTniart, pirates, rovers, and thieves, arrests and 
 detainments of all kings, princes, and people, of what nation, condi- 
 tion, or quality soever. 
 
 To take the words as they stand in the policy, " men-of- 
 war" cannot be mistaken, they are the declared and 
 authorised warships of a belligerent nation. '* Enemies " 
 are not merely unfriendly people, but open declared foes, 
 people under a hostile flag and primarily privateers under a 
 hostile flag, not equal in martial dignity to men-of-war, but 
 still equipped for carrying on authorised warfare. The 
 phrase, " letters of mart and countermart " (or marque and 
 countermarque) is used to designate one special class of 
 privateers.^ In former times it was customary for sovereigns 
 to grant to such of their subjects as had suffered seizure of 
 their property by the subjects of other states, letters or 
 commissions authorising the former to make good their loss 
 by retaliation on fellow-subjects of the seizers. The vessels 
 employed in this service by persons provided with such a 
 document were commonly described by the name of the 
 document. It is evident that this class of cruiser is much 
 less wide than that embraced under the word " enemies," 
 and is not at all equivalent to what is described under 
 " men-of-war." But all three have this in common, that 
 they own a national flag, make war only against the declared 
 foes of their own nation, and do so only after obtaining the 
 pennission of the supreme authority of their own nation. 
 
 On the other hand, "pirates, rovers" are depredators 
 who own no nationality and are living in what is practically 
 a state of outlawry. Both words mean the same thing, or 
 at most the difference is a slight difference of degree ; it 
 may be that as the pirates of certain regions (mostly 
 Mohammedan Moors or Arabs) were generally known as 
 " rovers," the word was added to designate them especially. 
 
 * It is worth remark that privateering was formally abolished by the 
 Treaty of Paris, 1856, at least as regards the signatories of that treaty.
 
 VI THIEVES— CAPTURE AND SEIZURE 113 
 
 Piracy is a very grave criminal offence, so that the com- 
 mission of any act held by the courts to be piracy entails 
 grave consequences. It has been decided that when a 
 crew mutinies, seizes, and makes off with their ship, the 
 offence is piracy {Brown v. Smith, 1813).^ It will be noted 
 that this is one of the offences which has been already 
 described as barratry; Amould remarks (p. 841, note /) 
 that in Dixon v. Reid " such loss was laid as loss by 
 barratry, which seems the true mode of alleging it." Simi- 
 larly, when Canton coolies being conveyed in a ship to 
 Chili murdered captain and crew and took away the ship, 
 the act was held to be an act of piracy {Naylor v. Palmer, 
 1 853). 2 One most surprising decision on piracy is given by 
 Amould thus (p. 841): "When a meal mob on the coast 
 of Ireland violently boarded a corn-laden ship, took the 
 government of her from her captain and crew, ran her on a 
 reef of rocks whereby the cargo was damaged, and then 
 forced the captain to sell the com at a low price. Lord 
 Kenyon held that this was a loss by pirates " {Nesbitt v. 
 Lushington, I792).3 The action of the mob certainly in 
 some respects resembled the action of pirates, but it would 
 be better described as robbery or theft. As for '' thieves," Addenda 
 they are the class of pillagers who would certainly use 
 violence, but might respect human life. They were in sea- 
 life the counterpart of the footpads of the last century, and 
 need not be assumed to own no national flag any more than 
 a footpad need be assumed to have no country or nation- 
 ality. They must be "sturdy" thieves, not "sneak" 
 thieves, violent pillagers, not mere pilferers, or as the law- 
 books put It, latrones, not fures. Some American policies 
 amplify the English form and say " assailing thieves," a Addenda 
 formula which would describe the aggressors in Nesbitt v. 
 Lushington ^ much better than " pirates." Pilferage or petty 
 theft is regarded as so entirely the result of negligence or 
 carelessness, that any loss arising thereby should be home 
 by the captain. There was a great deal of sense in this 
 
 • I Dow P.C. 349. 
 « 9 B. & Cr. 718 ; 8 Exrh. Rep. 739 ; 10 Exch. Rep. 38a, 
 » 4T.R. 783. 
 
 I
 
 114 MARINE INSURANCE chap. 
 
 view in the days when ships were of a size that the captain 
 could easily keep an eye over all that was done on board ; 
 nowadays, in altered conditions, the task is enormously 
 more difficult.^ 
 
 All these hostile parties agree in having for their object 
 " surprisals and takings at sea." 
 
 (a) " Surprisal " is a word rarely heard in modem com- 
 merce, being generally replaced by the word " capture." 
 Either word denotes a taking by the enemy as prize, in 
 time of open war or by way of reprisals, with the intention 
 of depriving the owner of all right of property over the 
 thing taken. Under this clause underwriters are liable to 
 pay the insured value of ship or goods captured by the 
 enemy or by pirates, the necessary expenses of recovering a 
 captured ship, and any sum paid to stop condemnation in 
 the prize court. But it must be noted that it has been 
 decided on grounds of public policy {Furfado v. Rodgcrs^ 
 1802,2 and Kellner v. Le Mes7tner, 1803 •'') that the risk of 
 capture by British vessels cannot legally be covered by 
 British underwriters, whether the policy was effected before 
 or after the outbreak of hostilities {Gamba v. I^ Mesurier^ 
 1803).* Since these decisions, policies have been issued 
 covering these forbidden risks, but they are merely honour 
 documents and cannot be enforced in any British court.^ 
 
 (b) By " takings at sea " are meant the stoppage and 
 forcible taking into port of neutral vessels, probably stopped 
 on account of their cargo being suspected to belong to the 
 enemy. The term is less forcible than " surprisals," because 
 the intention is not to deforce the neutral shipowner of his 
 property, but only to stop its employment to the taker's 
 disadvantage. " Taking at sea " is commonly expressed in 
 modem commercial language as " seizure." 
 
 But short of such stringent measures as surprisals and 
 
 ^ See Lord Justice Bowen in Steinmmtn v. Angier Line, 7 Times 
 L.R. 398. 
 
 * 3 B. & P. 191. Vide pp. 103 anfl 117 {Butler v. Wildman, 
 1820, Abbot, C.J.) ^ 4 Kfist 396. * 4 East 407. 
 
 ' " Fear of capture " not covered by the policy. Lord Ellenborough 
 lii Dlankenhageti v. London Assjirance li Camp. 453), v. pp. 103, 117.
 
 n F.C. AND S. CLAUSE IIS 
 
 takings at sea there may be other inconveniences in the 
 stoppage of property. Without declaration of war a govern- 
 ment may declare what is called an embargo, a prohibition 
 to remove certain goods or vessels. For instance, in 1892 
 the Russian Government prohibited the export of certain 
 classes of grain. The owner of a ship loaded with such 
 grain ready to sail when the regulation was issued would be 
 deprived of his property (or at any rate deprived tempor- 
 arily of the disposal of his property) by the administrative 
 act of a friendly foreign government. This is the kind of 
 risk contemplated in the words, "arrests, restraints, and 
 detainments of all kings, princes, and peoples," etc. etc. Addenda 
 There is an act of deprival or detention without hostile 
 intentions ; it is an authorised act of a recognised authority, 
 royal, princely, or national (for here " people " certainly 
 means " nations ").i If it results in the o^vner being for 
 any length of time deprived of his property, and if he is not 
 a subject of the government effecting the arrest, the under- Addenda 
 writer will under the ordinary form of policy have to make 
 good to him his loss. 
 
 The risks of capture, seizure, and detention are often 
 excepted by underwriters from their policies, and this has 
 usually been effected by the adding in the margin of the 
 policy a clause known as the " free of capture and seizure " 
 (F.C. & S.) clause. The form of this clause varies, 
 and the exact effect depends on the wording. Mean- 
 while it may be noted that the addition of such a clause 
 accomplishes more than the mere deletion of the words 
 relating to surprisals and takings at sea in the body of the 
 policy, because loss by pirates and rovers "was formerly 
 included amongst the general perils of tlie seas" says Amould 
 (p. 841, citing Park), "and probably would still be held to ' 
 be so." Consequently a deletion of the special words would 
 not be sufficient to free the underwriter from the risk. But 
 the F.C. & S. clause is so generally used that it has 
 come to be regarded as part of the conditions on which an 
 
 ' Mr. Justice Bullen, in Nnbitt v. Lushint^on, 1792 (4 T. R. 783), 
 uid the word "people" in th;.s clause means the supreme power of 
 the country, whatever it may oe.
 
 Il6 MARINE INSURANCE chap 
 
 ordinary quotation is made or risk^ accepted. When the 
 underwriter is willing to accept the risks of surprisals, 
 takings at sea, etc., he deletes the marginal F.C. & S., 
 and then his liability remains as it would have been had 
 the F.C. & S. clause never existed on his policy. 
 
 The clause just examined completes the statement of the 
 special perils named in the policy ; thereafter follow the 
 general words : — 
 
 And of all other perils, losses, and misfortunes that have or shall 
 come to the hurt, detriment, or damage of the said goods and 
 merchandises and ship, etc., or any part thereof. 
 
 On first reading, it seems as if in this clause the under- 
 writer assumed in it liability for every kind of loss or 
 damage not already explicitly specified ; the policy seems 
 to give in these words all that has been excluded by the 
 words already discussed. As it was found that the liberty 
 to touch and stay at all ports must be interpreted strictly in 
 connection with the words " in this voyage," so here it will be 
 found that the apparently unlimited words, " all other perils," 
 etc. etc., must be interpreted strictly in accordance with the 
 principle of identity of genus with the enumerated perils. 
 
 The first case in which the British courts were called 
 upon to interpret and enforce this clause was Cullen v. 
 Butler, 1 8 1 6,- in which one British ship mistaking another 
 British ship for an enemy fired upon her and sank her. 
 The Court inclined to the opinion that the loss was not one 
 by " perils of the sea," but held that it was covered by the 
 general words. Lord Ellenborough said (Phillips, § 1126, 
 and quoted by Lord Herschell in Hamilton v. Thames and 
 Mersey Marine Insurance Company, House of Lords, 1887):^ 
 " The extent and meaning of the general words have not 
 yet been the immediate subject of any judicial construction 
 in our courts of law. As they must, however, be considered 
 as introduced into the policy in furtherance of the objects 
 
 ^ The F.C. & S. clause exempts underwriters from claims for amount 
 of penalty paid as price of release from seizure consequent on smuggling. 
 Cory V. Burr, 1883, 5 App. Ca-ses 393. 
 
 « S M. & Sel. 461. » L.R. 12 App. Cas. 484.
 
 "all other perils," etc. 117 
 
 of marine insurance, and may have the effect of extending 
 a reasonable indemnity to many cases not distinctly covered 
 by the special words, they are entitled to be considered as 
 material and operative words, and to have the due effect 
 assigned to them in the construction of the instrument, and 
 which will be done by allowing them to comprehend and 
 cover other cases of marine damage of the like kind with 
 those which are specially enumerated and occasioned by 
 similar causes." The principle here laid down is known as 
 the principle " ejusdem generis (of same kind)." 
 
 In Butler \. Wildman, 1820,^ the captain of a ship threw 
 a large quantity of dollars overboard to prevent their falling 
 into the hands of an enemy by whom he was pursued. 
 Chief Justice Abbot said : " If not, strictly speaking, jettison, 
 it is ejusdem generis, and therefore falls within the general 
 words." In Phillips v. Barber, 1821,2 the same judge said : 
 " These general words are indeed restrained in construction 
 to perils ejusdem generis with those more particularly enu- 
 merated in this policy." In Davison v. Burnand, 1868,^ 
 Mr. Justice Willes expressly recognised the rule of con- 
 struction laid down in Cullen v. P-i'tler, 1816,^ and said, 
 " The question is not whether the loss here was strictly one 
 occasioned by the perils of the sea, but whether it was such 
 other loss within the policy, which of course must be a loss 
 of the same or a similar kind to one happening from perils 
 of the sea." 
 
 In the case of the West India and Panama Telegraph 
 Company v. Home and Colonial Marine Insurance Company, 
 1880,* a claim was made for the jiayment of damage done 
 to the steamer Investigator, through the bursting of its boiler. 
 Upon examination it was found that the bursting was due 
 to the thinning down of the shell of the boiler, and that 
 the thinning down was due chiefly to the action of bilge- 
 water on the outside of the boiler and to the accumulation 
 of sediment in the inside. Lord Selborne and Chief justice 
 
 But see p. 103, note 2, Blankenhagen ▼. 
 
 » L.R. 4 C. r-. 1.7. 
 • L.R. 6 y. IJ. D. 51. 
 
 » 3 
 
 B. 
 
 & Aid 
 
 ■ 398 
 
 Ijtndon A 
 
 Siurance. 
 
 ' S 
 
 U. 
 
 & Aid. 
 
 161. 
 
 *5 
 
 M. 
 
 &Sel. 
 
 461.
 
 tl8 MARINE INSURANCE CHAP. 
 
 Cockbum held that the explosion was a peril within the 
 general words : Lord Esher (then Brett, J.) held that the 
 explosion was so much ejusdem generis with fire as to come 
 within the general words ; but he added that without the 
 word " fire " notninatim in the policy he could not have 
 seen that explosion was like the perils enumerated. The 
 case was decided m the Court of Appeal in favour of the 
 assured, and did not go to the House of Lords. But the 
 whole matter came before the House of Lords in the case 
 of the Inchfnaree, {^Hamilton v. Thames and Mersey Marine 
 insurance Company, 1887),^ a test case arranged to go 
 up to the Lords in order that, if possible, the liability of 
 underwriters for damage to steamers' machinery insured on 
 an ordinary marine policy should be clearly defined. To 
 take the words of Lord Macnaghten : " The Inchmaree, was 
 in March 1884 off Diamond Island, lying at anchor and 
 about to prosecute her voyage. It was necessary to fill up 
 her boilers. There was a donkey engine and donkey pump 
 on board, and the donkey engine was set to pump up water 
 from the sea into the boilers. Those in charge of the 
 operation did not take the precaution of making sure that 
 the valve of the aperture leading into one of the boilers 
 was open. This valve happened to be closed. The result 
 was that the water being unable to make its way into the 
 boiler was forced back and split the air-chamber and so 
 disabled the pump. This was the beginning and the end of 
 the misfortune." On behalf of the assured an endeavour was 
 made to show that the damage was covered by the general 
 words. The Queen's Bench Division gave judgment for 
 the assured ; the Court of Appeal affirmed this judgment 
 by a majority consisting of Lords Justices Lindley and 
 Lopes, while Lord Esher dissenting took the opportunity 
 of expressing his doubts of the correctness of the view he 
 had taken in the .Investigator^ case {West India and 
 Panama Telegraph Company v. Home and Colonial Marine 
 Insurance Company, i88o).2 In the House of Lords on 
 appeal these decisions were unanimously reversed, Lord 
 
 » I^R. 17 Q.B.D 198 & 12 App. Cas. 484. 
 ■^ L.R. 6 Q.B.D. 51.
 
 VI " INCHMAREE " CLAUSE !!$ 
 
 Esher's view being maintained, namely, that the loss was 
 covered neither by any of the special words of the policy 
 nor by the general. The judgment of Lord Herschell was 
 particularly full : he considered that it was " impossible to 
 say that this is damage occasioned by a cause similar to 
 ' perils of the sea ' on any interpretation which has ever 
 been applied to that term." And he went on to say, " It 
 will be obser\'ed that Lord Ellenborough limits the opera- 
 tion of the clause to ' marine damage.' By this 1 do not 
 understand him to mean only damage which has been 
 caused by the sea, but damage of a character to which a 
 marine adventure is subject. Such an adventure has its 
 own perils, to which either it is exclusively subject or 
 which possess in relation to it a special or peculiar char- 
 acter. To secure an indemnity against these is the purpose 
 and object of a policy of marine insurance." 
 
 Since the Inchmaree, case there has been no further 
 litigation on the general words : the judgment of the 
 House of Lords was decisive and unmistakable. But 
 the immediate practical consequence was the invention 
 of a special clause of such a tenor as to get completely 
 round the House of Lords' judgment which was given on 
 an ordinary policy. The use of that clause has become 
 almost universal in policies on steamers, particularly in 
 time policies. It reads as follows : — 
 
 This insurance also specially to cover (subject to the free-of- 
 average warranty) loss of or damage to hull and machinery through 
 the negligence of master, mariners, engineers, or pilots, or through 
 explosions, bursting of boilers, breakage of siiafts, or through any 
 latent defect in the machinery or hull, provided such loss or Addenda 
 damage hxs not resulted from want of due diligence by the owners 
 of the ship, or any of them, or by the manager. 
 
 This clause is often, for the sake of brevity, called the 
 " Inchmaree, clause." The words " subject to the free-of- 
 avcrage warranty" are a recent addition: their effect will 
 become clear when that warranty comes to be discussed.
 
 CHAPTER VII 
 
 THE POLICY : PART II — continued 
 
 Sue and Labour Clause^ Waiver Clause, Force and Effect oj 
 Policy, Consideration, Attestation 
 
 And in case of any loss or misfortune it shall be lawful ^ to the 
 assured, their factors, servants, and assigns, to sue, labour, and 
 travel for, in, and about the defence, safeguard, and recovery of the 
 said goods and merchandises and ship, etc., or any part thereof, 
 without prejudice to this insurance ; to the charges whereof we, the 
 assurers, will contribute each one according to the rate and quantity 
 of bis sum herein assured. 
 
 This clause appears in the London policy of 1 6 1 3, and 
 would seem to be indigenous to England, as no clause 
 corresponding to it is found in the Florentine form of 1527. 
 It is striking that the first mention in the policy of payments, 
 charges, and expenses does not occur in reference to loss 
 of, or damage to the subject insured, but in connection with 
 efforts made to defend, safeguard, and recover ship or goods, 
 or any part thereof, after a loss or misfortune has occurred. 
 
 This portion of the policy is known as the " sue and 
 labour clause." It is, in fact, a supplementary side-contract 
 dealing with one separate class of expenses known as 
 " particular charges." Its operation is limited and com- 
 pleted by what is termed the " waiver clause," which in 
 some policies is printed in the margin, but in the ordinary 
 modtfm Lloyd's form follows the sue and labour clause as 
 part of the text, viz. — 
 
 And it is expressly declared and agreed that no acts of insurer 
 
 ^ The American form reads : "it shall be lawful and necessary to 
 and for the assured, etc." ; the necessity thus imposed on the assured 
 introduces into American law and practice features unknown in England.
 
 CHAP. VII SUE & LABOUR AND WAIVER CLAUSES 121 
 
 or assured in recovering, saving, or preserving the property insured, 
 shall be considered as a waiver or acceptance of abandonment. 
 
 If the two are taken together their intent is clear: it is 
 plain that if either party to the insurance contract takes 
 steps to defend, safeguard, or recover property covered by 
 the policy, these steps shall not be taken to prejudice or 
 alter the respective positions of the parties concerned, and 
 that when the assured, either in person or through factors, 
 servants, or assigns, does his best to avert loss, his expenses 
 incurred in doing this are guaranteed to him by the under- 
 writer in proportion to the sum insured. In fact the object 
 of the sue and labour clause is to encourage the assured, 
 his employees, and all to whom the benefit of the insurance 
 may have been passed, to take all possible steps to save 
 property in danger : the object of the waiver clause is to 
 enable the assured (and those deriving rights from him), 
 and also the underwriter, to undertake operations and incur 
 expenses meant for the safeguard of the property insured, 
 without any fear of thereby introducing some new element 
 into the contract or nullifying some step of commercial 
 or legal procedure already taken. Abandonment, accept- 
 ance of abandonment, and waiver or revocation of abandon- 
 ment will be treated at some length below. 
 
 It is to be observed that the clause providing for "suing 
 and labouring" takes no effect until a loss or misfortune 
 has actually occurred : it does not cover expenses incurred 
 or operations undertaken with the object of averting the 
 occurrence of a peril. Such expenses and operations are 
 the elements forming another nexus between assured and 
 underwriter. 
 
 There is no suggestion in the sue and labour clause of 
 the possibility that the underwriter may take steps for the 
 defence, safeguard, etc., of the property insured. That may 
 be either because in the days when the policy was drawn 
 up such a thing was unheard of, or because the right of the 
 underwriter to take such steps was considered so unmis- 
 takable that it was unnecessary to specify it. But by the 
 time that the parties to the contract founrl the necessity of 
 devising the waiver clause, it had become apparent that the
 
 122 MARINE INSURANCE chap. 
 
 assurer as well as the assured might and did take steps to 
 save the property in question, so that in modem policies 
 the right of the underwriter to step in is indirectly 
 secured. 
 
 Of the persons whose action is in the sue and labour 
 clause admitted as equivalent to that of the assured we 
 may put down first the captain of the ship. His duty as 
 respects the saving of the ship herself has never been a 
 matter of doubt ; but as to cargo there has been a certain 
 amount of difficulty. Formerly, when tlie custom was for 
 merchants to travel in the carrying ship and take charge of 
 their goods (of. Laws of Oleron, §§ 8, 9 ; circa 1195; 
 quoted by Lowndes, General Average, p. 6), the captain 
 did not represent the cargo owners. Even later, when 
 merchants did not accompany their wares to sea, they 
 usually delegated their authority to a special representative 
 of their own, the supercargo. But as loading on the 
 berth grew commoner and the conditions of oversea trade 
 were changed, it became unusual for the cargo to be ac- 
 companied either by its owner or by any special repre- 
 sentative of him. Consequently, nowadays, the only person 
 who can in most cases take such steps as are contemplated in 
 the sue and labour clause is the captain of the ship. In 
 the case of the Grattiudine, 1801,^ Lord Stowell decided that 
 in case " of instant, unforeseen, and unprovided necessity," 
 the master whose only duty to the cargo in ordinary cir- 
 cumstances is to keep and convey it in safety, is bound by 
 the general policy of the law to assume the character of 
 supercargo and agent for the cargo owner. Consequently 
 a shipmaster is now bound to do all he can to complete the 
 venture so far as both ship and cargo are concerned, and 
 must act on his own responsibility, to the utmost of his 
 skill and power, and in absolute good faith in furtherance of 
 the interests of the principals. If he has the means of 
 communicating with them he ought to communicate, and as 
 agent he must carry out any instructions he gets from them 
 so far as thio is possible and compatible with that better 
 knowledge of the actual position of affairs which he of 
 
 ' 3 Rob. 240.
 
 VII DUTY OF CAPTAIN — SALVAGE OPERATIONS 123 
 
 necessity possesses. He may even in case of necessity 
 hypothecate not the ship only but the cargo also in order 
 to raise money for the repairs of the ship (the Gratitudine^ 
 i8oi).i In case of absolute necessity where he, after 
 disaster, cannot find reasonable means of conveying goods 
 to destination, he may sell the goods (cf. Mr. Justice Willes 
 in his judgment in Noiara v. Henderson, \%y2).^ For 
 instance, if he has a cargo of fruit when his ship meets 
 with disaster, and he finds that it will perish before he can 
 manage to deliver it at the place of destination, he is 
 entitled to sell the fruit at a place short of destination. 
 But it is only when there is necessity for the sale of the 
 cargo that the master of a ship has authority to act as 
 agent for the sale of the cargo, and without such necessity 
 the sale may not be binding on the owners of the goods 
 (see Atlantic Mutual Insurance Cottipany v. Httth, 1880,^ 
 and Australasian Steam Navigation Company v. Morse^ 
 1872).* Consequently where the captain can communicate 
 with the cargo owners he should do so. 
 
 The e.xtension of the operations of wrecking organisa- 
 tions and salvage associations has in some waters greatly 
 diminished the number of cases in which captains have to 
 take these responsibilities. But there are still immense 
 portions of the world where it takes months to get in- 
 structions sent in reply to the report of an accident, so 
 that there are still only too frequent occasions for the 
 captain to exercise the latent authority and agency vested 
 in him. In European and North American waters, in the 
 Bay of Bengal and on the eastern and southern coast 
 of Australia, the work and responsibility contemplated in 
 the sue and labour clause is generally undertaken by 
 special corporations sending out experts who have had 
 experience in operations at wrecks, and who have at their 
 disposal diving-gear, tugs, pumps, and other necessary 
 plant. The practice in such cases is for the corporation or 
 salvage company to get written authority or instructions 
 from the shipowner to take the necessary steps to save 
 ' 3 Rob. 240. » L. R. 7 Q. IJ. 235. 
 
 » 16 Ch. I>. 474. * 4 I'.C:. 233.
 
 124 MARINE INSURANCE chap. 
 
 the venture. In some cases the authority of the captain is 
 accepted or even preferred. Occasionally a supplementary 
 authority is obtained from underwriters on such interests 
 as are known to be insured with them, or such as they care 
 to acknowledge the insurance of. This is done partly 
 with a view to full authorisation of the person or persons 
 engaged in the operations, and partly with a view to the 
 proper final incidence of the expenses. The reference 
 to charges and the underwriter's undertaking to contribute 
 a pro|J)er proportion, found in the clause does not exhaust 
 the question of incidence. For while the clause certainly 
 renders the underwriter liable for all or some of the 
 expense incurred in defending, etc., the property he has 
 insured, there is within the policy no means of determining 
 the amounts to be paid by the underwriters of different 
 parcels of goods. Each policy of insurance being a 
 contract entirely independent of all others running at 
 the same time (unless in cases of double or multiple in- 
 surance, or of policies containing express reference to 
 others), there is no solidarity ^ of underwriters. In 
 practice the apportionment of the expenses has to be made 
 quite apart from any consideration of insurance and in 
 connection with the contract of affreightment ; the amounts 
 incurred being paid by the owners (or consignees) of the 
 separate interests in proportion to the benefits received 
 from the operations as indicated by the values saved. All 
 that the words of the policy now under consideration mean 
 is that the underwriter on any particular interest shall bear 
 the same proportion of the expenses incurred on beJialf oj 
 these goods as his subscription bears to the value named in 
 the policy. Even in this limited application a difficulty 
 may arise should the expenses incurred in the " suing and 
 labouring " operations exceed the values recovered. If 
 the expenses have been incurred in good faith by an agent 
 sent to the scene of the disaster on the suggestion or 
 selection of the underwriters, they seem to be properly 
 chargeable to the underwriters. Even if the case were 
 managed entirely by the shipmaster, or some agent of his, 
 ' Solidariii tFr.)=joint-and-several liability.
 
 vii SUE AND LABOUR EXPENSES, ETC. 125 
 
 then probably the only question that can be raised is 
 whether the person in charge acted in good faith and to 
 the best of his ability : if so, and if his action averted a 
 loss from the underwriters, the expenses seem equitably to 
 fall on them. But in both of these cases it is assumed 
 that the real value of the goods is not in excess of the 
 amount insured ; in other words, that the owner is 
 not his own underwriter for part of the value. If he is 
 his own underwriter then he is, to the amount not covered 
 elsewhere, interested in the results of the operations and 
 must bear his proportionate share of the expenses. 
 
 It is evident that the cost of operations, such as recon- 
 ditioning of cargo if incurred at an intermediate port, may 
 form a sue and labour expense, while it becomes, if incurred 
 at port of destination, the means of estimating the amount of 
 damage suffered by the cargo. When the question of 
 particular average comes to be discussed, it will become 
 apparent that in many cases expenses are in the first case 
 recoverable from underwriters, while in the second, in 
 consequence of the conditions of the policy regulating the 
 underwriter's liability for damage (as distinguished from 
 total loss), they are not so recoverable. 
 
 There is a somewhat parallel diversity in the treatment 
 of what are called "extra charges," the incidental costs 
 arising out of damage and claim, such as survey fees, 
 auction chrH-ges, adjustment fees, etc The habit has been 
 for underwriters and adjusters to follow the custom of Lloyd's, 
 and allow in full all such charges incurred at destination, 
 while only allowing in proportion to the amount insured 
 such as are incurred at an intermediate port. This custom 
 fKjssibly arose from consideration of the difference of the 
 circumstances in which the expenditures take place. 
 
 It is most important to remember that the charges 
 incurred under the sue and labour clause must be — 
 
 (a) Incurred by the assured, his servants, factors or 
 assigns. 
 
 (i) On behalf of the property insured in a particular 
 policy. 
 
 There are consequently excluded from the operation of
 
 ia6 MARINE INSURANCE chap. 
 
 this clause (i) all expenses incurred in consequence of the 
 action of parties not described under (a), such as salvors 
 picking up property at sea, or persons voluntarily under- 
 taking salvage work on a wreck as a speculation ; and (2) 
 all expenses not incurred for the benefit of special items of 
 property, but for the safeguarding of the whole venture on 
 board any ship and all sacrifices made to avert peril from 
 the whole venture, matters which will come up for discussion 
 later under the name of " General Average." 
 
 Force and Effect of the Policy 
 
 And it is agreed by us, the insurers, that this writing or policy of 
 assurance shall be of as much force and effect as the surest writing 
 or policy of assurance heretofore made in Lxjmbard Street, or in the 
 Royal Exchange, or elsewhere in London. 
 
 In these words the policy has since the sixteenth century 
 perpetuated one great tradition of English commerce. In 
 the policy of 161 3 the underwriters speak of "the best and 
 most suerest pollacie or writinge of assurance which hath 
 binne euer heretofore vsed to be made lost or not lost in 
 the aforesaid street (Lumbard street) or Royall Exchange." ^ 
 The clause has disappeared from many English policies, 
 especially from those issued in the outports, and also pretty 
 generally from companies' policies. But till within the last 
 thirty-five years few English policies were issued that did 
 not contain this clause or some variant of it. Indeed, 
 without some such clause expressed or understood it is 
 difficult to know what is and what is not covered by the 
 policy. To settle this by a reference to tradition, somewhat 
 vaguely expressed, appears a very loose and casual mode of 
 proceeding, but it is a striking instance of a character- 
 istically English commercial method. There is no such 
 clause in the Florentine formula of 1523. The only 
 parallel is the Antwerp clause mentioned in the Historical 
 Introduction, p. 4. 
 
 ^ Mr. R. G. Marsden has traced the formula as far back as 20th 
 September 1547 ; a policy in Italian issued then in London naming 
 ' ' questa lombarda strade di I^ndra. "
 
 VII FORCE AND EFFECT OF POLICY 127 
 
 The effect of the clause is simply that where no provision 
 to the contrary referring to any particular point is found in 
 the policy, the assured is entitled to recover from the 
 underwriter whatever it has been the custom of assured to 
 recover from London underwriters. The burden of proof 
 accordingly lies on the assured. 
 
 The Binding Clause 
 
 And so we the assurers are contented, and do hereby promise 
 and bind ourselves, each one for his own part, our heirs, executors, 
 and goods, to the assured, their executors, administrators, and 
 assigns, for the true performance of the premises. 
 
 This is the form still employed by Lloyd's and other 
 private underwriters ; but being obviously not suitable 
 for the limited liability companies which engage in the 
 business of marine insurance, has had to be altered for their 
 use into something like the following : — 
 
 Now this policy witnesseth that the said company takes upon 
 itself the burden of this insurance to the amount of . . . pounds, 
 and promises and binds itself to the assured, their executors, 
 ailministrators, and assigns for the true performance and fulfilment 
 of the contract contained in this policy. 
 
 There is only one difficulty in connection with the words : 
 it is to determine what constitutes " true performance of 
 the premises," or as it is expressed in the later form, " the 
 burden of this insurance " or " the true performance and 
 fulfilment of the contract contained in this policy." Where 
 the policy contains a reference to the custom of Lombard 
 Street, such as has just been discussed, the difficulty is 
 slightly lessened. But the fact remains that the policy 
 contains no definite statement of what is to be paid in 
 event of certain casualties, no account of the method in 
 which the liability of the undenvriter is to be determined. 
 These important points have from time to time been 
 determined by the courts, as naturally disputes arose 
 regarding the duties and obligations of the parties to this 
 contract. Enlightened by the decisions of the judges, it is
 
 laS MARINE INSURANCE chap. 
 
 comparatively easy for modem commercial men to know 
 what the words of the policy contain ; they have learnt to 
 read into the policy a certain meaning. But the first 
 reading of a marine insurance policy usually leaves the 
 reader in a state of utter uncertainty of its real purport and 
 effect, and it is only after experience or research that he 
 becomes aware of what is involved in " the true perform- 
 ance" of the contract, namely, the payment of material 
 losses in whole and in -some cases in part, of certain 
 deteriorations and of certain liabilities, provided that these 
 losses, deteriorations, and liabilities result immediately from 
 some of the perils insured against enumerated in the policy. 
 These will be treated later in detail. 
 
 The Consideration 
 
 Confessing ourselves paid the consideration due unto us for this 
 assurance by the assured ... at and after the rate of . . . 
 
 This form of the consideration clause is an absolute 
 receipt for the premium, so that delivery of the policy can 
 be alleged as proof of the payment of the premium. As 
 the use of such a form has not always been found con- 
 venient, many companies now word their policies thus : — 
 
 In consideration of the person or persons effecting this policy 
 promising to pay to the said company a premium at and after the 
 rate of . . . 
 
 The employment of this form enables underwriters to 
 part with policies without previously receiving payment of 
 premium and without thereby vitiating their claim for 
 payment. 
 
 The ATTESTAnoN 
 
 In witness whereof, we the assurers have subscribed our names 
 and sums assured in London. 
 
 This clause is followed m a Lloyd's policy by a list of 
 names and sums ; the aggregate amount of the different sums 
 subscribed by each underwriter equals the amount required
 
 VII CONSIDERATION — ATTESTATION OF POLICY 129 
 
 to be insured. There is no joint - and - several liability 
 (solidarity) among the underwriters subscribing a Lloyd's 
 policy, as the binding clause expressly provides that the 
 underwriters subscribe "each of his own part." Such a 
 clause is obviously unsuitable for the use of limited liability 
 companies, which have consequently adopted such words as 
 the following : — 
 
 In witness whereof the undersigned, on behalf of the said Com- 
 pany, according to a Resolution duly passed by the Board of 
 Directors, have hereunto set their hands, in London, the day of 
 1 90-. 
 
 The Articles of Association of the various marine insur- 
 ance companies and the resolutions of their boards respect- 
 ing the proper attestation of their policies differ ver)' much 
 from one another. In some cases the signature of one 
 director is all that is required : few policies require more 
 than two signatures, whether both of directors, or the one of 
 a director and the other of an official. Most companies do 
 not seal their policies. 
 
 This clause completes the policy as it existed in 1748. 
 The remainder of the policy consists of what is termed 
 "The Memorandum" added in May 1749 (with which 
 addition to the 1748 policy, it is the same as appears in 
 the schedule of 35 Geo. III. c. 63 ; the Stamp Act of 
 1795). No later additions have been made to the body 
 of the policy ; they are made as required, either as marginal 
 clauses or written in on the face of the policy. The effect 
 of these clauses will be the subject of discussion below. 
 
 K
 
 CHAPTER VIII 
 
 PRINCIPLES OF INTERPRETATION OF THE POLICY 
 
 Lawyers and text -book writers have not spared theii 
 language when they have had the opportunity to describe the 
 ordinary English policy of marine insurance (v. p. 28). It 
 has been described as a badly drawn, illogical, and altogether 
 hopeless document. Amould (p. 16), citing Mr. Justice 
 Buller (4 T.R. 210), says it has always been regarded by 
 our courts of law as an absurd and incoherent document ; 
 and he gives the remark of Mr. Justice Lawrence (in 
 Marsden v. Reed^ 1 803) : ^ "It is wonderful that policies 
 should be drawn with so much laxity." In Pelly v. Royal 
 Exchange^ I7S7,^ Lord Mansfield spoke of the "ancient 
 and inaccurate form of words in which the instrument is 
 conceived." It consequently behoves those who have to 
 deal with this instrument to try to discover the principles 
 on which the courts have ascertained its meaning in the 
 cases that have come before them. 
 
 It will have been noticed that in the words of the policy 
 and in the explanatory remarks offered above, there is 
 constant reference to the conditions of trade as it used to 
 be, or as it is now. It will also be remembered that in the 
 description of the simplest form of a marine insurance (p. 
 10) the cotumon intention of assured and assurer was 
 mentioned as the basis of the whole transaction. It will 
 be found that the policy cannot be interpreted properly 
 without reference to both of these factors, and the recon- 
 ciliation of them is attended with so many difiiculties, that 
 
 * 3 East 579. * I Burr. 341,
 
 CH. vm INTERPRETATION OF THE POLICY 131 
 
 it has become hard to judge any particular case without 
 careful examination. 
 
 Judge Duer (M. I. i. pp. i 58, i 59) states that, with one ex- 
 ception,^ "the actual intention of the parties is the control- 
 ling principle from which all the special rules of interpretation 
 flow, and to which they are all subsidiary and subordinate. 
 These rules have no positive and arbitrary force." 
 
 The great leading dictum is that of Lord Ellenborough 
 in Robertson v. French^ 1803:2 "The same rule of con- 
 struction which applies to other instruments applies equally 
 to this, namely, that it is to be construed according to the 
 sense and meaning, as collected in the first place from the 
 terms used in it, which terms are assumed to be under- 
 stood in their plain, ordinary, and popular sense, unless 
 they have generally in respect to the subject matter, as by 
 the known usage of trade or the like, acquired a peculiar 
 sense distinct from the popular sense of the same words, 
 or unless the context evidently points that they must in 
 the particular instance, and in order to effectuate the 
 immediate intention of the parties, be understood in some 
 special and peculiar sense." Addenda 
 
 From this it is evident that while indemnity is recognised 
 as the object which the parties framing the contract have 
 in view, account is still taken of the phraseology actually 
 employed. 
 
 Consideration of the phraseology of the policy leads to 
 two conclusions somewhat divergent but still actually 
 complementary to one another. Firsts each word must 
 have its proper value and effect given to it. Should it 
 become necessary to ascertain the intention of the parties 
 in an ambiguous clause, if one interpretation of the clause 
 would add nothing to what the contract clearly expresses 
 elsewhere or necessarily implies, and another interi)retation 
 renders it operative by adding to the efTt-ct of the instru- 
 ment, then the latter interpretation is to be adopted. It is 
 unlikely that the parties intended only to repeat what had 
 
 ' Namely, such conditions as are construed .is w.irranties : in 
 respect to these a nile of strict and literal interpretation prevails. 
 * 4 East T40.
 
 13* MARINE INSURANCE chaf. 
 
 been already stated or implied. Second, the policy being 
 an agreement entered into with one intention, its true 
 meaning should be gathered from a consideration of the 
 whole instrument, and not of the separate clauses of which 
 it is composed and which may in detail be contradictory. 
 
 The words of the policy being, according to Lord 
 Ellenborough's dictum, understood in their plain sense, 
 unless they 
 
 (i) Have a special customary sense, 
 
 (2) Have such a context that their ordinary sense is 
 inapplicable, 
 it becomes necessary to examine in some detail the effects 
 of (i) custom and (2) context. 
 
 ( I ) Custom. — As the contract of a marine insurance is a 
 document of maritime trade, the policy is properly under- 
 stood only when interpreted with constant reference to that 
 trade. Further, as all branches of maritime trade do not 
 agree in the details of their management, the policy is 
 interpreted not in accordance with what may be termed 
 the customs of maritime trade generally, but of the particular 
 trade in which the venture insured is engaged or em- 
 ployed. Such general and notorious customs are enforced 
 judicially as if they were explicitly set forth in the con- 
 tract. It often becomes a question whether the evidence 
 produced proves that a custom really possesses the 
 requisite general and notorious character. But even in 
 the case of a usage which falls short in respect of these 
 attributes, the courts will enforce it if it can be shown 
 that it was in the mind and intention of the parties when 
 they drew up and entered upon tJie contract {Bartlett v. 
 Pentlandy 1830).^ The other qualities required to entitle a 
 custom to legal sanction are that it is reasonable in itself 
 and not repugnant to the expressed words of the contract. 
 The latter quality is very closely allied to that congruence 
 of the words of the contract that forms the subject of the 
 next section. 
 
 The great difficulty about usage is that from its nature 
 it does not appear on the face of the contract while it is 
 
 » 10 B. & Cr. 760.
 
 VIII INTERPRETATION OF THE POLICY 133 
 
 still true in the words of Judge Duer (i. 271) that a valid 
 usage is a part of the contract. In Preston v. Greenwood^ 
 1784,1 Lord Mansfield said, " Usage is always considered in 
 policies of insurance, even when the words are plain." In 
 Longy. Allen, 1785,2 Mr. Justice Buller states that, " Usage 
 not only explains but controls the policy." Judge Duer 
 (i. 245) gives the weight of his authority in favour of the 
 distinction drawn by Mr. Justice Buller, and proceeds in 
 these words, " Where the words to be interpreted are indeter- 
 minate or ambiguous, the usage explains them ; but when 
 they convey a definite meaning that the Court would be 
 bound to adopt, or their construction has been settled by 
 law, the usage controls them ; and in these cases it does 
 set aside what, judging alone from the terms of the policy 
 or the rule of the law, was the plain intention of the 
 parties ; but, in controlling, the usage does not contradict 
 the words — it merely varies by extending or enlarging 
 their application." It is in practice often extremely difficult 
 to distinguish between the control (or modification) of a 
 policy by a usage of the special trade it refers to, and the 
 contradiction of a policy by the same usage. The case of 
 Brown v. Carstairs, 1 8 1 1,^ is in point. It was formerly the 
 usage at Archangel to seal down a vessel's hatches 
 immediately on her arrival, and put a custom-house officer 
 on board until the goods were discharged and conveyed to 
 a government warehouse, where they remained until the 
 duty was paid. A merchant insured his goods from 
 London to Archangel until they should be there discharged 
 and safely landed. It was held by Lord Ellenborough 
 that no action lay against the underwriter for any loss 
 occurring after the sealing of the hatches and boarding of 
 the revenue officer, "for the goods were then landed, 
 according to the usual course of trade at Archangel, which 
 was all the underwriter undertook for." The point that 
 occurs to most readers of this decision is that here control 
 has come very near to contradiction, and it is difficult to 
 reconcile with this the view of Judge Duer that the 
 
 ' 4 Dougl. 28. ' 4 nougl 276. 
 
 * 3 Camp. 160 ; Arnould, p. 75.
 
 «34 
 
 MARINE INSURANCE chap. 
 
 usage in controlling does not contradict the words, but 
 merely varies, by restraining or enlarging, their application 
 (i. 246). For in what plainer and clearer words than 
 those employed in the policy could the merchant have 
 described his intention of insuring the goods until after 
 actual discharge and actual (not customary) safe landing ? 
 It would appear from Lord EUenborough's decision that 
 nothing would have been of any avail short of an explicit 
 exclusion from the contract of a usage which is only 
 implicitly contained in it. 
 
 Most of the cases on usage cited in the books are old, 
 some of them almost antique. The reason is that the 
 opening up of steam trading routes has resulted in a great 
 modification, in many cases an almost entire destruction, of 
 custom of particular places and trades. Whatever be the 
 fault of our present commercial rSgitne, it is certainly one of 
 much more uniform commercial practice than any heretofore. 
 Besides, warned by repeated decisions of the courts, the 
 parties to the marine insurance contract have tried to 
 express in special clauses or definitions more accurately 
 than of old the precise limits and extent of the risks 
 offered and accepted, and in consequence have given more 
 clearness and definiteness to the contents of the contract. 
 
 (2) Context. — As the contract of insurance is one con- 
 tract, it is evidently reasonable to expect that the various 
 parts of it shall tend to one end. Consequently, the plain 
 or literal meaning of the words having been once ascertained, 
 it remains to be seen whether the purport of each clause 
 does or can be made to agree with the general scope and 
 intent of the whole document. In the explanation of the 
 general words ("all other perils, losses, and misfortunes") 
 mention was made of the case of the Inchmaree, [Ha?mlton 
 v. Thames and Mersey Marine Insurance Company, 1887),^ 
 in which an attempt was made to claim under these words 
 the cost of repairs to a donkey boiler, where the occurrence 
 of the damage itself was the only thing of the nature of a 
 peril. It was laid down most distinctly that the courts 
 would not include under the general words any occurrence not 
 ^ L.R. 12 App. Cas. 484.
 
 vili INTERPRETATION OF THE POLICY 135 
 
 of the same class {ejusdem gejieris) as the perils enumerated 
 in the policy. Any other interpretation was held to be 
 outside the general scope and intent of the policy. 
 
 On the other hand, while the sphere of the policy itsell 
 is thus restricted, the marginal clauses which are in special 
 cases added to the policy are treated in another way. It 
 is always considered that as they are special additions to 
 the policy they form the subject of an agreement more 
 detailed and particular than the general agreement to 
 insure contained in the policy. The rule gnven by Lord 
 Ellenborough in Robertson v. French, 1803,^ is that "if 
 there is any doubt about the sense or meaning of the whole, 
 the words superadded in writing are entitled to have a 
 greater effect attributed to them than the printed words, 
 inasmuch as the written words are the immediate language 
 and terms selected by the parties themselves for the 
 expression of their meaning." As Judge Duer pointedly 
 puts it (i. 166), the printed words "may not express the 
 intentions of the parties," the written words "certainly do." 
 There is thus a gradation in the effect to be given to the 
 different parts of the contract. Subject to the general 
 conditions of a marine insurance contract, the terms of the 
 contract are interpreted with increasing strictness — technical 
 or literal as the case may be — according as they are 
 embodied in — 
 
 (i) The body of the text of the policy. 
 
 (2) Marginal printed clauses. 
 
 (3) Printed or stamped clauses impressed or attached to 
 the policy. 
 
 (4) Clauses written on the face of the policy. 
 
 There is, in fact, a progress from a stereotyped form 
 employed in all cases, through forms intended for the 
 reduction or increase of the risks contemplated, and those 
 applicable to special trades or classes of risks, to words and 
 clauses arranged and constructed with special reference to 
 the individual risk in point. 
 
 It is on the same principle that a greater strictness of 
 constructioLi is applied to clauses and stipulations which 
 
 ' 4 East 130.
 
 136 MARINE INSURANCE CHAR 
 
 the parties themselves have introduced than to customary 
 forms of expression, whether contained in the text of the 
 policy or in marginal, attached, or written additions. From 
 this follows the rule that if what is written conflicts with 
 what is printed, it controls what is printed. 
 
 The policy being a contract of indemnity to the assured 
 it is to be construed liberally in his favour ; he no doubt 
 wanted as full indemnity as was obtainable, and the 
 underwriter probably " means that he shall understand 
 the indemnity given to be as extensive as its terms upon 
 any fair consideration import." The application of this 
 principle results in two rules of practice : — 
 
 (i) The provisions of the text and clauses of the policy in favour 
 of the assured are throughout taken to be cumulative and not 
 restrictive or exclusive of one another. In other words, extra 
 clauses added to the policy with the intention of adding to the 
 extent of the assured's indemnity are not allowed to deprive him of 
 any indemnity he may have under the original text. For instance, 
 in Haf^edom v. Whitmore, iSi6,^ the existence of a special clause 
 dealing with the payment of damage to linens was not allowed to 
 deprive the assured of a claim for damage which he had on the 
 policy in the ordinary printed form (Marshall, 229). 
 
 (2) Any ambiguity m an exception to, or restriction of, the terms 
 of a policy is taken in the sense least favourable to the underwriter. 
 The ground for this apparently hard treatment of the one of the 
 parties to the contract is given by Chief Justice Cockburn in 
 Notmanv. Anchor Insurance Company, 1858,'^ namely, "the policy 
 being the language of the company must, if there be any ambiguity 
 in it, be taken most strongly against them." 
 
 The Doctrine of Proximate Cause 
 
 Any discussion of the principles of interpretation of a 
 policy is imperfect that leaves unmentioned the doctrine of 
 proximate cause, causa proxiiria. It is a doctrine the appli- 
 cation of which is not confined to insurance, although it is 
 perhaps more heard of in this connection than in any other. 
 The doctrine is embodied in the maxim, Causa proxitna 
 non reinota specintur (the immediate cause and not the 
 distant one should be regarded). In fulfilment of this 
 maxim it has become a settled rule " that the underwriter 
 » I Stark 157. » 4 C.B. N.S. 481.
 
 viit fROXIMATE CAUSE 13? 
 
 is liable for no loss which is not proximately caused by the 
 perils insured against" (Amould, p. 788). Lord Bacon 
 gave it as the reason for the prevalence of this maxim that 
 " it were infinite for the law to consider the causes of 
 causes, and their impulsions one on another, therefore it 
 contenteth itself with the immediate cause." It is a 
 misfortune that people have learnt to talk and write not of 
 immediate cause, but oi proxiviate cause ; the use of Bacon's 
 wording would likely have prevented the existence of 
 definitions of proximate cause which ignore the essential 
 characteristic, immediateness of sequence. 
 
 It is right to remark that there is not complete 
 unanimity in the regard in which the doctrine is held ; 
 most authorities state it as a leading principle, while 
 Phillips, for instance, is hardly inclined to treat it so 
 seriously. He says : — 
 
 § 1 132. The commonplace maxim, that in cases of 
 doubt to which of two or more perils a loss is to be 
 assigned, causa proxima non remota spectatur, has 
 been not unfrequently resorted to, by which was 
 meant, originally at least, that a loss is to be 
 attributed to the peril in activity at the time of the 
 ultimate catastrophe, when the loss is consummated. 
 But much of the jurisprudence is contradictory to the 
 maxim taken in this sense, and it seems to have served 
 rather to direct attention from the proper inquiry 
 and to becloud instead of elucidating the subject." 
 
 " I understand the results of the jurisprudence to 
 be that — In case of the concurrence of different causes, 
 to one of which it is necessary to attribute the loss, it 
 is to be attributed to the efficient predominating peril 
 whether it is or is not in activity at the consumma- 
 tion of the disaster." 
 Without knowing exactly what is meant by the words 
 "consummation of the disaster" it is impossible to say 
 whether this interpretation really represents the result of 
 the cases in the English and American law reports. 
 
 The best way to bring out the meaning of the maxim is 
 to show how it has been applied in practice in actual cases
 
 138 MARINE INSURANCE chap. 
 
 Take the instance of a ship confessedly damaged by the 
 perils of the seas, so that the underwriter is liable for the 
 cost of the repairs in the proportion which the amount he 
 has insured bears to the value given in the policy. This 
 payment for the material damage does not cover the 
 shipowner against all the loss he has sustained, for there is 
 another loss to the shipowner resulting from the ship not 
 being able to earn freight during the period of repairs. 
 This secondary loss is not recoverable from the underwriter, 
 not being the immediate result of the accident that produced 
 t)ie damage. This should be compared and contrasted 
 with the position taken up by one shipowner claiming from 
 another payment of the damages, etc., caused by collision 
 resulting from the fault of the other ship. In that case 
 there is added to the cost of the repair of the material 
 damage a charge for the loss sustained by loss of employ- 
 ment during the time occupied in the repairs {demurrage) ; 
 in fact, in collision suits this item is often the most 
 important part of the claim. 
 
 Similarly, in the case of cargo, in Powell v. Gudgeon, 
 1816,^ where a ship disabled by perils of the sea put into 
 port to repair, and the master was obliged to sell some of 
 the cargo to pay his expenses, it was held that this was not 
 a loss by the perils of the sea, though they were the 
 remote cause of it, the proximate cause being the want of 
 funds to pay for the repairs (Marshall, p. 492). On the 
 same principle, in case the master of a vessel belonging to 
 a foreign owner (whose liability is limited to the value of 
 his vessel), incurs outlay on behalf of the whole venture 
 which is in the end found to exceed the value of the ship 
 when sold, if the cargo-owner has in consequence to bear a 
 loss, this loss is not one for which the underwriter of cargo 
 against sea perils is liable. The immediate cause of the 
 cargo-owner's loss was not any peril of the sea or any other 
 peril enumerated in the ordinary English form of policy, 
 but the limitation by foreign law of the liability of the 
 shipowner to the value of his vessel. 
 
 In the case of the tug Rosa {Reischer v. Berwick, Court 
 > S M. & Sel. 431.
 
 I'm PROXIMATE CAUSE 139 
 
 of Appeal, 2nd and 3rd July 1894),! Lord Justice Lindley 
 in his judgment made the following statement : " There is 
 no doubt that, in considering the liabilities of underwriters 
 of marine insurance policies, it is a cardinal rule to regard 
 ' proximate ' and not ' remote ' causes of loss. This rule is 
 based on the intentions of the parties as expressed in the 
 contract into which they have entered, but the rule must be 
 applied with good sense, so as to give effect to, and not to 
 defeat those intentions." The existence of personal fault 
 of the assured among the remote causes of loss or damage 
 has been held to exempt the underwriter from claims for 
 loss or damage even if immediately caused by perils insured 
 against In the case of Thompson v. Hopper^ 1856,2 a 
 vessel was with the deliberate knowledge ^qx\& might say by the 
 wilful act, of her owner sent out of port into a roadstead without 
 proper preparation for sea. As she lay anchored in an exposed 
 position a gale came on, she was driven ashore and became a 
 total wreck. It was acknowledged that the gale, a sea peril, 
 was the immediate cause of the loss, but as the ship was know- 
 ingly left unprepared, it was held that the assured could not 
 recover, as otherwise he would really be deriving advantage 
 from his personal misconduct. This case should be con- 
 trasted with Dudgeon v. Pembroke, 1877,^ on a policy ot 
 insurance for time on a vessel bought after being out of work 
 for a while, and fitted up by the new owner for his special 
 trade without sparing expense or trouble. She sailed from 
 London to Gothenburg in Sweden, and arrived there, 
 although on the passage she made more water than was 
 expected. On the return voyage in a gale she began to 
 leak, and becoming full of water did not answer her helm. 
 In consequence of this and of fog and of the gale she 
 went ashore on the Yorkshire coast and went to pieces. 
 The jury found that had the vessel been seaworthy she 
 would not have gone ashore or been wrecked : that unsea- 
 worthy though she was, she would not have been lost had it 
 not been for the gale : that her unseaworthiness was a latent 
 defect arising from no fault of the owner. It was held in 
 
 > 10 Times I -aw Rcf.. 568 ' 6 E. & H. 17a, 937. 
 
 • L. R. a App. Cas. a84.
 
 I40 MARINE INSURANCE chap. 
 
 the Court of Queen's Bench and the House of Lords that 
 the underwriters were liable. The words of Lord (then 
 Mr. Justice) Blackburn are eminently worthy of attention : 
 "The ship perished because she went ashore on the 
 coast of Yorkshire. The cause of her going ashore 
 was partly that it was thick weather and she was 
 making for Hull in distress, and partly that she was 
 unmanageable because full of water. The cause of 
 that cause, namely, her being in distress and full of 
 water, was that when she laboured in the rolling 
 sea she made water ; and the cause of her making 
 water was, that when she left London she was not 
 in so strong and staunch a state as she ought to 
 have been ; and this last is said to be the proximate 
 cause of the loss, though since she left London 
 she had crossed the North Sea twice. We think it 
 would have been a misdirection to tell the jury that 
 this was not a loss by perils of the seas, even if so 
 connected with the state of unseaworthiness as that 
 it would prevent any one who knowingly sent her out 
 in that state from recovering indemnity for this loss." 
 In both of these cases the immediateness of the results 
 from perils of the sea is evident. What prevented the 
 recovery of the amount insured in Thompson v. Hopper^ 
 was not the remoteness of the cause, but the personal fault 
 of the assured. Further remarks in the judgment of 
 Dudgeon v. Pembroke 2 lead to the conclusion that if a 
 similar loss had occurred through tear and wear aggravated 
 by the original bad state of the vessel,^ Mr. Justice Black- 
 bum would have held the underwriters exempt from the loss. 
 These decisions lead to the conclusion that in casesof ships 
 insured on the ordinary form of policy, what has to be done 
 is to determine the immediate, the very last cause of the 
 loss or damage, in the way Mr. Justice Blackburn did in 
 the extract cited above : if this very last cause is one of the 
 perils insured against, then the loss or damage is due to be 
 
 1 6 E. & B. 172, 937. '^ L.R. 2 App. Cas. 284. • 
 
 * This is practically what the arbitrator found to be true in the case 
 of Fawcui V. Sanfield, 1856, 6 E. & B. 192.
 
 vin PROXIMATE CAUSE 141 
 
 paid by the underwriter, unless there is among the more 
 remote causes personal fault of the assured, simple tear and 
 wear, or unseaworthiness. But the negligent navigation as 
 distinguished from the wilful act of an assured does not 
 diminish the liability of underwriters for a loss of which the 
 proximate cause is a peril of the sea.^ 
 
 In the more complicated cases where a vessel is msured 
 against only some of the perils named in the policy, and 
 the loss occurs jointly from a peril specifically insured 
 against and one or more of those not insured against, the 
 same difficulty arises in a more pointed form. As an 
 illustration one may take the imaginary case put by Chief 
 Justice Erie in lonides v. Universal Marine^ 1863:'- 
 
 *' Suppose the ship, insured free from all consequences 
 
 of hostilities, is going to a port where there are two 
 
 channels, in one of which a torpedo has been laid 
 
 by the enemy. If the master not knowing this goes 
 
 into the channel where the torpedo is, and is blown 
 
 up, this is within the exception : ^ not so, if knowing 
 
 of the torpedo he takes the other channel to avoid 
 
 it, and by unskilful navigation runs aground there, " 
 
 In the case then under C. J. Erie's consideration, a 
 
 coffee-laden ship struck a reef of rocks and became a wreck, 
 
 in consequence of the captain losing his reckoning owing to 
 
 Cape Hatteras light being extinguished for strategic reasons 
 
 by the Confederates in the American Civil War. There 
 
 were 6050 bags of coffee on board, of these 1020 would 
 
 have been salved but for the intervention of the Confederate 
 
 troops, who, however, saved 170 for their own use. It was 
 
 decided that the underwriters who insured the coffee " free 
 
 from all consequences of hostilities " were not liable for the 
 
 loss of the 1020, but were liable for that of the remainder 
 
 5030. The 1020 were certainly lost in consequence of 
 
 hostilities, but the 5030 from perils of the sea, namely from 
 
 * The Gainsborough (Trinder v. Thames b" Mersey, Ct. Appeal, 
 4 May 1898), 14 Times L.K. 386. 
 
 •-' 14 C.B. N.S. 259. 
 
 * That is, the underwriter would in consequence of the clause " free 
 from all consequences of hostilities" be held free from all liability for 
 the loss.
 
 142 MARINE INSURANCE chap 
 
 striking the reef, which was not by any means an inevitable 
 Addenda. OF even a usual consequence of the extinction of the light. 
 In the case of the tug Rosa already referred to {Reischct 
 V. Borwic/c, Court of Appeal, 2nd and 3rd July 1894),^ the 
 risks insured against in the policy were " the risk of collision 
 (as per clause attached) and damage received in collision with 
 any object, including ice." The collision clause attached 
 refers to collision with other ships ; the accident that did 
 occur was collision with a snag in the Danube. The 
 damage was serious ; the captain endeavoured as speedily 
 as he could to plug up the vessel from the outside, and took 
 the assistance of a tug to tow his vessel to a place where 
 she could be repaired. During the tow one of the plugs 
 fell out, and in order to prevent the vessel from sinking in 
 deep water, the tug towed her on to the southern bank of 
 the river. The underwriters paid cash into court for the 
 damage sustained up to the time when the Rosa was taken 
 into tow, but denied liability ; with respect to the subse- 
 quent damage, they strenuously contended that they were 
 under no liability on the ground that the proximate cause 
 was not the collision, but the towing to a port of repair. 
 Mr. Justice Kennedy overruled this contention, and the 
 Court of Appeal (Lords Justices Lindlcy, Lopes, and Davey) 
 confirmed his view. Lord Justice Lindley said : " The sink- 
 ing of the ship was proximately caused by the internal 
 injuries produced by the collision, and by the water reaching 
 and getting through the injured parts whilst she was being 
 towed to a place of repair. The sinking was due as much 
 to the one of these causes as to the other ; each was as 
 much a ' proximate ' cause of her sinking as the other, and 
 it would in my opinion be contrary to good sense to hold 
 that the damage by the sinking was not covered by this 
 policy. ... I feel the difficulty of expressing in precise 
 language the distinction between causes which co-operate 
 in producing a given result. When they succeed each other 
 at intervals which can be observed, it is comparatively easy 
 to distinguish them and to have their respective effects, but 
 under other circumstances it may be impossible to do so. 
 * 10 Times Law Rep. 568.
 
 VIII 
 
 PROXIMATE CAUSE 143 
 
 It appears to me, however, that an injury to a ship may 
 fairly be said to cause its loss if, before that injury is or can 
 be repaired, the ship is lost by reason of the existence of 
 that injury, i.e. under circumstances which, but for the 
 existence of that injur>', would not have affected her safety. 
 It follows that if, as in this case, a policy is effected 
 covering such an injur)', it will in the circumstances supposed 
 extend to the loss of the ship, for in the case supposed 
 the injury will really be the cause of the loss — the causa 
 causans and not the causa sine qua non." 
 
 From consideration of all the cases mentioned above, it 
 appears that there is some difference between the treatment 
 of excepted perils and that of default of owner, wear and 
 tear, and unseaworthiness. The difference seems to be that 
 the excepted and the covered perils are regarded as of equal 
 importance until it is discovered which is the more imme- 
 diate cause of the casualty ; while in the case of default, 
 wear and tear, and unseaworthiness, any one of these once 
 found existing absolutely wipes out the other coexisting 
 perils and is burdened with all the liability. 
 
 There is another important group of cases, Jackson v. 
 Union Marine., 1873,^ In man v. Bischoff, 1 88 1,2 and Mercan- 
 tile Steamship Company v. Tyser^ 1881,^ in which the subject 
 insured was an expectation of gain, say freight, which was 
 lost through some circumstance like the exercise of a 
 charterer's option to cancel a charter if the vessel does not 
 arrive at loading port by a named date. In all these 
 cases a casualty caused by a peril of the sea occurred, and 
 in consequence of the resulting delay the charterers did 
 not permit the vessels to load the cargo or earn the freight 
 they went to get. The circumstances of the three cases 
 differed widely, but the net result was that where the loss 
 of the opportunity to earn freight was caused solely by the 
 exercise of the charterer's option to cancel, the underwriters 
 on the ordinary policy against perils of the seas were held 
 not to be liable for the loss."* 
 
 » L.R. 8 f:. I'. 572; 10 C. P. 125. 
 * 7 App. Cas. 670. ' 7 (J. HO. 73. 
 
 * Sec also The Abrota, 1895 (famiesnn v. Neivcastle Stm. Frt. Ins, 
 An.), II Times L. R. 176 and 416, see also p. 342 below.
 
 CHAPTER [X 
 
 TOTAL LOSS OF SHIP AND OF CARGO 
 
 Thk policy speaks of the underwriter taking upon himself 
 the "burden of this insurance," and binding himself "foi 
 the true performance and fulfilment of the contract " therein 
 contained. But the form which the underwriter's liability 
 may assume, and the extent which it may reach, are left 
 without special definition. All that can be gathered from 
 the wording of the policy alone is that the assured is pro- 
 tected by the underwriter from certain named adventures, 
 perils, losses, and misfortunes, and from all others (of the 
 same kind) occurring to the hurt, detriment, or damage of 
 the property insured or any part thereof. 
 
 There is nothing to be gained by attempting a theoretical 
 deduction of the forms which this liability must take. The 
 policy has been so modified by additions made to it from 
 time to time that any such deduction would probably be 
 most misleading. It will therefore be more suitable to take 
 up the diflferent forms of liability that have been found in' 
 practice. There is one form which must from the first 
 have presented itself as indubitable, namely, total loss arising 
 from any of the perils named in the policy. 
 
 Total Loss, Actual and Absolute. — Suppose a 
 vessel leaves port on a voyage to San Francisco ; some 
 weeks after, the crew of this vessel are landed from another 
 ship, and make a declaration that their vessel took fire in a 
 particular pocition on a named day, that after being com- 
 pelled to leave her in their boats they saw her explode and 
 go down, that they were picked up by the rescuing ship so
 
 CHAP. IX ACTUAL TOTAL LOSS OF SHIP 145 
 
 many days after. If this declaration agrees with what else 
 is known of the picking up of the crew, and is otherwise 
 credible and trustworthy, there can be no doubt that " the 
 burden " of an insurance covering fire will properly include 
 losses of this class. 
 
 Similarly, suppose that a vessel leaves port properly 
 equipped for a voyage, which on the average lasts three 
 months ; at the end of six months there is no news of her 
 arrival at destination, nor any report of her passing islands 
 or other stations on the track she was intended to take, nor 
 any " speaking " with other vessels following or crossing 
 that track or any in its neighbourhood. Time goes on, 
 inquiry is made for news respecting the vessel ; in absence 
 of news of her safety she is formally " posted " as a missing 
 ship. From the circumstances there can be no actual proof 
 of the cause of loss ; but as she left port a stout, strong, and 
 staunch vessel fit for her intended voyage, the presumption 
 is that she has perished by some of the perils named in the 
 policy (whether they be of the elements or of man). This, 
 therefore, also constitutes a loss, " the burden " of which 
 should fall on the underwriter issuing his policy against 
 perils of the sea. 
 
 Next, a vessel runs against a rocky headland, knocks 
 in her bow, smashes her keel, and breaks up into pieces 
 of iron and timber. What is left of her is no longer a 
 ship, it is not a vessel that can be employed in the trans- 
 port of goods from one place to another ; should the fact of 
 her materials remaining in a kind of existence in mass 
 prevent the disaster from being considered a total loss ? 
 
 Akin to these "losses and misfortunes " are those that 
 occur when the action of earthquake raising dry ground 
 under ships, or of tidal waves sweeping ships inland, 
 results in their being left high and dry up a mountain side 
 or hundreds of yards from sea-board. They are in these 
 positions quite unavailable for the performance of the work 
 they were intended for ; as far as the owner's intended 
 employment is concerned ihcy are as much taken out of his 
 possession and control as if they had been seized by pirates 
 or run off with by a barratrous captain or mutinous crew. 
 
 L
 
 146 MARINE INSURANCE chap 
 
 The few instances given above will illustrate tlie very 
 full definition given by I'liiiiips.' 
 
 "§1485. A total loss of a subject is when by the 
 
 perils insured against it is destroyed or so injured 
 
 as to be of trifling or no value to the assured for the 
 
 purposes and uses for which it was intended, or is 
 
 taken out of the possession and control of the 
 
 assured, whereby he is deprived of it ; or where the 
 
 voyage or adventure for which the insurance is made 
 
 is otherwise broken up by the perils insured against." 
 
 The last paragraph of this definition will be the subject 
 
 of closer consideration when losses of cargo and of hire for 
 
 carrying cargo are discussed. 
 
 The instances of total loss given above are so evident 
 and uncompromising that they are properly described as 
 actual total losses, or actual and absolute total losses. 
 There is either nothing left of the ship at all, or nothing 
 left in the possession and control of her owners, or only 
 something that is of no value to the assured for the pur- 
 poses and uses for which it was intended. 
 
 Constructive Total Loss. — But although a ship is not 
 totally lost in any of these evidently uncompromising ways, 
 she may still be a total loss. It has often occurred that a 
 ship having run on rocks has sustained damage to her 
 bottom, but sits upright in the water so that at a little 
 distance she seems to a landsman's eye uninjured, or not 
 seriously damaged. But the owner sees that in all prob- 
 ability she will never come off as a ship ; that she may 
 pound and grind herself over the rocks, but likely only to 
 sink in deep water a mass of iron and timber ; and that 
 even if she is taken off as she is, the cost of repair will be 
 so great as to render the taking of the vessel off a failure 
 in a commercial sense. 
 
 In such a case the owner usually proceeds to give notice 
 of abandonment (or to tender abandonment) to his under- 
 writers. He in effect says : " My vessel is totally lost ; pay 
 me the amount for which you have insured her for me and 
 I will transfer to you what remains of the property you have 
 ' See Cossmann v. West, 1887, Privy Council, 6 Asp. Mar. L, C. 233,
 
 41 CONSTRUCTIVE TOTAL LOSS — ABANDONMENT 147 
 
 insured." If the underwriters accept the view propounded by 
 the shipowTier, or if after further progress and examination 
 the owner turns out to be correct in his view, the total loss 
 thus occurring is termed a " technical or constructive total 
 loss," that is, a loss not materially and actually, but only so 
 regarded technically and by construction of law. There 
 is no compulsion upon the o^vner to take the step of tender- 
 ing abandonment ; if he prefers he may await the result of 
 efforts made to save the vessel, or even wait to see what 
 the vessel's condition is when she comes to be examined 
 for repairs. But by so doing he may completely alter his 
 legal position ; he may deprive himself of the possibility of 
 claiming as a matter of legal right from his underwriters 
 the payment of a total loss. If he awaits an examination 
 of the ship with a view to repairs, he has to abide by its 
 result, and take his indemnity in accordance therewith 
 {Roux V. Salvador, 1836, per Lord Abing^r).! 
 
 Abandonment and Notice of Abandonment. — In the 
 consideration of constructive total loss it thus becomes 
 necessary to discuss abandonment and notice of abandon- 
 ment. These are two wholly distinct things 2 ; abandonment 
 is a positive transfer of property, notice of abandonment is 
 a declaration of intention to make such a transfer. It is 
 not by English law put into the power of the assured to 
 say, " Here, take my property, give me the amount for 
 which you have assured it for me." All he can say is, " I 
 give you notice that in consequence of such and such cir- 
 cumstances I now make my election and declare my in- 
 tention to transfer my interest in what I have insured with 
 you, demanding in return the sum insured, and here and 
 now I make you the offer of this transfer." The implied 
 meaning of the tender of abandonment is that the venture is 
 in effect totally lost. Consequently the owner ought to tender 
 abandonment as soon as he has such definite intelligence 
 as will enable him to make up his mind that it is reasonably 
 certain that the venture will in effect be totally lost. If he 
 
 ' 3 Ring. N.C. 266. See below, p. 159. 
 
 ' Blackburn, J., in Rankin v. f>otter. L. R. 6 H.L. 83 at 118, 
 quoted by I>owndes, M.I. 153, note q.
 
 /48 MARINE INSURANCE chap. 
 
 delays past that time, then all that he does may be reckoned 
 up against him as testimony of his unwillingness to tender 
 abandonment at the proper time, and he may in consequence 
 have to be satisfied with some form of indemnity that does 
 not confer on him the payment of a total loss against the 
 transfer of the property, but leaves him with that property 
 repaired, so as only to be as good as it was before the 
 accident causing the damage. 
 
 If the underwriter on receiving the notice or tender of 
 abandonment accepts it, the abandonment takes effect and 
 the property passes to him from the moment of tender, the 
 consideration for the transfer being the payment of the sum 
 insured. If the underwriter desires to accept abandonment 
 he should notify this at once on receipt of the tender. If 
 he returns no answer he must be taken to have declined to 
 accept ; this was settled in the case of Provincial Insurance 
 Company of Canada v. Leduc^ 1874,^ 
 
 If the notice of abandonment to the underwriter has not 
 been accepted, there is a possibility of neither assured nor 
 underwriter taking steps to save the imperilled property ; 
 neither may be inclined to act in such a way as may be 
 held to indicate an assumption of ownership which each 
 wishes to disclaim. This is the reason of the existence of 
 the " waiver clause " already mentioned (p. 1 20), by which 
 it is " expressly declared and agreed that the acts of the 
 assured or assurer in recovering, saving, and preserving 
 the property assured shall not be considered as a waiver 
 or acceptance of abandonment." That is, the commence- 
 ment or continuation by the assured of operations intended 
 to presen'e the insured properly shall not be deemed to 
 indicate a withdrawal of any notice of abandonment which 
 he may have tendered ; nor shall the commencement or 
 continuation of operations by the underwriter be deemed 
 to indicate that he regards the insured object as his pro- 
 perty, and that therefore he must have accepted the 
 abandonment. 
 
 If, on the other hand, the assured's tender of abandon- 
 ment has been accepted, the abandonment is definitely 
 
 1 L.R. 6 P.C. 224.
 
 IX CONSTRUCTIVE TOTAL LOSS — ABANDONMENT 149 
 
 operative as regards both assured and underwTiler ; 
 each of them has exercised his option and must abide 
 by the consequences. 
 
 No particular form has been prescribed for tender (or 
 notice) of abandonment ; it is not even necessary that it 
 should be given in writing, although it is usually so given. 
 The reason for this evidently is that it is convenient to 
 have documentary evidence of the tender of abandonment. 
 But in whatever form it is given, one essential is that it be 
 given unequivocally ; no condition may be attached ; it is 
 an absolute offer then and there. As Lord EUenborough 
 put it in Parmeter v. Todhunter, 1 806, ^ •' The abandonment 
 must be direct and express, and I think the word abandon 
 should be used to make it effectual." It is advisable that 
 the tender of abandonment, whether oral or written, should 
 contain or have attached to it some statement of the grounds 
 on which the tender is made, or some reference to the 
 intelligence which has prompted the action of the assured. 
 
 As the tender of abandonment must be unconditional 
 and unequivocal, so must the reply in which the underwriter 
 accepts be unconditional and absolute. If he means to 
 decline, there is, as has already been explained, no need 
 to send any reply ; but in case of an oral tender, it would 
 be difficult to keep that silence in reply which would of 
 itself constitute refusal. But if the underwriter does 
 commit himself to writing a refusal of abandonment, he 
 would do well to be sure that the form he employs is 
 unconditional and unequivocal. 
 
 The word "abandonment" is one of great force. To 
 appreciate this fully, suppose that a ship belonging to an 
 owner who insured absolutely nothing on hull or freight, 
 got into such bad weather that she was seriously damaged 
 and was driven ashore and severely strained. Suppose that 
 she came oflF next tide without needing any assistance and 
 that she was beached by her own crew in a place of safety,^ 
 in what circumstances would an uninsured shipowner, exer- 
 
 ' Camp. 54a. 
 
 ' To pivc as simple a case as possiljle. it is .xssumed that absolutely 
 no outside help is used ; this keeps the matter free from such considera- 
 tions as those of salvage and " sue and labour" expenses.
 
 ISO MARINF-: INSURANCE chap, 
 
 cising the ordinary prudence of a business man, leave the 
 ship as she lay to whoever cared to take possession, in fact, 
 literally abandon her? It is evident that it will not pay 
 him to repair the vessel unless her value after she is repaired, 
 plus her future earnings on the voyage, exceeds the cost of 
 the repairs. Unless this is the result of his action, then the 
 vessel is to him, the owner uninsured on hull and freight, 
 commercially or technically a total loss ; he cannot restore 
 her to her work as a carrying machine for less than her 
 full value when restored. ^ 
 
 As regards abandonment by an insured owner, the law 
 has been expressed in several forms. In Rankin v. Potter^ 
 1873,2 Lord Blackburn said: "The question between the 
 assured and the underwriters on ship is whether the damage 
 sustained may be so far repaired as to keep it a ship, 
 though not perhaps so good a ship as it was before, 
 without expending on it more than it would be worth." 
 Similarly, Chief Justice Tindal in Benson v. Chapman^ 
 1843,'* speaks of the "repair necessary for pursuing the 
 voyage insured" constituting "an expense greater than the 
 value of the ship " before the assured is at liberty to 
 
 ^ Theoretically it is better put thus : The absolutely uninsured owner 
 will find it more profitable to abandon the wreck rather than repair it, 
 unless 
 
 Value of vessel when repaired + freight receivable at end of voyage 
 - cost of repairs exceeds Value of wreck as she lies ; 
 
 i.e. unless 
 
 Repaired value + freight exceeds Cost of repairs + value of wreck as 
 
 she lies. 
 
 The value of the wreck is generally neglected, probably as being a 
 vanishing quantity, or as being largely reduced by cost of removal to 
 a place of repair ; in fact, it is (in the words of Phillips, § 1485) " of 
 trifling or no value to the assured for the purposes and uses for which 
 it was intended." The formula thus becomes 
 
 Repaired value + freight exceeds Cost of repairs. 
 
 See Phillimore, J., in Gallia, 1899, 5 Com. Cas. 269; Walton, 
 J., ir. Wild Rose, 1903, 19 Times, L. R. 289, admitting the value 
 of the wreck. Per contra Bigham, J., in Phyllis Angel, 1902, Ship- 
 ping Gazette, Weekly Summary, 30th May 1902, rejecting the value 
 of the wreck ; confirmed by Appeal Court (Mathew, Williams, 
 Addfjyia, Stirling, L.JJ.) 1903, 19 Times L.R. 395. 
 
 " L.R. 6 ILL. 117. » 6 M. & Gr. 793 at 810.
 
 IX CONSTRUCTIVE TOTAL LOSS ABANDONMENT 151 
 
 abandon. On the other hand, Mr. Justice Patterson in 
 Irving V. Manning^ puts it thus, "Would a prudent owner 
 uninsured repair?" Mr. Baron Wilde in Grainger v. 
 Martin^ 1 863,- added, "Or rather would he sell unrepaired?" 
 If by " prudent uninsured owner " is meant " prudent owner 
 uninsured on hull," then these tests are all the same ; if, on 
 the other hand, by these words is meant " prudent owner 
 absolutely uninsured," then freight must come into the 
 calculation. It may possibly be urged that considerations 
 of freight ought to have no place in a matter between a ship- 
 owner and his underwriters on hull. The main point to 
 observe is that at this stage no regard is paid to the insured 
 value. The validity of a claim for constructive total loss is 
 determined simply with reference to actual values for sale 
 (^Irving V. Mannings 1847, House of Lords).^ But if the 
 correctness of the claim is once established on this ground 
 then the insured value comes into play as being the state- 
 ment of the amount of indemnity for the loss in question, 
 to be furnished by the underwriter. 
 
 Constructive Total Loss : Foreign Law and Practice. 
 — The matter of constructive total loss is one which has 
 greatly exercised shipowners, underwriters, jurists, and 
 legislators in all European countries and in the United 
 States. There are points of difference between the law of 
 these countries and the English law on the subject. One 
 of the most striking of these is that in the United States 
 "a damage over 50 per cent of the value of the vessel 
 when repaired is a constructive total loss of the vessel in 
 case of the policy containing no express provision to the 
 contrary" (Phillips, § 1539). By the law of France and 
 Italy loss or deterioration of the objects insured to the 
 extent of three-fourths constitutes a claim for constructive 
 total loss ; the law of the German Empire as to ships 
 is the same as French law in this matter. There is 
 one remarkable point of agreement of the American, 
 English, and German systems, namely, that in all 
 three no account whatever is taken of insured value in 
 determining whether a loss is%a constructive total loss, 01 
 
 » H. of L Cas. 817. ^ 4 B. & S. 9. » i II. of L. Cts, 817
 
 I5a MARINE INSURANCE chap. 
 
 until after the loss has been found to be constructively total, 
 but that as soon as that conclusion has been reached, the 
 insured value is applied as deciding the indemnity to be 
 paid by the underwriter. 
 
 Valuation Clause. — The result of excluding insured 
 value froui consideration in determining whether there is a 
 constructive total loss on an ordinary policy on ship is 
 frequently found to be that in consequence of the lowness 
 of the price which would be obtained for a ship after repair 
 she is condemned as commercially irreparable, when, in fact, 
 the damage done to her is actually small. In consequence 
 of cases of this nature, valuation clauses of the kind described 
 on p. 75 have been devised. The form there given, 
 
 The valuation stated herein shall by mutual consent in all 
 questions under this policy be taken to be the value of the vessel, 
 
 is not only awkwardly arranged, but also fails to touch the 
 point desired. Whether any loss is a constructive total loss 
 is not a question "under the policy, as its solution is reached 
 quite independently of any reference to the policy, whose 
 provisions and valuation come into effect only after that 
 question has been answered. 
 
 The next step was to frame a clause really meeting the 
 case, and the following was recommended by Lloyd's and 
 adopted by many underwriters and companies : 
 
 It is hereby agreed that the vessel shall not be deemed a con- 
 structive total loss unless the estimated cost of repairs would exceed 
 the insured value. 
 
 The defect of this form is that it creates a criterion of 
 constructive total loss different from that laid down by the 
 law of England ; the results of this contract and of that 
 enforced by the law in absence of such an agreement may 
 be the same, and, no doubt, in many cases are the same, 
 but that is only the result of accident. As English law 
 introduces only three factors in the determination of con- 
 structive total loss, namely, value after repairs, freight and 
 cost of repairs, any clause intended to bring insured value 
 mto practical effect in such •determination ought to contract 
 for its introduction in one of these factors. This is attained
 
 !X CONSTRUCTIVE TOTAL LOSS OF CARGO 153 
 
 by the use of a valuation clause of the following wording, 
 which is now generally adopted throughout the country : — 
 
 The insured value shall be taken as the repaired value of the 
 vessel in ascertaining whether there is a constructive total loss under 
 this policy. Addenda 
 
 Freight of Ship which has become a Constructive 
 Total Loss. — In determining whether a loss is a con- 
 structive total loss, the freight of the current voyage is intro- 
 duced as a factor. When abandonment is accepted it results 
 in an absolute transfer of the ship and all the engagements 
 she has. This includes the transfer of any freight to 
 be received for work in which she was engaged when the 
 transfer occurred. 1 Consequently, if underwriters after 
 accepting abandonment manage to complete the venture 
 in which the vessel was engaged they are entitled to the 
 freight eahied by carriage on the abandoned ship. There 
 are difficulties connected with such cases. One of these 
 arises when a shipowner in this way surrenders pending 
 freight to an underwriter of ship, and the freight is there- 
 after actually earned by the abandoned ship ; the shipowner 
 does not acquire any right of recovery against his under- 
 writer on freight, the ground being that there was no loss 
 of freight by the perils insured against (Sco//ish Marine 
 Insurance Company v. Turner, 1853, House of Lords). ^ 
 In Hickie v. Rodocanachi^ 1859,^ it was decided that when 
 a ship is condemned at a port of refuge, and the freight is 
 earned by a substituted ship, the underwriter on the first 
 ship is not entitled to any part of that freight. 
 
 Constructive Total Loss of Cargo. — With respect to 
 goods, there is no need to repeat the obvious cases of 
 absolute total loss either by manifest peril insured against 
 or by the carrying vessel becoming a missing ship. But 
 one form of total loss is more striking in the case of goods 
 than of ship. Among the instances of total loss of ship 
 
 ' As to what freight is to be received, see Mr. Justice Bruce in Red 
 Sea, (Afim. 5th July 1895), P. 293, confirmed by Ct. Appeal ■(i4lh 
 Noveml>cr 1895), 12 Times L. R. 40. 
 
 ' .Macqncen's H.L. App. 342. .See also Thompson v. Rowcroft, 4 
 tuist 34 (Maclachlan's y4mott/</, 6lh ed., pp. 1074, 1084). 
 
 * 38 L.J. Hlx. 273
 
 154 MARINE INSURANCE chap, 
 
 one was given of a ship being so battered by winds, waves, 
 and rocks that in the end it was no ship at all, but only a 
 heap of iron and timber. To use technical language the 
 property insured had changed its species, it no longer 
 remained the kind of thing it was at the commencement 
 of the venture. Such losses are of great importance in 
 the case of insurances on cargo. In the case of Roux v. 
 Salvador, 1836,' a parcel of hides was insured from Val- 
 paraiso to Bordeaux. The ship sprang a leak and put 
 into Rio, where it was found that the hides were rotting so 
 quickly that they would certainly not reach Bordeaux as 
 hides at all, but simply as a mass of putrefied matter. The 
 master of the ship sold the hides at Rio, and the loss was 
 held to be a total loss less the net proceeds accounted for 
 by the master. Similar cases might occur in which by 
 perils of the sea, grain, sugar, or fruit received suCh damage 
 that they no longer remained grain, sugar, or fruit, but 
 became utterly changed in their character. It appears 
 that the principle of Roux v. Salvador might equally apply 
 to such cases. Yet in some such cases such a proceeding 
 might come dangerously near paying for vice propre or 
 inherent quality of the goods. For supposing that some 
 chemical was insured, say some powder which solidified 
 when combined with sea-water, it is quite clear that with 
 imperfect packages a large amount of irreparable damage 
 might be done which would not have occurred in an article 
 of different constitution like flour. 
 
 The last words of Phillips' definition of a total loss are 
 " or where the voyage or adventure for which the insurance 
 is made is otherwise broken up by the perils insured against." 
 It is hard to see how these words can be applied to ships, 
 but in the case of goods or of the hire paid for the carriage 
 of goods it is manifest that where perils insured against 
 effect a "destruction of the contemplated adventure" (Lord 
 Ellenborough's words in Anderson v. IVallis, 1813, and 
 Barker v. Bla/ces, 1 808 ; quoted by Baron Bramwell in Rodo- 
 canachi v. Elliott, i873),2 there may be reasonable ground 
 
 > 3 Bing. N.C. 266. 
 * 3 Asp. Mar. L. Cas. 399 ; L. k. 8 C. P. 640.
 
 IX CONSTRUCTIVE TOTAL LOSS OF CARGO 155 
 
 for the assured asking for indemnity from his underwriter. 
 Such destruction of a contemplated venture might occur in 
 many ways : goods might be detained in a port for a long 
 period without any hope of early release so as completely 
 to frustrate all the commercial ventures connected with their 
 purchase and contemplated sale. This was the case in the 
 matter of Rodocanachi v. Elliott ^ regarding goods detained 
 in Paris during the siege of 187 1. Or it might happen 
 that the vessel carrying the goods in question stranded at a 
 point far from any possible assistance : the crew might be 
 able to save some cargo, putting it ashore in a place of 
 safety, but be unable to remove it to a port from which it 
 could be sent on to destination. The goods would thus lie 
 perfectly safe but unattainable. This appears to be a fair 
 case of loss of venture and consequently of constructive 
 
 total loss of cargo. Addenda 
 
 Again, if a voyage has been in some way interrupted by 
 perils insured against, it may happen that damaged cargo is 
 discharged at some point en route. If the original ship is 
 unable to prosecute her voyage it becomes a question 
 whether the goods can be forwarded without a loss being 
 incurred on them. If there would be a loss, in case the 
 goods were reconditioned, reshipped and forwarded, that 
 is, if on arrival at destination the goods were not worth 
 the amount of these various expenses, it is plain that 
 there is something like a constructive total loss on the 
 goods. On this point there are several important decisions ; 
 one of them {Farnworth v. Hyde, 1866)2 jj^s given rise to 
 a good deal of discussion, owing to the discovery of what 
 seems a mistake in an elementary sum in addition and 
 subtraction. 
 
 What would a pnident uninsured owner of goods do in 
 such a case ? \f he has goods lying damaged at an inter- 
 mediate port or place, what will he do ? will he arrange 
 to bring them on, or will he literally abandon them as they 
 lie ? His choice will certainly depend on the cost of 
 bringing them on to destination. The first item to considei 
 
 ' a Asp. Mar. Law Gas. 399, L. R. 8 C.P. 649. 
 » L.R. a C.l'. 204.
 
 156 MARINE INSURANCE chap. 
 
 is the cost of reconditioning, then follow the expenses ol 
 reshipping and the freight. If the expected value of the 
 goods at destination does not amount to the sum of these 
 items, it is evidently commercially unreasonable to expect 
 the merchant to bring on the goods, it is evidently bettet 
 to sell them as they lie for any price they will fetch. 
 
 Suppose that the same merchant were insured, under 
 what circumstances should he be entitled to claim a con- 
 structive total loss from his underwriter ? There would seem 
 to be no doubt that such a claim can be justified in case 
 the value of the goods taken as arrived at destination with 
 all charges paid is nothing, or, in other words, when the 
 price obtained for goods if sold at destination after payment 
 of all charges does not exceed the amount of the charges. 
 The question arises whether the freight per bill of lading is 
 one of the charges that should be taken into the calculation. 
 The case oi Farnivorth v. Hyde, 1866,1 ^as one against 
 the underwriters of a policy on a cargo of timber from 
 Quebec to Liverpool. It was proved that the ship was 
 frozen up in the St. Lawrence at the beginning of winter, 
 and in the spring she was, under the advice of competent 
 surveyors, sold, as it was considered that the expense of 
 repairing and forwarding would be greater than the value 
 when repaired. No notice of abandonment was given : the 
 news of the disaster and of the sale arrived at the same 
 time. The jury in the Court of first instance found the 
 sale justifiable, and a verdict was entered for the assured 
 as for a total loss. The Court of Common Pleas, on 
 a rule to enter non-suit, held (Mr. Justice Byles dissenting) 
 that there was evidence to show that the probable loss 
 during the operation of saving and forwarding would have 
 absorbed the surplus profit, and that the verdict for a 
 total loss ought to stand even without abandonment. In 
 estimating what would have been the value of the 
 cargo had it arrived at Liverpool, the original bill ol 
 lading freight ^1556 was deducted; had not this been 
 done, there would have been a margin of profit of £1100. 
 
 ' L. R. a C. P. 204U
 
 (X CONSTRUCTIVE TOTAL LOSS OF CARGO 157 
 
 This point was brought to the notice of the Exchequer 
 Chamber by Mr. Justice Blackburn, and in consequence it 
 was held that this freight ought not to have been deducted 
 to get at the value of the cargo as arrived at destination. 
 In the words of Baron Channell's judgment : "They ought 
 not to take into account the fact that if the goods are 
 earned on in the original bottom, or by the original ship- 
 owners in a substituted bottom, they will have to pay the 
 freight originally contracted to be paid, //w/ dang a charge 
 to which the goods are liable when delivered, whether the 
 perils of the seas affect thetn or tioi." On this principle the 
 judgment proceeds to state that in case the original shipowner 
 determines not to carry on the goods either in the original 
 or in a substituted bottom, the cargo-owner, if he brings 
 them on, is not entitled to take into account the whole of 
 the amount he pays for forwarding, but only the amount by 
 which that exceeds t/ie original freight. The effect of this, 
 put briefly, is that unless the extraordinary expenses incurred 
 in consequence of perils of the sea or other perils insured 
 against exceed the arrived gross value of the cargo 
 delivered at destination {i.e. of course with freight paid) 
 the assured is not entitled to abandon. 
 
 This result is quite different from that at which we 
 arrived when we considered the action of the prudent 
 uninsured owner. He would abandon the goods if their 
 expected gross price did not exceed the freight plus the 
 extraordinary expenses ; while the law does not give the 
 insured owner any right to tender abandonment to his 
 underwriter unless the expected gross value does not 
 exceed the extraordinary expenses alone, Lowndes (Law 
 M L p. 137) and M'Arthur (Contract M, I. p. 151, note) 
 both regard this difference as the result of a mistake or 
 fallacy into which the judges fell. So it certainly is, if it is 
 correct to assume that the result in any question of policy 
 or practice in the relations of assured and underwriter must 
 accord exactly with the result of the course which would be 
 adopted by a prudent uninsured owner. 
 
 But is this assumption justifiable ? If A, while retaining 
 certain of his own obligations with their corresponding
 
 158 MARINE INSURANCE CHA^ 
 
 privileges and rights, delegates some to B and others to C, 
 the result of the operation of each separate set of delegated 
 obligations and rights does not of necessity coincide with 
 that of the whole sum of A's original obligations and rights. 
 This is really the principle underlying Baron Channell's 
 judgment : he examined separately the relations of the 
 cargo-owner to the shipowner and then to the cargo under- 
 writer. 
 
 As to the shipowner, as long as the cargo is delivered 
 in specie at destination the freight is due to him by the 
 consignee in whatever state of damage the cargo is 
 delivered, provided the damage has arisen from perils 
 excepted in the bill of lading. 
 
 As to the cargo underwriter, it is possible that before 
 the cargo can be offered for sale at destination for any sum 
 worth mentioning, expenses have to be incurred in recon- 
 ditioning the goods. This class of expenses was dealt 
 with in Rossetto v. Gurney, i85i,iand Reimerv. Rifigrose, 
 1 85 1.2 The judges intimated to the assured: "The 
 obligation or risk transferred by you to your under- 
 writers includes nothing but the consequences of the perils 
 enumerated in the policy ; liability to pay freight at 
 destination is not one of these, so no consequence of that 
 obligation can be transferred to your underwriter." It 
 appears to have been on this ground that Mr. Justice 
 Blackburn raised the question of freight in the Exchequer 
 Court in Farnworihv. Hyde, 1866.^ The reasoning seems 
 to be (at least) as little fallacious as the opposite doctrine 
 that the position of an underwriter towards his assured is 
 always to be determined commercially by the course which 
 would have been adopted by a prudent uninsured merchant 
 or shipovmer. To put it in few words : the underwriter 
 never guarantees that cargo will be worth its freight whether 
 it arrives damaged or sound, why should a freight obligation 
 be imported into his contract in certain cases of damage 
 and loss when it is really a part of the merchant's obligations 
 which the merchant retains at his own risk in case of arrival 
 
 1 II C.B. 176. 2 6 Exch. 363. 
 
 » L. R. a C. P. 204.
 
 IX CONSTRUCTIVE TOTAL LOSS OF CARGO 159 
 
 of his goods at destination ? Considerations of a similai 
 kind arise again and again in the treatment of cargo claims ; 
 but this instance seems to make it clear that iht prudent- 
 uninsured- owner theory is not adequate to the solution 
 of several important problems in marine insurance. 
 
 Constructive Total Loss : when determinable ? — It 
 was said above (p. 147) that if the assured instead of 
 tendering abandonment awaits an examination of his pro- 
 perty with a view to repairs, he has to abide by the result 
 of such examination and take his indemnity in accordance 
 therewith. But what constitutes indemnity in such a case .? 
 Is the Hability of the underwriters determined by the state 
 of matters as they existed at the time when abandonment 
 was tendered by the assured, or when action was instituted 
 against the underwriter ? In the case of T/te Sailing Skip 
 Blairmore Company v. Macredie^ it has been decided that 
 to determine whether a loss is constructively total or merely 
 partial, account must be taken of such expenses as the 
 underwriters may incur between the dates of proper tender 
 of abandonment and of action brought, in rescuing the pro- 
 perty and taking it to a place of safety. Lord Herschell 
 stated the general rule of English law to be that if, in 
 the interval between the notice of abandonment and the 
 time when legal proceedings are commenced, there has 
 been a change of circumstances reducing the loss from a 
 total to a partial one, the assured can only recover for a 
 partial loss. But he added that this rule had never been 
 applied to a change brought about by the underwriter. He 
 considered that to extend it to such a case would be un- 
 reasonable and would not give due effect to the contract 
 between the parties. Lord Watson in his judgment 
 remarked, " I have been unable to arrive at the conclusion 
 that, in the circumstances which occur in this case, the 
 consideration of what would be the action of a prudent 
 owner uninsured affords the true test of the liability of the 
 underwriters as for a total constructive loss. In my opinion 
 that test is excluded by the contractual relations which 
 exist between the insured and his insurers." 
 
 ' House of Lords, 1898, A.C. 593.
 
 CHAPTER X 
 
 TOTAL LOSS OF FREIGHT 
 
 The third great maritime interest, freight, remams lo be 
 dealt with. The word " freight " does not appear in the 
 text of the policy as it existed before May 1749. It is not 
 easy to see how it came to have its present signification, 
 namely, hire for carrying goods. Etymological! y it should 
 mean simply load or cargo, and it is still used in the United 
 States in this sense {e.g. freight train, fast freight train, the 
 equivalent of the English goods train and express goods 
 train). But it has lost that meaning altogether in England, 
 and now stands simply for hire for carrying goods, and on 
 the United States' sea-board the word is used in nautical 
 affairs in that sense.^ 
 
 In regard to this interest there is a most important 
 and, in fact, an essential difference between the law of 
 England and that of most other ocean-carrying nations ; 
 and this difTerence has important consequences on the 
 relations of assured and underwriter on freight. English 
 law takes the contract under bill of lading between ship- 
 owner and merchant to be that if the freight is payable at 
 destination, then no part of it is earned by a partial per- 
 formance of the contract, that is, by delivery of the cargo 
 at any port short of destination. If an English ship takes 
 
 ^ In German there is a somewhat similar confusion between Frachl 
 and Frachtgeld, in Dutch between Vracht and V'rachtpenning ; in 
 Italian the words nolo and noUggio are those ordinarily used to mean 
 freight, while in French the word frel is pushing out nolis, and in 
 Spanish yf^/* is the only form now in common use.
 
 CHAP. X TOTAL LOSS OF FREIGHT i6i 
 
 in cargo at Liverpool for delivery at Calcutta in return 
 for so much freight, delivery of the cargo at Colombo or 
 Madras will not entitle the shipowner to any freight. 
 Almost all the maritime countries except England have 
 adopted a custom entirely contrary to this : they regard 
 the freight as a liability from the cargo accruing as it were 
 mile by mile as the vessel proceeds and culminating at 
 its full bill of lading amount at port of destination on safe 
 delivery. If a German vessel undertook the voyage from 
 Hamburg,^ and tendered the cargo at Colombo, being herself 
 unable to proceed farther on the voyage, the owner would 
 be entitled, under the law of his flag, to claim the same 
 proportion of the full freight as the distance from Hamburg 
 to Colombo bears to that from Hamburg to Calcutta. 
 This is called distance freight or freight pro rata itimris 
 peracti. In this country it has been considered contrary 
 to public policy to permit any such partial and pro- 
 portionate discharge of a freight contract : it has been 
 thought that such permission might tend to encourage 
 masters and crews to look for reasons to close the freight 
 contract elsewhere than at the intended destination of the 
 adventure. There is certainly good reason for thinking 
 that many condemnations of foreign vessels at inter- 
 mediate ports of their voyages would never occur were it 
 not for the distance freight. 
 
 In consequence of the view of freight adopted in 
 English law, payments made towards freight hold a 
 curious position in English maritime commerce. If the 
 full freight as per bill of lading is, in consequence of 
 some cause or other preventmg the ship's arrival at 
 destination, never earned, what becomes of amounts 
 which the cargo-owner may have prepaid ? are they re- 
 coverable by the cargo-owner or do they remain the 
 property of the shipowner ? That depends entirely on 
 the intention of the parties ; if the intention is to provide 
 an amount on account of freight as it may ultimately be 
 found to be due, then the prepayment is simply a loan ; if, on 
 the other hand, it is meant to be a payment of part of the 
 
 • See Industrie, Shipping Gazette, 30th Nov. 1893. 
 M
 
 i62 MARINE INSURANCE chap 
 
 freight, due when the cargo was loaded, on signing bills 
 of lading or immediately on sailing, then it is a payment 
 to the shipowner absolute and irrevocable, but to be 
 deducted from the bill of lading freight if and when 
 earned. The latter kind of payment is termed "advance 
 freight." If a payment on account is meant to be 
 merely a loan against freight as ultimately due, it should 
 be described in such words as will make its character 
 clear and prevent its being considered advance freight. 
 
 To turn to the insurance side of freight, it is plain that 
 when the carrying ship is completely destroyed by any of 
 what may be called the eminent perils (foundering, burning, 
 etc. etc.) there is an end of the carrying power of the 
 ship, and equally an end of what she was carrying, so 
 that in such cases there is what may be termed a " double 
 qualification" of claim for total loss of freight. In his 
 judgment in Scottish Marine v. Turner^ 1853,^ Lord Truro 
 said : " The expression ' loss of freight ' has two meanings, 
 and the distinction between them is material : 
 
 *'(i) Freights may be lost in the sense that, by the 
 perils insured against, the ship has been prevented earning 
 freight. 
 
 " (2) Freight may be lost in the sense that, after it has 
 been earned, the owner has been deprived of it by some cir- 
 cumstance unconnected with the contract between the assured 
 and the underwriter on freight. For a loss of freight, 
 in the first sense, the underwriter on freight is responsible ; 
 for a loss of freight in the second sense he is not." 
 
 Short of such complete total loss, we may have two cases 
 of total loss of freight : 
 
 (i) Where owing to perils insured against the cargo is 
 incapable of being carried to destination. 
 
 (2) Where owing to perils insured against the ship is 
 unable to carry the cargo to destination. 
 
 (i) By "incapable," in the first case, is meant not only 
 physically incapable but also commercially incapable. 
 That is to say, the description covers not only goods 
 
 * I Macqueen's H.L. App. 34a.
 
 X TOTAL LOSS OF FREIGHT 163 
 
 altered by i)erils insured against into something different 
 in specie from what was shipped or deteriorated so as not to 
 be able to bear forwarding and consequently totally lost, 
 but also goods burdened, in consequence of perils insured 
 against, with such charges as make their for\varding to 
 destination impossible except at a loss, i.e. goods which 
 have suffered constructive total loss in the sense already 
 explained. 
 
 Suppose that an English vessel has put into a port of 
 refuge for repairs and has discharged her cargo, and that 
 her cargo is found to be in such a condition that it cannot 
 be carried forward to destination with safety to the venture, 
 or so as to be delivered in specie, or in any but a worthless 
 state. If this cargo is sold at port of refuge, there evi- 
 dently has gone with it the right on the part of the ship to 
 obtain a certain amount of freight at the end of the voyage, 
 i.e. at destination when reached. The cargo may be sold 
 in this way (a) whole, {d) in part. 
 
 (a) If the whole cargo is sold, the possibility of earning 
 any part of the freight has vanished ; and if the 
 damage giving rise to the sale has been caused by 
 perils insured against, there will be a claim for total 
 loss on the freight policies, the shipowner not being 
 able to collect any freight from the consignee. 
 {b) When only a portion of the cargo is sold, and the 
 rest is forwarded, the amount of freight due by the 
 consignee is the excess of the bill of lading freight 
 on the portion delivered beyond the amount of 
 advance freight. If the full freight of the delivered 
 portion does not exceed the advance freight the 
 consignee has nothing to pay. This follows from 
 the decision in Allison v. Bristol Marine, House of 
 Lords, 1876,1 in which a ship took a cargo of coal 
 from Greenock to Bombay ; the charter-party pro- 
 vided tlint half the freight was to be paid on signing 
 bill of lading, and the remainder on right delivery 
 of the cargo. The vessel was lost before entering 
 
 ' I App. Caa. aoQ.
 
 i64 MARINE INSURANCE CHAi 
 
 Bombay harbour, and one-half of the cargo was 
 saved and delivered. It was held that the consignee 
 was not liable to pay anything further for freight, 
 the amount of the advance being enough to covei 
 the full freight of the delivered portion. There was 
 then no loss on the advance freight, but a total loss 
 upon the shipowner's freight at risk, which was 
 recoverable under the policies. Had the wording 
 of the clause in the charter-party dealing with 
 advance freight been that one -half of the freight 
 of each ton shipped was to be paid on signing bills 
 of lading, and the other half on right delivery of 
 the cargo, the amount lost would have been the 
 same, but the loss would have fallen equally on the 
 shipowner and on the consignee (or charterer) ; 
 the shipowner earning full freight on half the cargo 
 delivered (one moiety advance, one moiety on 
 delivery) and recovering from his underwriter the 
 moiety at risk on the half cargo lost, the con- 
 signee (or charterer) recovering from his under- 
 writer the moiety advanced on the half cargo lost. 
 It has frequently happened that a vessel is left 
 wholly or partly empty in consequence of an 
 accident at port of loading in which all or some 
 of her cargo is destroyed by perils insured against, 
 e.g. fire. The question arises, What would happen 
 if she were to complete the voyage for which 
 she had loaded the cargo, and were to present 
 herself at destination delivering instead of the 
 cargo, proper and adequate proof that owing to 
 such and such perils the missing cargo had been 
 destroyed ? There would appear to be a loss of 
 freight by perils insured against. It is doubtful 
 whether such a course would be reasonable, for 
 nothing would be accomplished by the passage 
 of a vessel thus wholly or partly empty except the 
 fulfilment of the voyage for which she accepted 
 cargo, the voyage being completed simply to sub- 
 stantiate a claim against underwriters on freight.
 
 X TOTAL LOSS OF FREIGHT 165 
 
 But suppose the shipowner finds himself at or near 
 the commencement of a voyage thus by genuine 
 perils deprived of the cargo for the carriage oi 
 which he was to earn freight, and then — instead of 
 completing the voyage empty and to no purpose — 
 effects a new charter and fills up his ship with 
 new cargo, what should his position be with 
 respect to the second freight ? If he is allowed 
 to retain the whole of it, the net result of the 
 accident — so far as the hire of his ship goes — is to 
 let him compress what should have been two 
 voyages into little over the time of one, and thus 
 earn double freight for part or whole of his ship on 
 what is practically one voyage. This seems hardly 
 fair to the underwriter who pays a total loss on 
 the part of the first freight destroyed : is he not 
 entitled to have some share of the second as a 
 "salvage" from what he has paid a loss for? It 
 is said that this point has not been definitely settled 
 by our courts, but that the feeling of the judges has 
 been expressed, that in such a case the assured is 
 bound to return to the underwriter on freight any- 
 thing extra earned by the ship on the same voyage 
 subsequent to the accident that has caused the loss.' 
 Meanwhile in the American cotton-carrying trade an 
 attempt has been made to get over the absence of 
 legal decision by the formation of a special agree- 
 ment applicable to such cases. Special agreements 
 were made in the cases of the Resolute, and Naples, 
 burnt at Savannah in 1887, and later in the case 
 of the Thalia^. These agreements formed the 
 basis of a form of contract now embodied in the 
 Cotton Conference Documents. 
 
 (2) Next, the impossibility of taking the cargo on to 
 destination may arise from the state of the ship. In this 
 
 > It musi De admitted that there are often collateral losses to the 
 >hii>ownrr which materially reduce the apparently larj^e profit of the 
 I'cond freight.
 
 i66 MARINE INSURANCE chap. 
 
 case, whether the impossibihty be physical or commercial, the 
 result is the same, the shipowner is not entitled to any 
 freight unless he^ delivers at destination. On the other 
 hand, it rests entirely with him to decide whether he will 
 forward the cargo or not. Being under no obligation 
 to forward he will naturally adopt the solution that is 
 most profitable to him : if he can forward at a profit he 
 will ; if not, he will not. It is therefore usually a require- 
 ment of an underwriter on the freight of a ship alleged to 
 be irreparable at a port of refuge, that he be perfectly 
 satisfied that the vessel is actually irreparable, and then be 
 quite certain that every effort has been made to secure 
 forwarding vessels a.\ such rates as will leave to the original 
 shipowner a profit on delivery of the cargo at destination 
 Addenda. Under original charter-party or bill of lading. 
 
 Total Loss of Freight arising from Detention 
 
 There is another form of total loss on freight that 
 deserves special attention in consequence of an important 
 decision and of a clause which has been inserted in almost 
 every freight policy since the date of the decision : con- 
 structive total loss of freight arising from delay in conse- 
 quence of sea perils destroying, in a commercial sense, 
 the venture entered into by the shipowner and the charterer. 
 
 The ship Spirit of the Dawn got ashore in Carnarvon 
 Bay on 4th January 1872 on her voyage from Liverpool to 
 Newport, where she was intended to load a cargo of rails 
 for San Francisco. Such a time was consumed in efforts 
 to get her off the rocks (which in the end succeeded) and 
 in repairs, that the charterers threw up the charter and 
 engaged another vessel to take the cargo of rails which 
 were wanted at San Francisco for the construction of a 
 railway. A claim was made for total loss of freight, and 
 in the case Jackson v. Union Marine^ 1873,^ the jury 
 found that the delay was such as to put an end com- 
 mercially to the intended venture. In consequence it 
 
 * UR. 8 C.P. 572 ; 10 C.P 12^.
 
 X DETENTION — SUMMARY OF DOCUMENTS 167 
 
 was decided that as the venture had been made of no 
 effect by perils insured against, there was a constructive 
 total loss of freight, and the sum insured on this interest 
 was due to be paid by the underwriter. 
 
 In the charter of the Spint of tJie Dawn there was 
 no cancelling date, so that the charterer had not by the 
 contract of affreightment the option of accepting or declin- 
 ing at his pleasure the services of the ship had she arrived 
 at Newport after that date. But it seems unlikely that a 
 loss of freight resulting from the exercise of a charterer's 
 option to cancel would be sufficient to substantiate a claim 
 for loss under a marine policy in the common form, 
 unless perhaps the delay which gave the opportunity of 
 cancelling to the charterer was the direct consequence 
 of perils of the sea, or other perils insured against. 
 
 One result of the decision \n Jackson v. Union Marine 
 was the framing and general adoption of a clause ^to the 
 following effect : 
 
 Warranted free from all claim for loss of freight consequent on 
 deteniion whether arising from perils of the seas or otherwise, 
 
 which is in modern practice inserted in all policies on 
 freight. It puts an end to all question of liability of freight 
 underwriters for loss arising from lapse of time whether the 
 charter under which the freight is due be provided with a 
 cancelling date or not.^ 
 
 ■ Total Loss of other Interests 
 
 The secondary interests, such as profit, increased value 
 of goods, etc., commissions and brokerages of all kinds, 
 follow in their fate the ship, cargo, and freight which have 
 already been discussed, so that it is unnecessary to discuss 
 separately total loss of these derivative interests. 
 
 Summary of Documents. — The documents required to 
 establish a claim for total loss are : 
 
 (i) Protest of master. 
 
 (2) Set of bills of lading (endorsed if necessary, so as to 
 be available to the underwriter). 
 
 ' This principle holrls also in the case of a time policy on freight. 
 Bensaudt v. Thames and Mersey M. I. Co., Housfc of Lords, 1897; 
 IS Times L. R. 501.
 
 i68 MARINE INSURANCE chap. 
 
 (3) Policy or certificate of insurance (endorsed if neces- 
 sary). 
 
 (4) In United States of America. Statement of loss 
 in detail. 
 
 In the United States of America certified copies of Nos. 
 (1), (2), and (3) are taken; but as none of these copy- 
 documents can transfer possession to the underwriter there is 
 necessary for that purpose another document, viz. — 
 
 (5) Bill of sale and abandonment with subrogation to 
 underwriter; that is, an assignment of all interest to the 
 underwriter. 
 
 In the absence of the/w// set of bills of lading a similar 
 document should be taken in England, especially in all 
 cases in which salvage operations are likely to be under- 
 taken. Such a document handed to a salvage association 
 or a manager of salvage (whether acting for shipowner or 
 for underwriter) settles the ownership of salved goods, 
 and ^sures that any claim for salvage expenses will be sent 
 direct to the underwriter. This is from the assured's point 
 of view desirable, and it greatly simplifies the management 
 of salvage cases. 
 
 As a claim for total loss cannot extend beyond the full 
 amount insured in the policy, it follows that the documents 
 required to substantiate such a claim must be supplied to 
 the underwriter free of charge. 
 
 Subrogation. — In connection with abandonment and 
 total loss it is convenient to consider subrogation. 
 
 When a person insured suffers a total loss and is indem- 
 nified for it by his underwriter, there is in virtue of this 
 ver)' payment and acceptance of indemnity a transfer from 
 the assured to the underwriter of all interest in the article 
 insured, the underwriter acquiring all the rights of ownership 
 at least up to the value which he has paid. If the assured 
 absolutely abandons to the underwriter, then the latter's 
 rights of property and recovery are not limited to the 
 amount he has paid. In the case of North of Ene^/ and Iron 
 Steamship Insurance Association v. Annstrong, 1870,^ there 
 is a strikinjr instance of this. A steamer valued in her 
 policies at £6000 was run down by another steamer. The 
 1 L. R. s Q. B. 244.
 
 SUBROGATION 169 
 
 latter was held to blame and had to pay up to the limit of 
 her statutory liability (at ^8 per ton) ;^ 5 6 84 or thereabouts. 
 So far, it seems only right that the undenvriter should 
 receive this amount in full. But it appeared that in the 
 statement made by the owner of the sunken steamer and 
 accepted by the court, the actual value of that steamer was 
 stated at ^^9000. The assured claimed the portion of 
 ;^5684 attaching to the difference between ^9000, the 
 actual value, and £6000 the insured value, namely, one- 
 third or ^^1895. But it was held that he had no right to 
 any share of the amount recovered, and as far as can be 
 seen the decision would have been the same had the full 
 ^9000 been recovered. Lord Cockbum in the course of 
 his judgment said: "Just as the underu'riter would be 
 entitled to the ship if it could have been got bodily back, so 
 they are entitled to that which is the representative of the 
 ship in the shape of damages to be paid by the owners of 
 the vessel which caused the collision." 
 
 If this is carried a step further, it will be found in the 
 case of loss of a vessel by collision with another vessel of 
 the same owner, that although the owner has to pay for the 
 cargo lost in the vessel not in fault, the underwriters on the 
 hull of that vessel have no claim for their loss against 
 him or his underwriters of the other vessel. The principle 
 of this distinction is that in each vessel the underwriters are 
 simply the bearers of a part of the shipowner's respon- 
 sibilities. When a loss to either vessel occurs by the 
 fault of the other, the underwriters on the injured ship have 
 no rights of action beyond those enjoyed by the owner, 
 which are in payment of the loss or damage subrogated to 
 them ; their rights of action are only his rights of action 
 passed on to them. But as a man cannot have a claim against 
 himself or raise an action against himself, his underwriters, 
 although interested in entirely different and independent 
 parts of his property, have no claim or right of action against 
 one another {Simpson v. Thompson, House of Lords, 1877, 
 reversing decision of First Division, Court of Session).^ 
 
 ' 3 App. Cas. 279 I'.ut to provide for cases of damnpe done in 
 collision of ships of one owner special agreements are made in the shape 
 of 'same ownership " or "sister ship " clauses ; vide p. 253.
 
 I70 MARINE INSURANCE chap, x 
 
 " In King v. Victoria Ins. Co. (Privy Council, March 
 1896: 12 Times L. R. 285) it was held that where under- 
 writers bona fide paid a loss for which they were not legally 
 liable, they were subrogated to the rights of the assured." 
 Lord Hobhouse said that such "a payment . . . was a 
 claim made under the policy and entitled the insurers to 
 the remedies available to the insured." 
 
 Course of Settlement of Constructive Total Loss. — At 
 whatever point in a voyage, short of destination, the 
 existence of a constructive total loss is proved, as soon as 
 the loss is paid, the whole property passes over to the 
 underwriter. The result of this is, that when a ship is sold 
 at an intermediate port because it cannot be repaired or 
 proceed on the voyage without repairs, and when goods are 
 sold because they cannot be forwarded, they are sold on 
 the underwriter's account, and the net proceeds are accounted 
 for to him. The ordinary course of business, however, does 
 not follow the matter thus particularly. The person who 
 takes charge of the venture at the intermediate port, prob- 
 ably the captain of the ship or his agent, sends the 
 proceeds to the shipowner, who passes over to the shippers 
 the proceeds of their respective parcels of goods. Then 
 the various underwriters have claims made on them for the 
 difference between the insured value of the ship and its net 
 proceeds, and of the goods and their net proceeds. Thus 
 practically the claim takes the form of a total loss less 
 proceeds. As proceeds are in such a case technically 
 termed salvage, this form of settlement is known in the 
 language of insurance by the name " salvage loss." 
 
 It is important to bear in mind the reason for the system 
 followed in this payment. It is not that the goods are 
 damaged, or that they are at an intermediate port in a 
 damaged state ; but that at a point which is not the 
 destination of the venture the goods are sold because they 
 cannot (physically or commercially) be carried on to desti- 
 nation, and being consequently a constructive total loss are 
 surrendered to the underwriter (or sold on his account) ir 
 return for his payment of the insured value.
 
 CHAPTER Xi 
 
 THE MEMORANDUM — F.P.A. CLAUSE 
 
 The form of policy discussed above leaves, as has already 
 been pointed out, some uncertainty about the extent of under- 
 writers' responsibility for total losses. The same indefinite- 
 ness prevails in the case of losses other than total. The 
 underwriter merely undertakes " the true perfonnance " oi 
 the contract in which he is described as being content to 
 bear and as actually taking on himself liability for all *' hurt, 
 detriment, or damage " inlhcted on the property insured by 
 certain named perils or others ejusdem generis. The policy 
 contains no words restricting the underwriter's liability to 
 cases of total loss only : there appears, therefore, to be no 
 doubt that unless excluded by commercial custom or by 
 special agreement, loss of a portion of the property insured, 
 or damage to the whole or any part of the property insured, 
 proximately caused by perils insured against, forms a liability 
 of the underwriter. 
 
 The correctness of this view appears established from 
 the fact that the earliest addition to the form of policy 
 discussed above was a paragraph in which special exceptions 
 are made from the liabilities of underwriters. The form in 
 which this was and still is effected is peculiar and will 
 require examination ; the effect is to free underwriters from 
 all claims for damage or partial, loss unless they reach a 
 specified percentage. This addition to the policy is known 
 as the Memorandum : it was first inserted in Lloyd's policies 
 in May 1749, in the following form : —
 
 172 MARINE INSURANCE chap. 
 
 ^. /?. — Corn, fish, salt, fmit, flour and seed are warranted free 
 from average, unless general, or the ship be stranded ; sugar, 
 tobacco, hemp, flax, hides and skins are warranted free from average 
 under ^S per cent, and all other goods, also the ship and freight 
 are warranted free from average under £3 per cent, unless general, 
 or the ship be stranded. 
 
 The memorandum remains in Lloyd's policy unaltered 
 except by the addition of a few words, which extend the 
 underwriter's liability in case the ship has been sunk or 
 burnt, or the damage has been caused by collision. 
 
 Stevens in his essay on Average (ist edition 1813, 
 5th edition 1835) says that "the intention of the 
 memorandum appears to have been to prevent persons 
 from being insured on certain articles particularly liable to 
 waste, decay, leakage, or damage on a sea voyage, or which 
 were of great value and small bulk, under the general 
 expression of goods, whereby the insurer would run a 
 greater risk than he had calculated on," Stevens proceeds 
 to explain that the reason why articles subject to leakage or 
 breakage are not enumerated in the memorandum is that, 
 according to the custom of Lloyd's, such articles are free 
 from average unless it can be shown that the ship struck 
 the ground with such force as to make it probable that she 
 had thereby deranged her stowage. He adds that the 
 warranty respecting certain articles being made free of 
 average under a certain percentage is of a later date than 
 the general clause of " free of all average." From this it 
 appears that before the adoption of the memorandum as a 
 permanent addition to every policy the component parts of 
 it must have been used separately as required by under- 
 writers. 
 
 Benecke {Principles of Indemnity, chap, x.) traces the 
 memorandum to the attempts of underwriters to counter- 
 balance the effect which the natural quality of certain 
 articles must necessarily produce upon the risk of the 
 underwriters, and to put- goods of every description upon 
 an equal footing. In different countries different methods 
 have been tried for the attainment of the same end ; in 
 Holland an attempt to adjust the premium and introduce
 
 XI thl: memorandum 173 
 
 special stipulations for different articles had to be abandoned 
 (Marshall, p. 215). 
 
 The paucity of the articles enumerated is striking : it 
 would be inexplicable were it not that the application of tlie 
 memorandum was only the first step towards the framing of 
 special terms for the insurance of different classes of goods, 
 which in the end have superseded the memorandum. As 
 to what was understood to be included under the names of 
 the articles, we learn from Park ^ and Marshall ^ that under 
 "com" are included malt {Moody v. Surridge, 1794), pease 
 {Mason v. Skurray, 1780), but not rice {Scott v. Bourdtllon, 
 1 806), that " salt " does not include saltpetre {Joumu v. 
 Bourdieu, 1787). In fact the words are used in their 
 ordinary trade sense, according to which it is quite reason- 
 able that jute should not be included under " hemp " or 
 "fiax," and that in the United States furs have been held 
 not to be included under "hides" or "skins" (Phillips, § 
 1764, quoting Astor v. Union Insurance Company^ 7 Cow, 
 N.Y. 202). 
 
 The wording of the memorandum leaves much to be 
 desired: it has been the subject of litigation from 1754 to 
 1893. There have been disputes about (i) the meaning of 
 the phrase " warranted free from average," (2) the effect 
 of the words "unless general," and (3) the interpretation of 
 the words " or the ship be stranded." 
 
 (i) Warranted free from Average. — The difficulty here 
 is due to the uncertainty which prevails regarding the 
 meaning of "average." It will be more convenient to 
 discuss this word later, meanwhile it is enough to say that 
 it here means " loss less than total and resulting from sea 
 damage." The effect of these words taken in connection 
 with the percentages stipulated in the remainder of the 
 clause is, as regards the group of articles first named, "to 
 free the policy for any extent of deterioration by sea 
 damage however great which does not amount to a total 
 loss" (Amould, p. 875^; as regards the second and third 
 groups, to give the same freedom for any extent of deteriora- 
 
 • Marine Insurance, p. i7q. "^ Insurance, pp. ai6, 218.
 
 174 MARINE INSURANCE chap. 
 
 tion by sea damage however great not amounting to 5 per 
 cent and 3 per cent respectively. 
 
 (2) Unless general. — It was held by Lord Mansfield 
 {Wilson V. Smith, 1764),^ that the word unless here means 
 the same as except, and is not to be construed as denoting a 
 condition ; that is to say, the clause means that except 
 general average no loss resulting from sea damage and less 
 than total loss shall be paid, and does not mean that no 
 loss resulting from sea damage and less than total loss shall 
 be paid unless general average occur, in which case partial 
 loss resulting from sea damage shall be paid. In Price v. 
 Ai Small Damage Association, 1889,2 Lord Justice Fry 
 stated that " free of average unless general " is equivalent 
 to " free of particular average," a term which will be the 
 subject of examination later. 
 
 (3) Or the ship be stranded. — As the underwriter's 
 exemption from claim for anything short of a total loss of 
 certain articles, or of loss of a certain named percentage on 
 others, is removed by the " stranding " of the ship, it 
 becomes of great importance to know what is covered by 
 that word. Lord Ellenborouj^h, in M'-Dougle v. Royal 
 Exchange, 18 15,' said that the various decisions given 
 displayed "a curiosity not at all creditable to the law." 
 
 First, to describe what it is not. It is not a mere 
 striking either of the ground or of anything firmly attached 
 to it, such as piles, wrecks, stones, or rocks. Striking a 
 floating wreck in mid-ocean does not constitute a strand, 
 for it is essential that the object touched be attached to, or 
 be in immediate contact with the bottom. Even remaining 
 for a time in firm contact with a floating wreck does not 
 amount to a strand. It is not a mere touching and grazing 
 along the ground ; nor does striking a reef and staggering 
 over it constitute a strand. 
 
 In describing what is included under the word "strand- 
 ing " or " strand " some of the text-books use a phrase 
 which expresses in a way what is required, but still is not 
 free from objection ; they speak of a vessel not being 
 
 » 3 Burr. 1550. "^ L.R. 22 Q.B.D. 580. 
 
 • 4 Camp. 283.
 
 XI STRANDING 175 
 
 stranded (within the meaning of the memorandum) unless 
 she settles down on the obstructing object in a quiescent 
 state. Careful examination shows that this is a very 
 exacting definition. It is doubtful whether the vessel need 
 either settle down or be absolutely quiet. But she must 
 remain firm and fast in the sense of not being able to 
 proceed on her course of navigation without perceptible 
 loss of way for an appreciable period of time. Then, if the 
 obstruction causing the loss of way is ground, rock, bottom 
 of some kind, or something in immediate contact with it, 
 like a wreck lying at the bottom of the sea, or loose rocks 
 or stones, or something fixed in it like piles, the vessel is 
 stranded. Provided she cannot get over the obstacle, her 
 not settling down and her not being absolutely quiescent 
 hardly seem sufficient to prevent her being considered 
 " stranded." 
 
 The stoppage must be perceptible and must last for an 
 appreciable period of time. As Lord Ellenborough put it 
 in Baker v. Towry, 1816:^ " It is not merely touching the 
 ground that constitutes stranding. If the ship touches and 
 runs, that circumstance is not to be regarded ; but if she is 
 forced ashore, or driven on a bank and remains for any time 
 on the ground, this is stranding without reference to th^ 
 degree of damage she may thereby sustain." In the case 
 then before the court the vessel had been fifteen to twenty 
 minutes on the ground. In another case Lord Ellen- 
 borough more closely defined his idea of what he meant by 
 " remaining for any time on the ground." In M'^Dougle v. 
 Royal Exchange, 181 5,2 a vessel coming out of harbour fell 
 over on her beam ends, and after so remaining for one 
 minute and a half floated off" and proceeded on her voyage. 
 Lord Ellenborough decided that this was NO stranding. 
 He said: "To use a vulgar phrase, which has been 
 applied to this subject, if it is touch and go with the ship 
 there is no stranding. It cannot be enough that the ship 
 lay for a few moments on her beam ends. Every striking 
 must necessarily produce a retardation of the ship's 
 
 ' I Stark 436. * 4 Oimp. a8i.
 
 176 MARINE INSURANCE cha^ 
 
 motion. If by the force of the elements she is run aground 
 and becomes stationary, it is immaterial whether this be on 
 piles or on rocks or on the seashore, but a mere striking 
 will not do wheresoever that may happen." Later in the 
 same judgment he said : " I take it that stranding in its fair 
 legal sense implies a settling of the ship,^ some resting or 
 interruption of the voyage, so that the ship may pro 
 tempore be considered as wrecked ; from which misfortune 
 a great deal of damage does frequently occur." The 
 decisions, therefore, determine that to constitute a strand a 
 stoppage of something between one and a half and fifteen 
 minutes must occur. 
 
 Daily (Perils, p. i8o) suggested that "the centre of 
 gravity of a vessel must be supported by the ground before 
 it can be said that she is stranded." But there does not 
 appear to be anjlhing in the decisions to support this view, 
 and the latest text-book writers characterise it as " perhaps 
 too severe" (Lowndes, Law M. I. p. 197), or as "erring on 
 the side of undue stringency" (M'Arthur, Contract, p. 290). 
 If the suggestion of Daily were taken literally, a vessel with 
 stem and stem firmly fixed on two ridges of rock, but with 
 the rest of the keel free, would not be stranded ; nor would 
 one holed by a sharp rock at any point except exactly under 
 the centre of gravity, even though the rock held the vessel 
 firm, like a pivot ; nor one bilged by a rock to the one or the 
 other side of the keel, even though held firm by the rock. 
 It is enough if the vessel is firm and fast to such an extent 
 that for an appreciable time the course of the vessel's 
 navigation is perceptibly interrupted. 
 
 The stranding must be fortuitous, accidental — not part 
 of the customary navigation on the voyage insured. Foi 
 instance, a vessel going up the river to Cork took the 
 ground once for eight hours, and again for ten hours, 
 owing to the shallowness of the water ; and after mooring 
 at a quay in Cork harbour she fell when the tide ebbed 
 and lay on her broadside for two whole tides. It appeared 
 from the evidence in the case, that taking the ground in this 
 
 * It is worth noting that Lord Ellenborough does not say "a 
 fettling dcwn of the ship."
 
 XI STRANDING— BEACHING 177 
 
 manner was no more than was usual with this class of vessels 
 in the Cork river. This was held not to be a stranding, 
 because it happened in the ordinary course of navigation 
 yHearne v. Edmunds, 1819).^ So when in a tidal harbour 
 a vessel moored in a proper berth took the ground at ebb 
 tide, as and where it was intended, and damaged herself on 
 some hard substance, it was held that the vessel did not 
 strand, but merely took the ground in the ordinarj' course of 
 navigation {Kingsford \. Marshall, i832).2 "Otherwise," 
 said Chief Justice Tindal in his judgment, " at every ebb of 
 the tide there would be a stranding, and the memorandum 
 intended for the security of undervmters against partial 
 losses upon perishable articles would be nugatory." 
 
 But where the ground is taken intentionally, as when a 
 vessel is beached to prevent her sinking in deep water, this 
 is held to constitute a strand ; the reason being that "the 
 ship was laid on the strand not in the ordinary course of 
 navigation, but ex necessitate to avoid an impending danger 
 (Mr. Justice Bayley in Barrow v. Bell^ i825).3 In the case 
 of a vessel which for the safety of the whole venture entered 
 a tidal harbour, forced by stress of weather to take any place 
 of refuge that could be found, and there grounded, it was 
 held by the Court of Queen's Bench that such a grounding 
 constituted a stranding within the memorandum {Corcoran 
 V. Gurney, 1852).* As Chief Justice Tindal put it in 
 Kingsford v. Marshall,^ " where the taking of the ground 
 does not happen solely from those natural causes which are 
 necessarily incident to the ordinary course of the navigation 
 in which the ship is engaged, either wholly or in part, but 
 from some accidental or extraneous cause, that is a 
 stranding." 
 
 It should be noticed that in the case of goods insured 
 in a ship on a policy with the ordinary memorandum, and 
 not containing the lighterage clause, the stranding of a 
 lighter does not produce the same extension of the under- 
 writer's liability as the stranding of the ship {Hoffman v. 
 Mars/iall, i835).« 
 
 > I Br. & B. 388. « 8 BinR. 458. » 4 B. & Cr. 736. 
 
 « 1 E. & B. 456. • 8 Bing. 458. * a Bing. N.C 383. 
 
 V
 
 178 MARINE INSURANCE chap. 
 
 Two recent cases are of interest as defining the applica- 
 tion of the memorandum more closely. In the Alsace and 
 Lorraine {Blackwood, Bryson, and Company v. British and 
 Foreign Marine Insurance Company^ 1893),^ the vessel met 
 with bad weather on her voyage from Calcutta to Demerara, 
 had to jettison part of her cargo of rice — damaging some 
 of the remainder in the operation — ^and put into Mauritius 
 for repairs. The cargo was discharged, and part of it found 
 to be unfit for reshipment was sold. Before the repairs on 
 the vessel were completed she was driven on the rocks by 
 the great cyclone of April 1892; she remained hard and 
 fast, and was so damaged that she was hopelessly lost. 
 The unsold portion of the cargo was forwarded to destina- 
 tion in the Brazil^ which met with bad weather, in conse- 
 quence of which the rice on board of her was damaged. 
 Claim was made for the amount of this damage on the 
 ground that " the vessel " had stranded. There was no 
 dispute about the facts. The plaintiffs' contention was that 
 if the vessel strands after the shipment of the goods, while 
 the vessel is still under contract to carry the goods, and 
 during the currency of the policy covering the goods, such 
 stranding removes the exception from the memorandum, 
 even though at the time of the stranding the goods were 
 not on board. This view was not accepted by Mr. Justice 
 Barnes, who found for the defendants with costs. 
 
 Similarly, in Thames and Mersey Marine Insurance 
 Company v. Pitts, Sons, and King, 1893^ (an action to 
 recover money overpaid), a vessel loaded cargo at San 
 Nicolas and on her way to Buenos Ayres she stranded. 
 At Buenos Ayres she took more cargo on board, and it was 
 claimed by the cargo-owners that the stranding was a 
 stranding in the sense of the memorandum even as regards 
 the goods shipped thereafter at Buenos Ayres. The judges 
 (Justices Day and Collins) held that the stranding of the 
 vessel did not aflTect any cargo except such as was on board 
 when it occurred. 
 
 1 9 Times Law Rep. 484. 
 ^ I Q.B. 476.
 
 XI APPLICATION OF THE MEMORANDUM 179 
 
 Consequently it may be taken as settled that to con- 
 stitute a stranding in the sense of the memorandum the 
 interest insured must be in one common adventure with the 
 ship at the time when the ship takes the ground. 
 
 Within five years after the addition of the memorandum 
 to the policy the courts were called upon to decide whether 
 in a case of strand the underwriter was obliged to pay his 
 pro rata share for all the damage which the goods sustained 
 during the voyage, or only for what was occasioned by the 
 stranding. Upon a policy on com {Caniillon v. London 
 Assurance, 1754),^ it was held by Sir Dudley Ryder that 
 the stranding entitles the assured to claim the whole loss 
 occurring on the voyage. One consequence of this decision 
 was that the London Assurance and the Royal Exchange 
 Assurance struck the words " or the ship be stranded " out 
 of their policies. There was some wavering on the part of 
 the courts in later cases, but it was finally settled by Lord 
 Kenyon's decision in Burnett v. Kensington, 1 797, ^ that " if 
 a ship be stranded and the cargo suffer no damage whatever, 
 and afterwards the vessel meet with bad weather and the 
 cargo sustains an average loss, say of 90 per cent, the under- 
 writers are answerable for the whole of that average loss." 
 
 On a somewhat similar principle it has been decided 
 that to constitute a percentage claim on goods named in 
 the second and third classes in the memorandum, it is not 
 necessary that the damage making up the full percentage 
 must all happen on one occasion or from one kind of 
 casualty. It is enough if it occurs in the course of the 
 voyage insured, and results from perils insured against. 
 But the stipulated percentage must consist entirely of actual 
 damage sustained by the goods insured ; it cannot be com- 
 posed partly of such damage and partly of such other items 
 as general average, or of particular charges, or of expenses 
 incurred in proving the claim (cf. Kidston v. Empire 
 Marine, i866).3 
 
 It was mentioned above (p. 172) that words have been 
 added to the memorandum extending the liability of the 
 
 ' Cited 3 Burr. 1553. ' 7 T. R. 2i<x 
 
 » L.R. I CP. 535 : aCP. 357
 
 i8o MARINE INSURANCE chap. 
 
 underwriter. In the case of the Glettlivet (Admiralty, 
 March 1893),^ Mr. Justice Barnes stated that for about 
 the last thirty years the words '* sunk or burnt " have 
 generally been added to the memorandum. 
 
 As stranding designates accidental resting of the ship's 
 side or bottom on the ground in such a way as to make her 
 innavigable and to damage her, so sinking must mean such 
 accidental deepening of the ship's draft as will permit water 
 to pour into her by the hatches, or other proper openings 
 in her, and bring her down beneath water level. The only 
 English case on sinking is Bryant and May v. London 
 Assurance, 1886 (in Queen's Bench before Mr. Justice 
 Grove and a special Jury),^ in the matter of a cargo of 
 match splints per B. C. Boyesen from Quebec to London. 
 On the vessel's arrival at Gravesend the water was over the 
 deck as far aft as the mainmast, abaft the mainmast it was 
 dry ; the captain's cabin and hurricane deck were dry. 
 The cargo was very much wetted, but part of it was 
 delivered dry. The plaintiffs contended that this con- 
 stituted a sinking within the meaning of the memorandum, 
 saying that the vessel had sunk as far as a vessel with a 
 timber cargo could sink. But both of their witnesses 
 admitted that had the cargo become more saturated with 
 water the ship would have sunk further. The case was 
 decided in favour of the defendants. But if a sinking were 
 to be of such a character that, to use the words of Lord 
 Ellenborough va. M^Dotigle v. Royal Exchange, 1815,8 "the 
 ship may pro tempore be considered as wrecked," such a 
 disaster would certainly remove the exception laid down 
 in the memorandum. 
 
 In the case of burning another difficulty arises. If the 
 property insured is a cargo of flour, and if this interest 
 takes fire and is burnt without the ship being damaged by 
 the fire, the exception has not been taken out of the memo- 
 randum, and the underwriter remains free of claim for 
 partial loss or damage of the flour. It is the ship that 
 
 ^ 9 Times Law Rep. 360 ; decisions affirmed by Court of Appeal, 
 10 Times T^w Rep. 97, but Mr. Justice Barnes's reasons disapproved. 
 2 2 Times Law Rep. 591. * 4 Camp. 283.
 
 XI BURNING COLLISION i8i 
 
 must be burnt, say a beam scorched, a floor charred, a ceiling 
 burnt. Consequently the destruction of a cabin byfire removes 
 the exception, while a fire in the cargo itself does not. Such 
 was the view acted upon almost universally until quite lately. 
 But a recent decision of Mr. Justice Barnes (the Glenlivet, 
 1 893)^ has raised a new point. Fire occurred thrice, once on 
 each of three separate and distinct voyages, in the Glenlivefs 
 coal bunkers but did not pass beyond them. As it was decided 
 by Lord Ellenborough that a mere touching of the ground was 
 not sufficient to make a strand, so it is now decided in the 
 Glenlivet case that a mere burning is not sufficient to take the 
 exception out of the memorandum ; it must be such a burning 
 as to constitute a substantial burning of the ship as a whole. 
 The judgment in the Glenlivet has excited considerable atten- 
 tion, as it takes away on principle what was long granted 
 without question. But indeed it is not easy to see why a fire in 
 a ship's bunkers or cabin should be enough to establish a claim 
 for damage to cargo arising from some other peril barred by the 
 memorandum, when a touch-and-go graze on a rock, even if 
 actually causing damage, is not enough. Since the issue of the 
 decision some slips have had the words " on fire " added to 
 "burnt," confessedly in the hope and expectation of thus restor- 
 ing to the assured what has been taken from him by the decision.* 
 In consequence of the great increase in the number of 
 
 1 9 Times L. R. 360 ; 10 Times L.R. 97. 
 
 * But will not exactly the same principle that was applied in the 
 interpretation of " burnt" be applied to that of " on fire" ? For it is 
 not a question of the extent of the effect of ignition ; if ignition results 
 in the total loss of the property insured, then the loss is claimable as a 
 total loss and not under the memorandum or any other clause referring 
 to partial loss ; if it does not result in a total loss, then, as far as the 
 memorandum is concerned, is it not all the same whether you say 
 "burnt" or "on fire" so long as the principle of "substantial 
 burning of the ship as a whole" is applicable? This is the principle 
 stated by I^ord Justice Lindley in the GUnlivet decision. Court of 
 Appeal, 1894, I Q.B.D. 48: "I take it the context shows what is 
 meant is that the ship as a whole must be stranded, sunk, or burnt ; 
 and I cannot accept the suggestion of the plaintiff's counsel that .-iny 
 6re on lx)ard a ship doing little structural damage to the ship itself is 
 a burning in ordinary language. ... Of course in one sense it ii 
 burnt ; anything that burns any part of a ship is a burning of the ship, 
 but I cannot think that that is the meaning of it here."
 
 i8a MARINE INSURANCE chap. 
 
 collisions occurring at sea since the introduction of naviga- 
 tion by steam, it has lately become customary to add to 
 the memorandum in policies the words, " or the damage be 
 caused by collision," occasionally supplemented by the 
 words, "with another ship or vessel."^ There are various 
 forms of the addition, but the one just given is the most 
 equitable between assured and underwriter, and the least 
 likely to lead to results disappointing to either party. The 
 form "or in collision" is open to the objection that the 
 mere fact of the carrying vessel being in collision would 
 remove the exception from the memorandum, and that the 
 policy would then be liable for the payment of damage 
 arising from some other peril barred by the memorandum. 
 
 The form " or the damage be caused by collision " sug- 
 gests the true middle course open to assured and under- 
 writers in the matter of stranding and burning. As matters 
 are at present, the assured feels the hardship of not being 
 able to recover the amount of damage done by fire to and 
 in his cargo unless the fabric of the ship has been burnt ; 
 the underwriter feels the hardship of being legally obliged 
 to pay for sea damage to cargo which has not resulted from 
 any serious peril, but is claimed on the ground of a merely 
 technical strand. Why not solve both difficulties by making 
 the memorandum read, "unless caused by stranding, sinking, 
 burning, or collision with another ship or vessel, wreck or ice " ? 
 
 The preceding remarks bear more particularly on the 
 relation of the memorandum to goods, the bearings of the 
 memorandum on ship and freight will be examined later. 
 
 It is of interest to note that the American form of policy 
 follows the English in adopting the plan of making a 
 memorandum deal with the particular average liabilities of 
 the underwriter on some interests. The text of the policy 
 provides that " no partial loss or particular average shall in 
 
 * Lord Coleridge in Richardson v. Burrows, 1880, gave it as his 
 opinion thai in the memorandum collision means "collision with 
 another ship" (Lowndes, Law M. I. p. 199). Compare Mr. Justice 
 Baraes in the Munroe (Prob. Div. 1893, p. 248), Mr. Justice Mathew 
 in Kirkmichael and Osseo {Union M. I. Co. v. Borwick, Q. B. , 20th 
 June 189s), II Times L.R. 461;, and Mr. Justice Bighani in Chandler 
 Atlderida. v. ^/ojr^ (24th Nov. 1897, 14 Times L.R. 66).
 
 XI F.P.A. CLAUSE 183 
 
 any case be paid unless amounting to 5 per cent." Then 
 follows the memorandum : — 
 
 Memorandum. — It is also agreed that bar, bundle, rod, hoop, 
 and sheet-iron, wire of all kinds, tin plates, steel, madder, sumac, 
 wickerware and willow (manufactured or otherwise), salt, grain of 
 all kinds, tobacco, Indian meal, fruits (whether preserved or other- 
 wise), cheese, dry fish, hay, vegetables and roots, rags, hempen 
 yam, bags, cotton bagging, and other articles used for bags and 
 bagging ; pleasure carriages, household furniture, skins and hides, 
 musical instruments, looking-glasses, and all other articles that are 
 perishable in their own nature, are warranted by the assured free from 
 average, unless general ; hemp, tobacco stems, matting, and cassia, 
 except in boxes, free from average under 20 per cent, unless 
 general ; and sugar, flax, flax seed, and bread are warranted by the 
 assured free from average under 7 per cent, unless general ; and 
 coffee in bags or bulk, pepper in bags or bulk, and rice, free from 
 average under lo per cent, unless general. 
 
 Warranted by the insured free from damage or injury from 
 dampness, change of flavour, or being spotted, discoloured, musty, 
 or mouldy, except caused by actual contact of sea water with the 
 articles damaged, occasioned by sea perils. Not liable for leakage 
 of molasses or other liquids unless occasioned by stranding or 
 collision with another vessel. 
 
 This is very stringent, far more closely binding than 
 anything ever introduced into the English policy for general 
 use ; and the occurrence of even an important casualty to 
 the vessel carrying the goods does not subject the underwriter 
 to any liability unless the damage amounts to the stipulated 
 percentage, or unless, in the case of leakage, it is actually 
 occasioned by stranding or collision. The absolute exclu- 
 sion of such damage as gave rise to the case Alofitoya v. 
 London Assurance, 1851' (see p. 97) is stated in ex- 
 tremely strong language ; mere contact with sea water is 
 not enough to constitute a claim, the contact must have 
 been occasioned by sea perils. 
 
 The Free of Particular Average Clause 
 
 After 1749 the course of insurance business showed 
 that the memorandum afforded only a moderate protection 
 to underwriters on goods. As was remarked above (p. 173) 
 the paucity of the articles named is striking. The meagre 
 
 * 6 lixch. 451,
 
 i84 MARINE INSURANCE chap, 
 
 • 1 
 
 ness of the memorandum was soon rectified by the con- 
 struction and employment of a clause known as the " Free 
 of Particular Average" clause, the F.P.A. clause. It was 
 found that it suited both merchants and underwriters that 
 some of the articles named in the second group of the 
 memorandum should be insured on the stricter and Cheaper 
 terms of the first group, namely, free from average, unless 
 general, or the ship be stranded ; and the same held true 
 of many articles not specified in either the first or the 
 second group, but included under the words " all other 
 goods," which in the memorandum are warranted free from 
 average under 3 per cent, unless general, or the ship be 
 stranded. It thus becomes customary to regard most 
 insurances on goods as being done either on the terms of 
 the first group in the memorandum, or on special " average " 
 terms, to the consideration of which we will turn later. 
 
 The memorandum being employed in permanent addition 
 to the policy, it became necessary to indicate by special 
 clause on the policy any departure from memorandum 
 terms in the insurance of goods or other property. The 
 adoption of the terms of the first group of memorandum 
 articles became so common that the clause became known 
 as the free of particular average (F.P.A.) clause absolutely. 
 The first form of the clause was exactly as at the beginning 
 of the memorandum : — 
 
 Warranted free from average, unless general, or the ship be 
 stranded. 
 
 This clause written on or attached to a policy for sugar, 
 flax, or hides, or any of the second group of memorandum 
 articles, overrides the words providing for the payment of 
 average if exceeding 5 per cent ; for manufactured goods 
 it overrides the words providing for payment of average if 
 exceeding 3 per cent. 
 
 As in the memorandum, so in the F.P.A. clause, it was 
 found necessary to permit the occurrence of other casualties 
 besides stranding to annul the exception ; the clause conse- 
 quently took the form : — 
 
 Warranted free from average, unless general, or the ship be 
 ttranded, sunk, or burnt.
 
 XI 
 
 F.P.A- CLAUSE l8S 
 
 Or, substituting for the words "average, unless general," 
 the equivalent given by Mr. Justice Fry (p. 174), "particular 
 average," the following form : — 
 
 Warranted free from particular average unless the ship be 
 stranded, sunk, or burnt. 
 
 Then it became necessary to include stranding, sinking, 
 and burning of craft, and the clause became — 
 
 Warranted free from particular average unless the vessel or craft 
 be stranded, sunk, or burnt, each craft or lighter being deemed a 
 separate insurance. 
 
 The peril of collision becoming more and more important, 
 it became usual to add after " burnt " some words by which 
 the underwriter assumed liability for the proximate effects of 
 the peril. The objections to the apparently simplest form 
 of expressing this, namely, " or in collision," have already been 
 pointed out (p. 182) ; they led to the addition of such phrases 
 as — 
 
 The colHsion to be of such a nature as may reasonably be 
 supposed to have caused or led to the damaj^e. Or, 
 
 The collision to be of such a nature as may reasonably be 
 considered to have occasioned damage to cargo. Or, 
 
 The collision to be of such a nature as to have been the proxi- 
 mate cause of damage to the interest.' Or, 
 
 The collision to be of such a nature as may be reasonably 
 supposed to have caused or led to the damage.' 
 
 Much the best way is to avoid entirely the use of the 
 words " or in collision," and instead to use the form — 
 
 Or the damage be caused by collision with another ship or 
 vessel. 
 
 ' Seemingly an inadequate form and dangerous for the assured. 
 Would it cover anything exctrpt the damage done by the structure of 
 the ships colliding with one another ? would it properly cover damagt 
 done by water coming in through a hole or leak resulting from 
 collision ? (cf. Lord Justice F.indUy in Reischer v. Burwick, July 1894). 
 See pp. 139, 143. 
 
 ' Seemingly dangerous for underwriters ; might not secondary 
 or consequential damage be claimed under the words "led to the 
 damage." Perhaps the insertion of the word " immediately ' 
 before " led" would suffice to make the clause safe.
 
 i86 MARINE INSURANCE chap. 
 
 Even this expression was not found to be enough. There 
 are certain expenses connected with a vessel's putting into 
 a port of refuge in distress, such as warehousing, reshipping, 
 and forwarding charges. These when incurred by the ship- 
 owner have always been charged by him against the cargo, 
 and are admitted by law in certain cases as properly charge- 
 able. Underwriters agreed to assume responsibility for 
 their proper proportion of such charges, and this arrange- 
 ment was embodied in what was known as the "forwarding 
 clause " : — 
 
 To pay warehousing, forwarding, and other special charges if 
 incurred. 
 
 But special charges if incurred might be much too com- 
 prehensive a phrase ; an attempt might be made to include 
 under it such charges as distance freight payable to a foreign 
 ship condemned at an intermediate port, and other expenses 
 such as would not be recovered under an ordinary English 
 " clean " policy (i.e. policy consisting simply of the common 
 text and the memorandum). To prevent any such incid- 
 ence on underwriters of amounts not already at their 
 charge, the words "if incurred" were omitted, and the 
 clause was completed with the phrase "for which under- 
 writers would otherwise be liable," where " otherwise " means 
 " by some provision of the policy different from the clause 
 now under discussion." The forwarding clause thus stood : 
 
 To pay any special charges for warehouse rent, reshipping, or 
 forwarding, for which underwriters would otherwise be liable. 
 
 To these provisions was added one dealing with loss in 
 transhipment, — in itself quite a reasonable thing to be 
 covered by underwriters on goods. But here again there 
 has been considerable difficulty in the wording. The first 
 form was got by adding to the words covering collision 
 damage words like the following : — 
 
 As well as partial loss arising from transhipment. 
 
 The objection to this form is that partial loss includes 
 deterioration as well as total loss of a part of an interest 
 insured. The perception of this and of the fact that with
 
 XI 
 
 F.P.A. CLAUSE 187 
 
 such a form of words underwriters might have to pay for 
 damage suffered in transhipment of a class of goods from 
 which under the F.P.A. clause they would be exempt 
 in any other part of the venture, led to the disuse of the 
 form given and to the substitution of the following : — 
 
 To pay the insured value of any package or packages which 
 may be totally lost in transhipment. 
 
 As a quid pro quo for this extension of liability, the 
 assured, by special agreement with the underwriter, accedes 
 to the following restriction of the underwriter's liability : — 
 
 Grounding in the Suez Canal is not to be deemed a stranding, 
 but underwriters to pay any viamage or loss which may be proved to 
 have directly resulted therefrom. 
 
 Such were the stages in the history of the F.P.A. clause 
 as it is now known. At a general meeting of the under- 
 writing community of the United Kingdom, assembled at 
 Lloyd's on the 17th July 1 883, a form of clause was adopted 
 which has become the customary English form, and is, in 
 absence of any special agreement between assured and 
 underwriter, the F.P.A. clause ; it reads — 
 
 Warranted free from particular average unless the vessel or craft 
 be stranded, sunk, or burnt, each craft or lighter being deemed a 
 separate insurance. Underwriters, notwithstanding this warranty, to 
 pay for any damage or loss caused by collision with any other ship 
 or craft, and any special charges for warehouse rent, reshipping, or 
 forwarding, for which they would otherwise be liable. Also to pay 
 the insured value of any package or packages which may be totally 
 lost in transhipment.' Grounding in the Suez Canal not to be 
 deemed a strand, but underwriters to pay any damage or loss which 
 may be proved to have directly resulted therefrom. 
 
 1 Transhipment means generally the act of transferring goods from a vessel 
 in which they have been carried to another vessel for the completion of their 
 Toyaee. If taken strictly, its application in this clause is confined to the rnere 
 act of lifting from the earlier vessel to the later vessel employed in the carriage 
 of the goods, or if a lighter or other craft is employed to cany the gonis between 
 the vesseli— from the earlier vessel to the lighter and from the lighter to the 
 Uter vessel. It is reasonably extended to the conveyaiice between the two 
 vessels, but does it include any stay on qu-iy in case the tirst vessel discharges 
 direct on to quay and the second loads direct from quay? So long as the slay 
 on quay is merely incidental to the removal from one vessel to another, the ini:lu- 
 lion fjf the risk for a modcrati; tiiiic is not unreasonaljjc, but the moment that 
 ttay become* delay or sioiage the case becomes doubtful.
 
 CHAPTER XII 
 
 PARTICULAR AVERAGE 
 
 Before proceeding to the consideration of particular aver- 
 age and the method in which underwriters' liability for it is 
 determined, it may be remarked that the percentages named 
 in the memorandum have not continued to be applied in 
 their original sense (see p. 195). Stevens (Average, p. 227, 
 note) says : " I have been informed by a gentleman of great 
 experience, who was one of the subscribers to old Lloyd's 
 in Lombard Street,^ that the intention of the memorandum 
 when first inserted was that the £$ per cent or £2, per 
 cent (according to the thing insured) on the amount of the 
 mterest should in all cases be deducted from the average, 
 the underwriter paying the balance, and that this was then 
 the practice." 
 
 Leaving aside for the moment the discussion of the word 
 " average " and phrase " particular average " we may examine 
 the definitions of the text-books. 
 
 Amould (p. 970) says : " Particular average is loss arising 
 from damage accidentally and proximately caused by the 
 perils insured against, [or from extraordinary expenditures 
 necessarily incurred for the benefit of] some particular 
 interest, as the ship alone or the cargo alone." 
 
 Owing to the decision in Kidston v. Empire Marine^ 
 1867,2 the words in brackets must be deleted and the word 
 " to " substituted. 
 
 ' Martin {History of Lloyd's, p. 120) says that Old Lloyd's ceased 
 »o exist soon after October 1770. 
 
 ' L.R. I C.P. 535; a C.P. 357. See below, pp. aai, 223.
 
 CHAP. XII PARTICULAR AVERAGE 189 
 
 Phillips (§ 1422^ says: "A particular average is a loss 
 borne wholly by the party upon whose property it takes 
 place, and is so called in distinction from a general average 
 for which divers parties contribute." 
 
 These definitions appear rather to describe a loss borne 
 by a shipowner or merchant than the indemnity which he 
 recovers from his underwriter, subject to the terms of the 
 contract between them, so that perhaps the following 
 modification of Amould's definition may make the matter 
 clearer : — 
 
 " Particular average is the liability attaching to a 
 marine insurance policy in respect of damage or partial 
 loss accidentally and immediately caused by some of the 
 perils insured against, to some particular interest (as the 
 ship alone or the cargo alone) which has arrived at the 
 destination of the venture." 
 
 In the discussion of the method of settling a construc- 
 tive total loss and a salvage loss, it was pointed out that 
 the reason of the transfer of property in such a case to the 
 underwriter was neither that the goods were damaged, nor 
 that they were at an intermediate port in a damaged state, 
 but that they could not (physically or commercially) be 
 carried on to destmation, and being consequently a con- 
 structive total loss, are surrendered to the underwriter in 
 return for the payment of the insured value. 
 
 The method of claiming indemnity for damage to 
 interest arriving at destination in specie and otherwise 
 than as a total loss, must be based on some principle that 
 does not place the property with the underwriter. A 
 policy of marine insurance is not a document guaranteeing 
 the safe and sound arrival of a venture at destination. It is 
 a contract of indemnity against the results of certain named 
 perils, the indemnity varying as the amount of the loss 
 varies. As the idea of quantity is thus an essential factor 
 in indemnity, one naturally expects the quantities involved in 
 any particular case of indemnity to be those stated in the 
 contract taken in conjunction with those necessary to express 
 the loss for which indemnity is wanted. Therefore it is natural 
 to expect that to determine the indenmity due to the assured
 
 igo MARINE INSURANCE CHAr. 
 
 in a contract of marine insurance, one should find it 
 necessary to introduce and combine in some way these 
 four factors : the sound value with the damaged value (to 
 determine the merchant's loss), the valuation in the policy 
 with the proportion of it insured by each separate underwriter 
 or insurance company (to determine the insurer's hability). 
 
 Damage falling on property carried by sea may show 
 itself in three ways, by 
 
 (a) Diminution of quantity, 
 (^) Deterioration in quality, 
 (c) Diminution and deterioration. 
 
 In goods arrived at destination all three kinds of damage 
 are technically described as particular average or partial 
 loss. But in the common language of business it is usual 
 to employ the name particular average to designate {b') and 
 (f ), and to indicate by the phrase total loss of part the mere 
 diminution of quantity {a). 
 
 In claims for indemnity against partial loss, regard must 
 be paid to many of the points that came up in the considera- 
 tion of total loss. For instance, the damage must not 
 have arisen from the negligence or misconduct of the 
 assured or his agents, nor from the essential character oi 
 natural quality or inherent vice {vice propre) of the object 
 insured, nor — and this comes out more clearly in the case 
 of partial loss than of total — from the ordinary wear and 
 tear inseparable from the carrying on and completion of the 
 voyage. 
 
 Average "as Customary." — After these points have 
 been satisfactorily disposed of, there is another matter to 
 consider : the intention of assured and underwriter regarding 
 partial loss when they entered into the contract of which the 
 policy is the expression. But the proneness of the English 
 trader to cling to precedent, and to prefer adhesion to what 
 has been customary — even though he himself does not know 
 the details of the custom — rather than run the risk of 
 launching out into the unknov/n in the shape of a special 
 agreement, often comes into play in this connection, and it 
 is very usual to find in policies the clause " average payable 
 as customary."
 
 XII PARTICULAR AVERAGE 191 
 
 Free of All Average (F.A.A,) Policies. — It might 
 have been thought that the insurance of goods "free of 
 all average " could not have given room for any difficulty. 
 But in 1857, Mr. Justice Williams gave two decisions 
 which show how difficult it sometimes is to determine 
 liability. In Duff v. Mackenzie, 1857,^ a captain insured 
 his effects for i^ioo, and it was arranged and agreed 
 that the insurance was to be free of all average, i.e. the 
 underwriter was to pay no claim for deterioration or partial 
 loss. The assured did not furnish for statement in the policy 
 any specification of the various property he had with him, 
 nor did he give the value of the separate items or classes of 
 goods covered by him. But having lost some of his effects 
 he made a claim, and it was held that when two or more 
 different and distinct kinds of goods are insured on one 
 policy, the loss of the whole of any one kind entitles the 
 assured to claim the insured value of the same. In a later 
 case, Wilkinson v. Hyde, 1857,2 with respect to a policy on 
 emigrants' effects, the same judge expressed the principle on 
 which he decided both that case and Duff v. Mackenzie as 
 follows : " As soon as it is ascertained that the goods are of 
 different species, it is as if the different species were 
 enumerated." The effect of these decisions is to make 
 what is practically a partial loss recoverable on a policy free 
 of all average, in all cases where several classes of goods are 
 insured under some general term like " goods " or " mer- 
 chandise" or "effects," although technically the losses must 
 be claimed as total losses of distinct classes of property.^ 
 
 Franchise. — In the examination of the memorandum it 
 was pointed out that the different percentages therein 
 enumerated were based on considerations of the greater or 
 less liability of the goods to damage. The same considera- 
 tions have led to the different average terms on which 
 different goods are insured. Some articles seem always to 
 show a certain proportion, more or less, of diminution and 
 
 > 3 C.B. N.S 16. « 3 C.B. N.S. 30. 
 
 * The cases are dealt with h'^re because of their practical effect : 
 
 in a strictly systematic work they should he reviewed under "total 
 lois. "
 
 t9a MARINE INSURANCE CIIa?. 
 
 deterioration at the end of a voyage. To exclude this 
 apparently inevitable loss, and to prevent the occurrence of 
 vexatious petty claims, it has been arranged that all claims 
 falling short of a certain amount or percentage should not 
 attach to the policy covering the goods. This amount or 
 percentage is termed xhc fratic/iise. 
 
 Scries. — As ships increased in size, and as some par- 
 ticular commodities began to be carried either in full 
 cargoes or in parcels of considerable value, it was found 
 that although the percentage was small, the amount in cash 
 required to amount to this percentage was considerable. 
 This being found to leave upon the assured a share of the 
 risk greater than seemed to be reasonable, the plan was 
 adopted of breaking up the cargo or parcel into smaller 
 subdivisions, and of stipulating that, if in any one of these 
 the requisite percentage of damage was attained, the 
 underwriter should pay his proper proportion of it. Each 
 of these subdivisions is technically termed a series. Taking 
 the instance of sugar from Java to Europe, the average 
 terms are that the underwriter pays average if amounting 
 to a franchise of 5 per cent on any series of twenty baskets 
 running landing numbers. By " running landing numbers " 
 is meant that the baskets are to be taken in sets of twenty 
 as they come out of the hold and are landed on the quay. 
 Similarly, in cotton the average terms are warranted free of 
 particular average under 3 per cent on each ten bales 
 running landing numbers. The more delicate the goods 
 the higher the franchise is likely to be ; e.g. ginger, 
 gambier, dye-stuffs, like myrabolams, have a franchise oi 
 5 per cent ; and tobacco is frequently insured on such 
 average terms that the underwriter pays only the amount of 
 average exceeding 5 per cent. 
 
 As to series, it may almost be taken as a rule that the 
 more valuable the goods the smaller the series, the idea evi- 
 dently being that a series should not in value exceed a certain 
 fairly moderate sum (about ^100). Thus when underwriters 
 insure cigars against averaj^^e the series generally consists 
 of one case ; cotton, ten bales running landing numbers ; 
 silk, each package ; indigo, each package ; tea, ten chests.
 
 XII SERIES — AVERAGE " ON THE WHOLE " 193 
 
 twenty half-chests, or forty boxes running landing numbers ; 
 sugar, twenty baskets (Java), ten hogsheads, twenty barrels, 
 ten cases, or fifty bags. 
 
 There is a very full collection of customary average 
 clauses in Lowndes's Law of M. L pp. 241-244. In that 
 list the series is given fully, but not always the franchise. 
 It is interesting to note the difference of average terms on 
 the same article shipped from different ports, and on the 
 outward and inward shipments, as well as on the raw article 
 and manufactured goods. For example, on coffee from 
 Java to Europe the terms are 3 per cent on twenty- five 
 bags ; from Brazil to United States 5 per cent on two 
 hundred and fifty bags ; on sugar shipped outwards from 
 England the series is five casks or twenty bags ; inwards 
 ten hogsheads, twenty barrels, ten cases, fifty bags, or 
 twenty baskets. 
 
 Average " on the whole." — When provision is made 
 for settling average on series less than the whole quantity 
 insured on the policy, it may happen that the damage is 
 in several series so slight that the franchise is not attained, 
 while in others it is so severe that if it is taken together 
 with what has been rejected as not attaining the franchise, 
 then the franchise necessary to constitute a claim has been 
 reached on the whole parcel or shipment. Take for instance 
 one hundred chests of tea, i.e. ten series of ten chests each, 
 franchise 3 per cent. If one series is damaged to the 
 extent of 10 per cent of its value, one 7 per cent, one 15 
 per cent, one 2^ per cent, and three 2 per cent each, the 
 remaining three series being perfectly sound, the franchise 
 of 3 per cent is evidently attained in only three of the 
 series. But if the percentages of damage are calculated 
 out and added, it will be found that they amount to 4.05 
 per cent on the whole one hundred chests. It is thus 
 evident that cases can arise in which the strict application 
 of the series would deprive the assured of some of the 
 indemnity he would have received had his insurance been 
 on the same terms of franchise, but without any mention of 
 series. But as the series has been introduced into the 
 contract with the intention of extending the indemnity 
 
 O
 
 194 MARINE INSURANCE chap 
 
 granted to the assured, the clause providing for it is not 
 permitted to work to his detriment (see sup. Principles of 
 Interpretation, p. 136; cf. Hagedoj-n v. Whitmore, 1816).^ 
 In many average clauses this is definitely expressed by the 
 addition of the words " or on the whole." 
 
 Formation of Series. — In series which consist of more 
 than one package, case, or bale, it was originally stipulated 
 that the series should be made up of a certain number of 
 packages taken as they were landed on the quay. This 
 stipulation has been pared down to the minimum of import- 
 ance. The damaged packages are either not landed in the 
 order in which they would have come out of the ship if 
 sound, or if so landed they are entered in the landing books 
 all together at the end of the cargo. The result is, as a rule, 
 almost all the seriously damaged packages in a cargo of 
 produce are found entered in the last few pages of the 
 landing books. This procedure practically secures to the 
 assured the recovery of all damage of any moment ; but 
 it is not what was contemplated when the wording was 
 devised. Lowndes (Law M. I. p. 200) speaks of this 
 as a practice prevailing in some ports ; unfortunately it 
 has become so usual that exceptions only rarely present 
 themselves. 
 
 Tail Series. — When on the formation of the cargo into 
 series it is found that some packages remain over, these, 
 however few in number they be, are taken to constitute 
 what is called a tail series, and average is payable by the 
 underwriter on them if it reaches the stipulated proportion 
 of their insured value (as distinguished from the insured 
 value of a y9/// series). For instance, in shipment of fifty- 
 three bales of cotton, in whatever way the bales are 
 grouped, there must always be five series of ten bales and 
 three bales over. The three odd bales form a tail series, 
 and if damage is found in them exceeding 3 per cent on 
 the value of the three bales, it is recoverable from the 
 underwriter. 
 
 Franchice how Applied. — It was observed (p. 188) that 
 
 ' I Stark 157.
 
 Jtii FRANCHISE — ADJUSTMENT OF P. AVERAGE 195 
 
 the underwriters in " Old " Lloyd's understood that the 
 percentages named in the memorandum were always to be 
 deducted from any claim for average made in terms of the 
 memorandum. In all probability the same held true of the 
 franchises mentioned in average policies. But nowadays in 
 England when the franchise is once reached, the whole 
 amount of average including tJie franchise is paid by the 
 underwriter, unless the contrary is expressed. For instance, 
 if the franchise on any class of goods is 5 per cent, and a 
 shipment of these goods is damaged to the extent of 7 per 
 cent, then it is not 2 per cent (the difference between the 
 damage and the franchise) that is paid, but the full 7 per 
 cent If it is intended by the underwriter that he shall be 
 liable only for the excess of any definite percentage, that 
 ought to be clearly expressed in the policy. In French 
 policies this difference is expressed with the most scrupulous 
 exactness ; " claim for material particular average to be 
 paid in full if the franchise is reached " {remboursement 
 integral, franchise une fois atteinie\ as distinguished from 
 " franchise always deducted " {franchise toujours ddduite). 
 The distinction can be perfectly well expressed in English : 
 " to pay particular average if amounting to . . . per cent 
 or over " as distinguished from " to pay the excess of , . . 
 per cent particular average." 
 
 Adjustment of Particular Average. — Suppose that a 
 parcel of goods or produce insured against particular average 
 has arrived damaged by sea water, and that particulars 
 have been obtained of the amount of damage and the series 
 over which it is spread. Suppose it to be a case of such 
 serious damage that the franchise is indubitably attained, 
 how is the amount due by the underwriter to be determined ? 
 As was said above (p. 190), in a claim made under a contract 
 of indemnity one naturally expects to find the quantities 
 involved to be the value of the goods when sound, their 
 value in their damaged condition (the difference being the 
 merchant's loss), their valuation in the policy, and the share 
 of that valuation insured by each separate underwriter or 
 insurance company. 
 
 The first great English case on this subject is Lewis v
 
 196 MARINE INSURANCE chap 
 
 Ruckcr, 1761.^ It was on a policy covering sugars, valued 
 at £yj per hogshead, from the West Indies to Hamburg. 
 When the sound value at destination was compared with 
 the damaged value it was found that the merchant's loss by 
 sea perils amounted to about 17 per cent. Lord Mansfield 
 and his associates on the bench decided that the under- 
 writers must pay 17 per cent of the amount at which the 
 sugars were valued in the policy. Lord Mansfield stated 
 the rule thus : " The underwriter takes the proportion of 
 the diflference between sound and damaged at the port of 
 delivery, and pays that proportion upon the value of the 
 goods specified in the policy." To illustrate the rule he 
 gave the following example : "Suppose sea-damaged goods 
 valued at £2>° in the policy to arrive at a market where, 
 had they arrived sound, they would have sold for ^50, but 
 arriving damaged, they only sell for ^40 — here is a deprecia- 
 tion of ;^io, or a fifth of their sound value ; the underwriter 
 must pay a fifth of the value in the policy, that is £b." The 
 reason for this procedure is not difficult to understand. 
 The underwriter contracts to give indemnity for losses arising 
 immediately from sea perils, consequently he is to be 
 exempt from all losses arising from fall of market, and is 
 equally to be deprived of all gains arising from rise of market. 
 The valuation given on valued policy and that determined 
 by law in the case of an open policy are both independent 
 of market fluctuation. If the amount claimed from an 
 underwriter in case of goods arriving damaged was simply 
 the difference between the policy valuation and the arrived 
 damaged value, the rise or fall of the market would be an 
 element in the latter item, and so would come into the claim 
 against the underwriter. It would, consequently, be to the 
 underwriter's advantage to have damaged goods arrive in a 
 rising market, and to his disadvantage to have them arrive 
 in a falling market. But he will be rendered independent 
 of rise or fall of market if the measure of his loss is taken 
 to be the proportion which the difference between the sound 
 and damaged arrived values bears to the sound arrived 
 
 ' 2 Burr. 1167.
 
 Xli ADJUSTMENT OF PARTICULAR AVERAGE 197 
 
 value, and if this proportion is applied to the insured value 
 declared in the policy or to the legally determined value 
 in the case of an open policy.^ 
 
 It turned out that in this admirable judgment Lord 
 Mansfield assumed one point of importance, namely, that 
 there could be no doubt about the amounts therein described 
 by the words " sound arrived value " and " damaged arrived 
 value." That their meaning was not free from doubt 
 appeared in the case of Johnson v. S/ieddon, 1 802,2 long 
 known as the Brimstone case. The policy in this case 
 covered a shipment of brimstone and shumac on board the 
 Caroline, from Sicily to Hamburg, Upon a calculation by 
 Mr. Oliphant, to whom the loss was referred by the parties 
 for adjustment, the loss was found to amount to £^6 : 7 : 4 
 per cent. The matter came before the court, and after 
 decision in first instance, a new trial was moved for, on the 
 ground that the adjuster had made a mistake in his method 
 of calculation, inasmuch as in estimating the loss he had 
 taken for his basis the difference between the net proceeds 
 of the damaged goods and their net sound value, instead 
 of taking the difference between ihit gross damaged proceeds 
 and the gross sound arrived value. Three points were 
 agreed to by both parties : — 
 
 (i) The loss to be estimated by the nile laid down in 
 Lewis V. Rucker^ that the underwriter is not to be subjected 
 to the fluctuation of the market. 
 
 (2) The loss for which the underwriter is liable is that 
 which arises from the deterioration of the commodity by 
 sea damage. 
 
 (3) The underwriter is not liable for any loss which may 
 be the consequence of duties or charges to be paid after 
 the arrival of the commodity at the place of destination. 
 
 The matter came before the Court of King's Bench, and 
 Mr. Justice Lawrence (in what Amould, p. 985, describes 
 as " one of the ablest judgments ever delivered in West- 
 
 ' As a matter of fact damaged goods never have a market value in 
 the same sense that sound goods have, so that the underwriter can 
 never be quite independent of consid'Tations of market. 
 
 ' 3 liobl 581. * a liurr. 1167.
 
 198 MARINE INSURANCE chap. 
 
 minster Hall ") held the true rule of adjustment to be 
 " that the percentage or aliquot part, which the underwriter 
 has to pay of the prime cost or value in the policy, must be 
 ascertained by comparing the gross produce of the sound 
 with the gross produce of the damaged sales." By "gross 
 produce" Mr. Justice Lawrence meant the price including 
 freight, duty, and landing charges. His reason for adopting 
 this price was that he desired to get at the intrinsic value 
 of the goods in their sound and damaged conditions at 
 destination ; for it must be borne in mind that the essence 
 of particular average is that it is a settlement on goods 
 which have reached destination. He said : " When a com- 
 modity has been offered for sale to one who has nothing 
 further to pay than the sum the seller is to receive, it is 
 the quality of the goods which, in forming a fair and rational 
 judgment, can alone influence him in determining what he 
 shall pay. He has nothing to do with what it may have 
 cost the seller, and the goodness of the thing is the criterion 
 which must regulate the price ; for, being liable to no other 
 charges, he has only to consider its intrinsic value ; and 
 therefore if a sound commodity will go as far again as a 
 damaged commodity by having twice its strength, or by 
 being in any other respect twice as useful, he will give 
 twice the money for the sound that he will for the damaged ; 
 and so in proportion." ^ 
 
 Freight involved in Particular Average on Goods. — 
 It is evident that in all cases in which the insured value is not 
 below the gross sound arrived value, the assured is, by the 
 principle established in Lewis v. Rucker^ and Johnson v. 
 Sheddon^^ secured in the payment in full by the underwriter 
 of any particular average sustained by his goods. On the 
 other hand, for any amount by which the gross sound 
 arrived value exceeds the insured value the assured has to 
 bear the loss himself. As has been already explained, the 
 gross sound arrived value includes freight, landing charges, 
 
 ^ By custom of Lloyd's particular average is adjusted on a com- 
 parison of bonded instead of duty-paid prices in claims for damage to 
 tea, tobacco, coffee, wine, and spirits imported into this country. 
 
 2 2 Burr. 1 167. * 2 East 581.
 
 xn EXPENSES CONNECTED WITH P. A. CLAIMS 199 
 
 and duties. But these expenses not being payable by the 
 merchant until after the voyage is closed, are never incurred 
 in case the vessel is totally lost before arrival. The shipper 
 of goods has, therefore, no reason to insure these amounts 
 against total loss of the ship or cargo. It is consequently 
 only against the risk of the vessel's arrival with cargo so 
 damaged as to give rise to a particular average claim that 
 the shipper need insure the freight, landing charges, and 
 duties. This is not a customary insurance in England, so 
 that cases sometimes arise in which the application of Mr. 
 Justice Lawrence's decision is felt by the merchant to 
 involve him in some hardship. But in French policies on 
 goods it is quite usual to find special provision for the 
 insurance of freight payable abroad, warranted free of claim 
 in case of the total loss of the ship ; in return for this 
 warranty the premium is generally made one -half of the 
 rate on the goods. 
 
 In the case of goods manufactured for the consumption 
 of one firm and adopted only for their trade, it may be 
 impossible to arrive either by sale or by assessment at a 
 true idea of the damage sustained by them. In such cases 
 the damage is measured by the cost of reconditioning the 
 goods at destination, the claim on the policy being in other 
 respects treated in the same way as if the goods had been 
 sold or the damage assessed. 
 
 Expenses of proving and adjusting Claim for Particu- 
 lar Average. — In determining whether a claim for particular 
 average attains the franchise or not, no account is taken of 
 anything but the actual physical damage. The clearness 
 with which this is brought out in the French phrase, avarie 
 particuliire matdrielle (material particular average), renders 
 that designation superior to our shorter name " particular 
 average." So far, expenses of survey, etc. etc., remain at the 
 charge of the merchant himself. But if it is found that the 
 actual material damage (diminution and deterioration) 
 exceeds the stipulated franchise, there bein^ evidently by 
 that time a liability on the part of the underwriter, then the 
 underwriter allows to the assured the sums spent in survey 
 fees, etc., as being expenses incurred in the claim, which
 
 200 MARINE INSURANCE Chap, 
 
 were essential to the existence of the claim and therefore 
 became part of it. On the same ground the cost of 
 making-up or, as it is termed, adjusting the claim, is 
 admitted when the assured employs an adjuster to make it 
 up ; but it is not (as a rule) admitted when the statement is 
 prepared by the assured himself or by a member of his 
 regular office staff. 
 
 On examination of adjustments of particular average on 
 goods it will be found that these statements are simply 
 applications of the principles explained above. The 
 adjuster first determines from invoices and policy the 
 insured value of the goods whose damage he is dealing 
 with ; then from account-sales or surveys he arrives at the 
 proportion of loss sustained by the damaged goods : if this 
 proportion exceeds the stipulated franchise he applies this 
 proportion to the insured value he has calculated, and to 
 the result he adds the various costs incurred in ascertaining 
 the amount of damage and his own fee for adjustment. It 
 follows from what has already been said respecting costs of 
 surveys, etc., that if there is found to be a claim on only 
 some series of the damaged goods, the proportion of the 
 costs attaching to the goods whose damage does not attain 
 the franchise, falls to the assured's burden not being 
 recoverable by him from his underwriter. 
 
 Particular Average on Freight. — The most frequent 
 occasion of claim for particular average on freight is the 
 loss of some portion of a cargo by one of the perils insured 
 against in the policy. For instance, take a cargo of^ sugar 
 carried from Java to New York in return for freight of so 
 much per ton payable when the cargo is delivered at New 
 York. If the vessel meets with some disaster at sea or 
 with bad weather it may happen that a portion, say one- 
 half, of the cargo is lost. In such a case there is evidently 
 a good ground for claiming from the underwriter on freight 
 the half of the amount he has insured. 
 
 A claim may arise on a policy covering the freight of 
 certain goods without the occurrence of a claim on the 
 policy covering the goods themselves. For it might 
 happen that the goods were insured f.p.a. unless the ship
 
 XII PARTICULAR AVERAGE ON FREIGHT 20t 
 
 be stranded, and the freight on ordinarj' memorandum 
 terms. In such case, if the vessel did not strand no loss 
 on cargo except total loss could be claimed from the under- 
 writer, while any loss on freight exceeding 3 per cent pro- 
 ceeding from sea perils of any kind could be recovered from 
 the underwriter on freight. 
 
 The ordinary terms on which freight is insured are 
 those laid down in the memorandum, but occasionally 
 freight is insured f.p.a. unless the ship be stranded. This 
 holds specially of freight of salt, and it is easily understood ; 
 if it is not possible to insure the salt except f.p.a. (and this 
 holds true of insurance on salt effected on the ordinary 
 form of policy), it is only to be expected that the freight 
 which can be earned only when the salt is delivered in 
 specie cannot be more favourably insured. 
 
 In the discussion of total loss of freight, it was remarked 
 that mere delay on a voyage will not constitute a claim on 
 an ordinary policy on freight This holds equally true as 
 regards particular average. The loss must arise from 
 some peril insured against. 
 
 It was also noticed that as English law takes no notice 
 of a partial performance of a freight contract, a freight 
 must either be earned in full by the shipowner or not 
 earned at all. There cannot, consequently, be any claim on 
 a freight policy for particular average arising from clos- 
 ing a marine venture short of destination. The nearest 
 approach that can be got to that is a salvage loss ; and 
 such a settlement can only occur when an underwriter on 
 the freight of cargo carried in a foreign ship^ pays a 
 total loss, the ship failing through perils of the sea to 
 deliver her cargo at destination, and is in consequence 
 substituted in the rights of the foreign shipowner to receive 
 distance freight pro rata ilineris peracti. Such a case was 
 decided by the Court of Queen's Bench in the sense 
 indicated, and was confirmed by the Court of Appeal (The 
 Canute, London Assurance v. Williams, 1893).^ 
 
 ' Or on a British ship which has conferred on it pro tempore the 
 rights of a fonfipn vessel as to distance freight. 
 
 • Times Law Reports, 96, 257. In this case the vessel was
 
 ioi MARINE INSURANCE CHAP. 
 
 It is to be observed that when a vessel fails to deliver 
 poriion of her cargo, what the shipowner fails to collect 
 is the corresponding proportion of gross freight, i.e. of bill 
 of lading freight. Consequently, if the system applied to 
 cargo is applied to freight, the proper plan of adjusting a 
 claim on freight is to find what proportion of the total gross 
 freight at risk is lost, and to take that proportion of the 
 insured value as the amount payable by the underwriter. 
 The adoption of gross value is as correct for freight as it 
 has been found to be for cargo. For the value of the net 
 freight on a voyage {i.e. the bill of lading freight less 
 expenses of earning) depends on the length of the vessel's 
 passage. Consequently, there would be in adjustments on 
 net values an introduction of the very elements of time and 
 detention which have been in other respects excluded from 
 the contract. Besides, it is easy to conceive a case in 
 which by the loss of a comparatively small portion of the 
 cargo the net freight would be reduced to nothing, or even 
 to a minus quantity. It would certainly seem absurd that 
 a total loss could be claimable on any real interest when by 
 far the greater part of the goods on which that interest was 
 based completed the venture in safety. 
 
 In treating cases of loss of freight and claims on policies 
 covering that interest, there ought to be constant reference to 
 the contract of affreightment. In case of lump sum charters, 
 it may be that freight is payable in full only when the 
 whole cargo is delivered at destination, or that it is 
 payable in full when part is delivered, provided the failure 
 to deliver the rest has arisen from perils excepted in 
 the charter-party. It is therefore possible that, in con- 
 sequence of the terms of the charter, what would under 
 a charter of another form constitute a claim against under- 
 writers on freight on the ordinary policy, would not in the 
 particular case in hand give rise to such a claim. 
 
 Similar complications may arise in connection with 
 
 British, but received distance freight in consequence of an agreement 
 that the adjustment of liabilities between ship and cargo should be 
 made according to the law and usage of Havannah, where the ventur* 
 was broken up.
 
 XII PART. AVERAGE ON CHARTERED FREIGHT 203 
 
 freight partially prepaid, resulting in cases such as that of 
 Allison w Bristol Marine, i875-6,Miscussed above (p. 163). 
 
 Passing from freight at risk to chartered freight, we enter 
 on the consideration of one of the most difficult subjects 
 in marine insurance. This will be better appreciated after 
 examination of two important cases of recent occurrence. 
 
 In Intnan v. Bischoff, House of Lords, 1882,2 the policy 
 on which action was taken was a policy on chartered 
 freight The facts of the case were as follows : " On 20th 
 February 1879 the Inman Steamship Company chartered 
 the City of Paris ^ to the Admiralty to convey troops to the 
 Cape ; the arrangement was to hold for three months 
 certain, commencing i8th February 1879, and was at the 
 Admiralty's option prolongable after the expiry of that 
 period. One month's freight was payable on signature of 
 the charter, and at the end of the second and of every sub- 
 sequent month's service one-half of that month's freight was 
 payable. On 22nd February the Inman Company effected 
 an insurance on freight outstanding, risk commencing 20th 
 February 1879 and expiring 19th May 1879, both days 
 included On 21st March the vessel struck a rock near 
 the Cape of Good Hope and sustained serious injuries, 
 resulting in her being put out of pay in terms of her 
 charter. On 17th April the vessel was discharged from 
 Her Majesty's service, and it was not till 14th May that 
 she was granted a certificate of efficiency. The Inman 
 Company made a claim on their freight policies for the 
 freight between 21st March and 19th May, alleging that 
 perils insured against in the policy prevented them from 
 earning the freight that would have been eanied between 
 these dates had the vessel not been put out of pay and dis- 
 charged from Her Majesty's service. The Government 
 time charter stipulated that if the vessel became inefficient 
 the Admiralty could make 'abatement by way of mulct out 
 of the hire or freight.' At the first trial Lord Justice 
 Brett decided in favour of the plaintiffs ; on appeal this 
 decision was reversed, the court being of opinion that none 
 of the perils insured against was the proximate cause of the 
 
 » I App. Cas. •09. • 6 Q. B. U. 648 ; 7 App. Cas 670.
 
 i04 MARINE INSURANCE chap. 
 
 loss, although one of them was a cause sine qua non. In 
 the House of Lords both Lord Selbome and Lord Black- 
 bum insisted on the diflference between a fine or mulct, oi 
 the class for which the charter provides, and a loss oi 
 freight. As Lord Blackburn put it, 'The question here is 
 not what was the proximate cause of a loss of freight, but 
 whether there was any loss of freight.' The House of 
 Lords decided that there was no loss of freight, con- 
 sequently, that the underwriters on the ordinary policy were 
 exempt from liability. Respecting the risk of fine or mulct 
 Lord Blackburn said, 'Such a risk might very well be in- 
 sured against, but it would require some special clause.' " 
 
 It appears that to entitle the assured on a time policy 
 on chartered freight to claim for loss of time resulting from 
 an accident caused by perils of the sea, the loss of time 
 must have been such as to cause a loss of hire during the 
 currency of the policy. In other words, if the vessel can 
 perform the charter without having to stop her work for 
 repairs, consequently without loss of hire, that performance 
 discharges the underwriter, and he is not liable for any 
 subsequent loss of hire which the shipowners suffer while 
 the repairs are being effected. This is the effect of the 
 decision in Hough v. Head, Court of Appeal, 1885.^ 
 
 The case of the Alps {Mersey Shipphig Company v. 
 Thatties and Mersey Marine Insurance Company^ Limited^ 
 Admiralty, 1893)2 is an interesting pendant to Intnan v. 
 Bischoff. The Alps was hired to charterers who paid for 
 her use ^42 5 per month, payment monthly in advance; 
 the charter-party providing that "in the event of loss of 
 time from collision, stranding, want of repairs, breakdown 
 of machinery, or any cause appertaining to the duties of 
 the owner preventing the working of the vessel for more 
 than twenty-four working hours, the payment of hire shall 
 cease from the hour of the beginning of the detention until 
 the ship be again in an efificient state to resume her service." 
 On 1 8th August 1 89 1 the ship took fire, and was so damaged 
 that repairs became necessary, which occupied thirteen days. 
 
 J 54 L.J. Q.B. 204 ; affirnifd 55 L.J. Q.B. 43, C.A. 
 2 L.R. 1893, P.O. 109.
 
 XII PART. AVERAGE ON CHARTERED FREIGHT 205 
 
 The hire of the vessel for these thirteen days was repaid to 
 the charterers by the shipowners. The question that came 
 before the court was whether the shipowner was entitled 
 under an ordinary policy on chartered freight to recover 
 from underwriters their proper proportion of the hire. 
 Both sides cited In»ian v. Bischoff, each interpreting that 
 case his own way. Mr. Justice Barnes, after examining the 
 judgments in that case, concluded that " the true view to 
 take of an insurance such as this applied to a very ordinary 
 form of charter-party containing a very ordinary and usual 
 clause, is to cast upon underwriters the risk of loss on 
 freight when that clause is put into operation through the 
 immediate action of the perils insured against." 
 
 In a more recent case {^Bedouin Steam Navigation 
 Company v. Bradford^ Court of Appeal, 1893) ^ the charter- 
 party contained a clause stipulating that " in the event of a 
 breakdown of engines or machinery " (amongst other things), 
 " and the progress of the steamer is thereby delayed for 
 more than twenty-four running hours, payment of hire shall 
 cease until such time as she is again in an efficient state to 
 resume her voyage." The steamer's thrustshaft parted, and 
 she was towed into St. Vincent, where a new shaft was fitted. 
 The defendant, an underwriter on " freight chartered *"''/o, 
 as if chartered, on board or not on board," alleged that he 
 was not informed of the existence of such a clause in the 
 charter or of the tenor of this particular clause. In his 
 judgment the Master of the Rolls (Lord Esher), supported 
 by Lords Justices Lopes and Kay, confirmed Mr. Justice 
 Barnes' decision in favour of the assured. The Master of 
 the Rolls said that when the plaintiffs told the defendant 
 that it was to be an assurance on freight payable per 
 month, they told him in effect that it was to be a charter 
 with the twenty-four hours' clause in it, and it could not 
 be held that there was any concealment of material fact.'-^ 
 
 • 10 Times L. R. 70. 
 
 • It is striking that the Master of the Rolls in the Bedouin,, and 
 Mr. Justice Barnes in the Alps, should hoih have felt themselves forced 
 to adopt trade custom as their guide in their efforts to find a proper 
 Mnnection between charterer, shipowner, and underwriter.
 
 2o6 MARINE INSURANCE chap. 
 
 Particular Average on Ship. — The consideration of 
 particular average on the third great maritime interest, 
 the ship, is beset with certain difficulties which are peculiar 
 to that interest. It is much more easily grasped than is 
 particular average on freight ; in fact, it is quite as tangible 
 as particular average on goods, but it is far from being so 
 simple. Indeed the examination of the principles and 
 practice of adjustment of particular average on ship shows, 
 perhaps, more clearly than anything else how strongly 
 English law is imbued with respect for custom, or, put the 
 other way, how fully custom has taken up in England the 
 position elsewhere usually granted only to statute. 
 
 Francliise : Valuations. — In one respect freight and 
 ship are alike, the conditions of average for both being 
 decided by the memorandum : on both interests there is a 
 franchise of 3 per cent unless the ship be stranded. 
 As has already been explained, it has become usual to add 
 words to the memorandum which render the sinking or 
 burning of the vessel, or her suffering damage from collision 
 with another ship or vessel, equivalent to stranding in ex- 
 tending underwriter's liability for particular average to 
 damage under 3 per cent. In the case of steamships 
 this provision was not found to be sufficiently favourable to 
 the assured. The value of the vessels that now do the 
 most important part of the world's carrying trade far 
 exceeds the value generally prevailing when the memo- 
 randum was originally drawn ; the price of what would 
 then have been considered an enormously costly ship is no 
 more than that of an ordinary " tramp " steamer of to-day. 
 It has consequently become customary to give in the policy 
 separate valuations for the hull of a steamer and for the 
 machinery usually expressed thus : — 
 
 Hull and materials, masts, spars, sails, boats, etc., and 
 cabin furniture valued at j[. 
 
 Machinery, boilers, and everything connected there- 
 with valued at 
 
 and to add to the policy a clause of the following tenor : —
 
 xii P.A. ON SHIP : FRANCHISE : VALUATIONS 207 
 
 Average recoverable on each valuation as if separately insured, or 
 on the whole, whether the average be particular or general. 
 
 Leaving aside general average for the present, it is 
 evident that this clause extends considerably the indemnity 
 recoverable by the assured under the name of particular 
 average. It is to be remarked that the addition of the 
 words " or on the whole " expressly grants to the assured 
 indemnity for claims in which the franchise on the whole 
 value is reached, although it may not be attained on one of 
 the valuations. This is exactly parallel to the procedure in 
 cargo claims under average clauses, and is in perfect agree- 
 ment with the principles universally adopted in the inter- 
 pretation of the policy (pp. 136, I94)- 
 
 In the case of the great passenger line steamers the 
 introduction of a second valuation has not been found 
 sufficient, and the number has been increased to three or 
 four. When the great cost of the cabin outfit and furniture 
 of these vessels is borne in mind, it seems not unreasonable 
 that this item should be treated as a separate valuation in 
 their policies. 
 
 In indemnifying the assured for particular average on 
 ship, the damage suffered is estimated by a method which 
 from its nature is usually inapplicable to other interests. 
 The fixing of the loss which falls on a policy of insurance 
 covering freight is simply a matter of arithmetic : the amount 
 of damage to goods is usually determined either by assess- 
 ment or by sale ; while in the case of ships, the measure 
 of liability for particular average is the cost of such repairs 
 as will put the vessel in the same state of efficiency as she 
 was in before the accident which rendered these repairs 
 necessary. The only parallel to this method is the charging 
 of the cost of reconditioning goods at destination as par- 
 ticular average. There is some reason for this exceptional 
 treatment of ship as contrasted with goods. For goods 
 are exposed to the perils of the sea for only a brief period 
 of their existence, and when the underwriter's connection 
 with them is terminated by their arrival at destination, the 
 indemnity he has to pay is fixed by sale or assessment of 
 the damage : ships, although insured voyage by voyage,
 
 2o8 MARINE INSURANCE chap. 
 
 or year by year, are intended to remain permanently at 
 work at sea, and constantly exposed to sea perils, and are 
 almost universally insured without interruption from the 
 beginning to the end of their existence, so that it is reason- 
 able that the payment of the cost of repairs should be 
 taken as complete indemnity for the damage suffered by 
 the assured. 
 
 The repairs of damage of the nature of particular 
 average are confined to what will put the vessel in the 
 same state of efficiency as she was in before the accident 
 which rendered these repairs necessary. There is no 
 reference to any other standard, whether it be the re- 
 quirements of Lloyd's registry or any other classification 
 body. Consequently, when underwriters have a claim put 
 before them in which the repairs are said to be based on 
 the requirements of any registry, they are entitled to go 
 behind the recommendations of the surveyors, and to 
 discover the actual state of the ship prior to the accident. 
 It might happen, it actually has happened, that a casualty 
 necessitating the repair of a ship occurred on the voyage, 
 at the end of which the vessel was due for Lloyd's No. 2 
 survey. In the ordinar)' course of that survey she would 
 have to be dry-docked and opened out for examination : it 
 would obviously be unfair that all the expenses of these 
 operations should be charged to the underwriter, a great 
 part if not all of them being incumbent on the shipowner 
 himself, even if his vessel went quite free of accident. This 
 point will be treated more fully below. 
 
 Putting a vessel in the same state of efficiency as before 
 the occurrence of an accident, does not necessarily mean the 
 exact replacement of everything in and about her in its 
 former position and condition ; it does not mean what is 
 called in fire insurance " reinstatement." The repair will 
 have fulfilled all that the assured is entitled to exact if it 
 results in making the ship, to use the words of Lowndes 
 (Law M. I. p. 191), "as strong and durable and as good a 
 carrier ... a ship which shall be as fit either to keep or 
 to sell as she was before." 
 
 Wear and Tear. — In* examining the nature of the losses
 
 XII WEAR AND TEAR 209 
 
 for which underwriters should be liable under the common 
 form of policy, the conclusion was reached that everything 
 in the way of damage resulting from the essential character, 
 natural quality, or inherent defect of the subject insured 
 should be excluded from the operation of the policy. Now 
 the most inevitable form of inherent defect is the one that 
 is least perceptible in its progress, namely, wear and tear. 
 It is clear that in every structure with which we are 
 acquainted, detriment must be going on steadily without 
 ceasing ; these structures, though intended to last for years, 
 are yet admittedly of only limited durability. This is 
 particularly true of ships, especially of wooden ships ; 
 and if true of the hull and spars, it is evidently much more 
 so of hawsers, cordage, and sails. 
 
 It is extremely difficult to determine where " wear and 
 tear" ends. The perusal of hundreds of statements of 
 particular average on ships will probably result in making 
 the matter not clearer but rather more difficult. It is 
 probable that in reality a very great proportion of the 
 cases of damage suffered at sea arise neither from sea 
 perils nor other extraordinary casualties alone, nor from 
 wear and tear alone, but from a combination of these ; or 
 from a state of insufficiency resulting not so much from 
 active wear and tear as from the mere effect of time on 
 materials which were originally fully sufficient for their 
 intended purposes. The institution of periodical surveys 
 by the classification registries may be quoted in support 
 of this view ; these surveys are held irrespective of the 
 history of the vessel as regards accidents, and are held at 
 times fixed when the original class certificate is given. As 
 an example the case of chain cables, windlasses, and 
 hawsers may be taken. In olden days every damage or 
 loss of these was put down to simple wear and tear, unless 
 some strain out of the ordinary course had befallen these 
 appliances in consequence of some peril of navigation. 
 When a chain cable is run out with an anchor it is fulfilling 
 the very purpose for which it was furnished. If it does not 
 hold the ship in ordinary lueaihcr it has either been in- 
 efficient from the first, or having once been sufficient, 
 
 P
 
 2IO MARINE INSURANCE chap. 
 
 has through actual wear and tear, or the mere lapse of 
 time, become insufficient. But the real difficulty is to say 
 how much such a cable should be able to stand in the way 
 of bad weather or unusual strain ; anything below that 
 standard should be called ordinary, anything above it 
 extraordinary. In the case of cables and anchors a 
 standard approximately of this character has been imposed 
 on English shipowners by the Board of Trade. All vessels 
 have to carry anchors and chain cables tested up to a strain 
 ranging with the size of the ship. It is natural that the 
 shipowner should consider that his fulfilment of the re- 
 quirements of the Board of Trade should pass his cable as 
 manifestly sufficient for all the strain to which it is exposed 
 in ordinary weather. The next conclusion is that whatever 
 weather is followed by the breaking of this cable must be 
 extraordinary, as all usual wear and tear is covered by the 
 Board of Trade's certificate. This is one of the results of 
 positive enactments ; on the whole, they have raised the 
 percentage of safety, but the literal fulfilment of them does 
 not prevent the occasional occurrence of disaster which 
 might perhaps have been avoided had it not been for their 
 existence. With respect to the settlements made by 
 underwriters in cases of this character there can be no 
 doubt that, in the words of Lowndes (Law M. I. p. 183), 
 " this leniency may perhaps ... be carried too far." 
 
 The same difficulty presents itself in connection with a 
 breakdown of machinery in steamers, especially of screw 
 shafts. A few years ago there was an epidemic of broken 
 shafts. It seemed as if the first flight of compound- 
 eng^ned cargo steamers had about worn out their shafts, or 
 rather had reduced them to such a state of tenuity that 
 weather far short of serious storm found the weakest spot in 
 the shaft and snapped it. No doubt some of the breaks 
 were due to the propellers hitting floating wrecks, while 
 others were immediately attributed to pitching of the ship 
 and consequent racing of the engines. But the question 
 arises, What amount of pitching and racing is to be con- 
 sidered ordinary pitching and racing which a seaworthy 
 shaft ought to be able to withstand? It has often struck
 
 XII WEAR AND TEAR an 
 
 those whose duty it is to examine claims for such damage, 
 that the final break often comes on most moderate pro- 
 vocation. It looks in many cases as if some congenital flaw, 
 or some slight rent originating in previous passages, has 
 resulted either in a crack or in such a molecular condition 
 of the metal that what seems only a slight alteration of 
 the stresses applied to the metal is sufficient to complete 
 the break, which is in reality the result of an accumulation 
 of trifling shocks. The absence of what appeared sufficient 
 reason for such breaks of screw shafts, led to the suggestion 
 that the constant revolution of the shafts produces crystalli- 
 sation in the metal, rendering it so brittle that it may snap 
 without any additional strain from without. If this were 
 correct, the cases it would explain would unmistakably be 
 cases of damage due to inherent defect which, equally with 
 wear and tear, is excluded from the liabilities of the under- 
 writer on the ordinary policy. (Cf. Lowndes, Law M. I. p. 
 185, on decay or dry rot in wooden masts, and A. E. 
 Seaton on Mysterious Fractures in Steel at Institute of 
 Naval Architects, March 1 896, with Prof Arnold's remarks 
 in discussion ; also Mr. Justice Mathew in The Ashley, 
 (N. of Ireland S.S. Co. v. London Assurance), Q.B.D. 8, 
 9, nth May 1896). 
 
 Wooden Ships, Caulking and Metalling Clauses. — In 
 repairs of wooden ships there was formerly much difficulty 
 in settling whether damage was due to defective caulking or 
 rot ; and in consequence ol this a clause known as the 
 metalling clause was drawn to limit the responsibilities of 
 underwriters. The clause ran : — 
 
 Warranted free of particular average below the load water line, 
 unless caused by grounding or by contact willi some substance 
 other than water. 
 
 This was an attempt to meet a certain class of wear and 
 tear claims, but it is questionable if the clause could in 
 fairness be inserted in a policy on a vessel newly caulked and 
 metalled. Since the introduction of iron and steel for the con- 
 struction of ships this clause has naturally fallen into disuse. 
 
 Im addition to the limitation put to underwriters' liability 
 in cases of wear and tear, there are others which rest upon
 
 212 MARINE INSURANCE chap. 
 
 custom, and are universally respected, although there is no 
 definite mention of them in the policy or in any other 
 expression of the contract of insurance, e.g. — 
 
 (i) Sails Lost. — Sails split by the wind, or blown away 
 while set, are not charged to underwriters unless the loss 
 be occasioned by the ship's grounding or coming into 
 collision, or in consequence of damage to the spars to 
 which the sails are bent. 
 
 (2) Rigging Chafed. — Rigging injured by straining or 
 chafing is not charged to underwriters, unless such injury 
 be caused by blows of the sea, grounding, or contact, or by 
 displacement through sea peril of the spars, channels, 
 bulwarks, or rails. 
 
 These customs analysed will be found to rest on the 
 recognition of two principles : — 
 
 (a) The underwriter is not to pay for wear and tear. 
 
 (J)) The underwriter is not to pay for loss occurring in 
 the proper and ordinary use of anything in the work for 
 which it was intended. 
 
 In the case of the first custom it is presumed that any 
 weather damaging the sails without the spars is ordinary 
 weather, and the damage arising from it does not proceed 
 from any extraordinary occurrence. In the second the rigging 
 is presumed to be fulfilling its proper function in bearing 
 the straining and chafing inseparable from any sea voyage, 
 and any injury resulting from that is such as must occur, 
 while " the purpose of the policy is to secure an indemnity 
 against accidents which may happen, not against events 
 which jnust happen (Lord Herschell in the Xaniho, 1887).^ 
 Somewhat similar is — 
 
 (3) Gear, etc., on Deck. — Damage or loss of water casks 
 or tanks carried on a ship's deck is not paid for by under- 
 writers, nor is that of warps or other articles when improperly 
 carried on deck. 
 
 This custom is simply an extension to the insurance of 
 ship of the principle recognised in dealing with cargo 
 claims, that to justify a claim on the policy the property 
 
 ' la App. Cas. 503.
 
 XII PARTICULAR AVERAGE ON SHIP 213 
 
 damaged must be in the position on the ship intended for 
 it. When a vessel is in the act of sailing, or of arriving, 
 or preparing for either, it is quite proper to have warps, etc., 
 on deck ready for use : at other times only extraordinary 
 circumstances can justify their being there. 
 
 The three customs dealt with above form part of the old 
 *' customs of Lloyd's." ^ 
 
 Among the many points of detail that have to be con- 
 sidered in the settlement of almost every case of particular 
 average on ship, the following are so important as to require 
 special attention : — 
 
 ( I ) Collision Liabilities. — The expenses borne by under- 
 writers as particular average on ship being the proper 
 proportion of the cost of the repairs of material damage, and 
 of such outlays as may be incurred to effect these or to 
 restore the ship to her owner's possession, no claim can be 
 made against underwriters on the ship for damage done 
 by her to persons or property. In the case of De Vaux v. 
 Salvador^ 1836,2 the owner of a vessel brought an action 
 against his underwriter to recover the amount he had to 
 pay to another vessel in consequence of a collision in the 
 Hooghly. In the Court of King's Bench it was held that 
 he could not recover, for, as Lord Denman expressed it, the 
 " obligation to pay was neither a necessary nor a proximate 
 effect of perils of the sea, but growing out of an arbitrary 
 provision of the law of nations." ^ The result of this 
 
 ' Preamble to the "custom of Lloyd's" as issued by Average 
 Adjusters' Association : " Nothing can be called a 'custom of Lloyd's' 
 which is determined by a decision of the superior courts ; for whatever 
 is thus sanctioned rests on a ground surer than custom. A ' custom 
 of Lloyd's, then, must relate to a point on which the law is doubtful, 
 or not yet defined, but as to which for practical convenience it is 
 necessary that there should be some uniform rule. By the term is 
 here understood the ctistoms of English adjusting, whether as affecting 
 general or pKirticular average." 
 
 • 4 Ad. and ¥A\. 124. 
 
 * In the United States Mr. Justice Story gave a decision to the 
 very opposite effect in Peters v. Warren Insurance Company, but in a 
 later case Mr. Justice Curtis, in the Supreme Court of the United States, 
 took I.orcl Denman's virw of the matter, and F'hillips (^§ 1137. 1437) 
 states his opinion that that view seems lu t>c " the better doctrine. "
 
 214 MARINE INSURANCE chap. 
 
 decision was that to cover collision liabilities a separate 
 contract was framed, incorporated in the policy, and known 
 as the collision clause, which will be dealt with subsequently. 
 On the same principle payments for other damage to property 
 done by the ship, and loss of life caused by her, do not form 
 part of the liabilities of the underwriter of an ordinary policy. 
 
 (2) Wages of Crew and Demurrage during Repairs. — 
 The underwriters of a ship are not charged with the wages 
 or provisions of a crew during the time that she is detained 
 for repair, nor with anything of the nature of demurrage. 
 This holds equally whether the repairs are effected at the 
 close of the voyage or at an intermediate port in the course 
 of the voyage. But in case any members of the crew are 
 after arrival at destination employed to do work which, 
 unless done by them, would require the labour of workmen 
 from outside, the amount of their wages for the time so 
 occupied is allowed. The exclusion of demurrage from par- 
 ticular average on ship, and its inclusion in all claims made 
 against other vessels for damage suffered in collision, form 
 a striking contrast. But the contrast marks strongly the 
 difference between liability under a contract of indemnity 
 against the immediate results of certain named perils and 
 liability under a relation of injury arising from the fault of 
 another person and resulting in his payment of damages. 
 
 (3) Temporary Repairs. — If it is found to be for the 
 interest of all concerned to effect only temporary repairs of 
 damage, the shipowner is entitled to recover the cost of 
 these repairs from his underwriters as well as the cost of 
 the permanent repairs afterwards. In tlie same way he is 
 entitled to recover the cost of repairs which have to be 
 done over again in consequence of the work being done 
 badly, or the repairs being effected in a manner which does 
 not leave the ship as fit to sail or to sell as she was before 
 the accident. 
 
 (4) Cost of Removal for Repairs. — With regard to the 
 cost of removal of a vessel for repairs there are two possi- 
 bilities to note : — 
 
 (a) If the place of repair is in the port where the 
 damaged vessel lies, it is customary to allow the expenses
 
 xn PARTICULAR AVERAGE ON SHIP 215 
 
 of removal to the repairing place, and from that place after 
 repair to what would then have been the vessel's position 
 had the necessity for repair not arisen, namely, her place 
 of loading. 
 
 (J>) If it is desired to remove the vessel from an out- 
 port or a distant or foreign place to her home port or other 
 place to be repaired there, it should be shown that the 
 removal has been done in the interest of underwriters before 
 they are charged with any of the expense ; for it is only 
 where expenses are incurred of necessity to enable the ship 
 to be properly repaired that the underwriters are liable for 
 them. The desire of the shipowner to superintend in person 
 the repairs of his vessel at her home port will not justify 
 his removing her at underwriters' expense, nor will the 
 whole of the expense of removal be properly chargeable to 
 underwriters if it results in the vessel, after repair, being in 
 a better position for future engagements than if the vessel 
 had been repaired at her destination. Addend* 
 
 (5) Dispatch : Overtime. — It frequently occurs that in 
 order to save time, the repair of damage is accomplished with 
 unusual expedition, overtime, nightwork, holiday and Sunday 
 work being resorted to in order to get the repair finished 
 quickly. It may happen that the extra cost thus incurred 
 is less than the charge that would otherwise have been 
 made for longer use of the graving dock or slip, and in that 
 case it is but reasonable that the underwriter should bear 
 the extra cost, as it results in a saving to him. But usually 
 such dispatch is required to enable the vessel to take Up 
 some engagement, such as a charter or her turn on the 
 berth in a regular line. As the underwriter is not con- 
 cerned in such engagements, should he be held liable to 
 make good costs incurred solely to enable a vessel to fulfil 
 them ? If he were liable in any sense for loss of time 
 ansing from a sea peril there would be some ground for 
 making him pay for dispatch in repairs, but as he is not 
 (without special agreement) liable for loss of time, it seems 
 anomalous to charge him with expenses incurred to avoid 
 such loss. The view adopted by the most recent writers 
 (Lowndes, Law M. 1. p. 194 ; M'Arthur, Contract, p. 233)
 
 2i6 MARINE INSURANCE CHAP. 
 
 is that the shipowner is entitled to recover the extra pay- 
 ment for dispatch, if it is no more than he would reasonably 
 incur if he were not insured. The solution hardly appears 
 satisfactory, for it makes an insurance liability out of an 
 expense in the incurring of which all question of insurance 
 has confessedly been ignored. In addition, its adoption 
 increases or diminishes underwriter's liability for one and 
 the same casualty, according as the ship has engagements 
 for favourable prompt employment or unfavourable distant 
 employment. That is to say, the dispatch is obtained for a 
 reason which has no relation, either proximate or remote, 
 to the material damage chargeable on the policy. It appears 
 that the question has not yet come before the courts. 
 
 (6) Unrepaired Damage. — If a vessel is damaged and 
 is not repaired, but is later on the same voyage lost, the 
 only claim that can be made on the policy is for total loss. 
 Similarly, if she is only partially repaired and lost later 
 on the same voyage, no claim can be made for the repairs 
 not effected {Livie v. Janson, 1 8 lo).^ But if the loss occurs 
 on a subsequent voyage, the underwriters on the policy for 
 the earlier voyage are liable for the repairs of damage 
 arising on that voyage, those on the policy for the later 
 voyage being liable for the total loss {Lidgett v. Secretan, 
 i87i).2 
 
 (7) Should a shipowner be content to accept some 
 method of repair which will render the vessel as fit for her 
 trade as if she were more completely repaired, but not as 
 valuable for sale, he is entitled to claim from his under- 
 writer an allowance for the depreciation his ship has 
 suffered. For instance, it often happens that a frame or 
 beam is injured in such a way that it must be renewed in 
 its whole length, unless the shipowner agrees to have it 
 " scarphed," a much cheaper operation, but one that leaves 
 the ship of less value in the market. In such a case the 
 shipowner is entitled to claim in addition to the cost ol 
 repairs an allowance for the diminution of his ship's value, 
 provided that the sum of these two items does not exceed 
 
 » I a East 648. » S C.P. 190 : 6 C.P, 616.
 
 Xlt PARTICULAR AVERAGE ON SHIP *lj 
 
 the cost of the more complete method of repair. But it has 
 been decided that if the ship is, after the substituted repairs, 
 as valuable for work or sale as she was before the accident, 
 then the indemnity received by the assured is complete, as 
 he cannot recover more than he has lost {Bristol Steam 
 Navigation Company v. Indemnity Marine Insuratice^ 
 1887).! 
 
 (8) Concurrent Repairs. — When repairs for which ■ 
 underwriters are liable are carried out at the same time as 
 repairs on shij>owner's account, certain expenses, such as 
 dock hire, are incurred only once which, unless the repairs 
 were carried on concurrently, would be incurred twice. In 
 the case of the Vancouver, {Afarine Insurance Company v. 
 China Trans-Pacific Steamship Company , 1886 2) two sets of 
 repairs, shipowners' and underwriters', quite distinct, but 
 both necessary^ were going on in graving-dock at the same 
 time. Three days' dock dues were saved by the joint- 
 execution of the repairs, as the shipowners' work alone 
 would have occupied three days, and the underwriters' alone 
 eight days. The Court of Appeal decided that the first 
 three days' hire should be halved, and the next five should 
 fall entirely on the underwriters, and this decision was 
 affirmed in the House of Lords. In the case of the Ruabon^ 
 1899,^ the House of Lords decided that when a vessel, 
 docked solely for the repair of damage caused by perils 
 insured against, is at the same time surveyed on the owner's 
 behalf with a view to reclassification, the principle of the 
 Vancouver, judgment does not apply. The survey was 
 not then necessary, it added nothing to the time spent in 
 dock or the cost of the repairs. 
 
 Thirds Deducted. — After determining whether any 
 liability attaches to underwriters in the ordinary form of 
 policy for the repair of certain damage, it becomes necessary 
 to inquire to what extent that liability goes. Up till the 
 time when iron ships were introduced, the invariable practice 
 in England was that unless the vessel was new a deduction 
 of one-third was made from the cost of the repairs, this 
 
 1 6 Asp. Mar. L.C. 173. '11 A pp. Cas. 573. 
 
 * 9 Asp. Mar. L.C. a.
 
 2i8 MARINE INSURANCE CHAP. 
 
 deduction being called an " allowance of one-third new for 
 old." See the remarks of Mr. Justice Brett in Lohre v. 
 AitcJiisoti, 1877, 1S79.1 If this is examined it will turn out 
 to be merely another application of the principle already 
 discussed above, namely, that the underwriter is not to be 
 liable for wear and tear. The meaning of excepting from 
 this deduction all repairs to new vessels (or, as the clause 
 was sometimes worded, vessels on their first voyage, or 
 vessels within eighteen months after launching) was that it 
 was not supposed that ordinary use of the hull and materials 
 of a new ship for the first voyage, or for less than eighteen 
 months, would deteriorate them to any appreciable extent. 
 The only cases in which the clause is now customary are 
 those of iron ships getting on in years, in which it is usual 
 for underwriters to stipulate that thirds shall be deducted 
 from the repairs of the parts of the ship that are not iron. 
 The clause runs : — 
 
 In event of claim, no one-third new for old to be deducted from 
 the cost of ironwork repairs of hull, masts, or spars. 
 
 In cases in which it is agreed that absolutely no thirds 
 shall be deducted this is expressed in a clause like the 
 following : — 
 
 Average payable on each valuation or on the whole without 
 deduction of thirds, new for old, whether the average be particular 
 or general. 
 
 Since iron and steel have displaced wood as the material 
 for shipbuilding, the importance of the deduction of thirds 
 is much curtailed by the almost universal adoption in 
 policies of clauses rendering underwriters liable for these 
 thirds,^ but as regards the ship under^vriter's liability in 
 respect of general average it is still of effect. In the clause 
 last quoted reference is made to this, so that frequently in 
 statements of average an item occurs, "ship's proportion 
 of thirds deducted in general average." But in the absence 
 of any such clause the practice is based on the custom of 
 
 > 2Q.B.D. 501; 3Q.B.D. 558. 
 * But see Mr. Justice Willes in Lidgett v. Secretan, r87i-
 
 xn ADJUSTMENT OF P.A. ON SHIP 219 
 
 Lloyd's as amended by the Association of Average Adjusters 
 1890, 1 89 1, viz. : — 
 
 The deduction for new work in place of old is fixed by custom 
 at one-third, with the following exceptions : — 
 
 Anchors are allowed in full. Chain cables are subject to one- 
 sixth only. 
 
 The rule applies to iron as well as to wooden ships, and to labour 
 as well as material. It does not a pply to the expense of straightening 
 bent ironwork, and to the labour of taking out and replacing it. 
 
 It does not apply to graving-dock expenses and removals, 
 cartages, use of shears, stages, and graving-dock materials. 
 
 It does not apply to a ship's first voyage.* 
 
 Old. Materials. — Where damage is repaired by replacing 
 old materials by new the value of the old is credited to the 
 underwriter. This credit is in England entered after the 
 deduction of the third from the cost of the new ; in America 
 de/ore the deduction ; the difference to the underwriter is 
 one-third of the value of the old materials. 
 
 Incidental Expenses. — As the repairing of a vessel at a 
 port other than her home port involves the shipowner in 
 certain expenses for the superintendence of repairs, these 
 are allowed by underwriters when the cost of repairs is 
 such as to constitute a claim on the policy. If a vessel 
 is repaired at her home port no charge is admitted for the 
 services of a superintendent in the permanent employment 
 of the shipowner. Wherever the repairs are executed no 
 amount is allowed to the shipowner as commission, but 
 bank commission on the amount of the disbursement is 
 paid ; nothing is allowed to him for payments made or 
 services rendered at the port where he resides. 
 
 The costs of surveys and adjustment are apportioned 
 between owner and underwriter over the interests concerned. 
 
 Adjustment, — It is evident from the preccdini,' that the 
 task of separating the items of account that should be 
 charged to the merchant and shipowner from those that 
 should fall in whole or in part on tiie underwriter is one 
 that demands great care and skill. The result of the diffi- 
 culty of drawing up such an account is that it has become 
 necessary to found a profession of specialists who devote 
 ' P.ul the word vuvti^e is very anihiguoiu ; vidf p. 236.
 
 220 MARINE INSURANCE chap, xii 
 
 themselves entirely to the adjustment of marine losses. 
 They dissect the accounts item by item, apportioning the 
 amounts (in the case of a particular average on ship) 
 between ship, ship less one-third, and owner. In the end 
 all that is chargeable to the two former heads is apportioned 
 over the insured value of the ship, each underwriter pay- 
 ing the same proportion of the amount that his subscription 
 bears to the insured value of the ship. No account is taken 
 of the actual value of the ship as distinguished from the 
 insured value, ship being treated differently from goods in 
 that respect. 
 
 Summary of Documents. — For the substantiation of a 
 claim for particular average the following documents are 
 required : — 
 
 (1) Protest of master or log-book. 
 
 (2) Set of bills of lading (cargo claims). 
 
 (3) Policy or certificate of insurance (endorsed if 
 
 necessary). 
 
 (4) Certified statements in detail of actual cash value at 
 
 destination of goods in damaged state, all charges 
 paid. 
 
 Certified statements in detail of sound value at des- 
 tination of goods on same day, all charges paid. 
 
 Or original vouchers of costs of repair of ship, ail 
 discounts, rebates, allowances, and returns deducted. 
 
 (5) In United States, subrogation to underwriters of 
 
 damaged goods.
 
 CHAPTER XIII 
 
 PARTICULAR CHARGES : SUING AND LABOURING 
 EXPENSES 
 
 Particular Charges. — Expenses incurred in recondition- 
 ing cargo at destination have already been discussed as a 
 form of particular average. Such expenses are sometimes 
 incurred at an intennediate point of the voyage. In the 
 absence of any special contract regarding costs of recon- 
 ditioning, it seems to be equitable that they should be borne 
 by the person who would have been liable for the damage 
 which was prevented or diminished by the reconditioning. 
 
 Other expenses may be incurred at an intermediate port 
 for the preservation or recovery of the property insured, 
 besides reconditioning expenses ; such are warehouse rent, 
 cost of reshipping, cost of forwarding. 
 
 In the case of Kidston v. Empire Maftne, 1 866 and 1 867 * 
 (see below, p. 223), the jury found that expenses of this 
 character are known as " particular charges," and that they 
 are in their nature entirely distinct from particular average, 
 the latter denoting merely actual damage (diminution ""*/<,, 
 deterioration), but not expenses incurred in recovering or 
 saving the property.^ As these expenses are not particular 
 average they are not excluded by the memorandum or any 
 other equivalent clause from the liabilities of the under- 
 writer, and for the same reason their incidence is not 
 
 ' L.k. I C.P. 535; L.R. aC.P. 357. 
 
 * This distinction in English law corresponds to the distinction 
 drawn in France between " avarie particuliere maUrielU" and " avario 
 particulitre en /rait,"
 
 222 MARINE INSURANCE chap. 
 
 limited by any consideration of franchise. These expenses 
 are also known as " special charges." 
 
 It has already been noticed (p. 187) that the latest form 
 of the F.P.A. clause contains the words : — 
 
 Underwriters, nolwiihstaiuling this warranty, to pay for any 
 damage or loss caused by collision with any oilier ship or craft, and 
 any special charges for warehouse rent, reshipping, or forwarding, 
 for which they would otherwise be liable. 
 
 The effect of stating nominatim warehouse rent, re- 
 shipping, and forwarding as special charges for which 
 liability is assumed is to exclude from the operation of the 
 clause all other special or particular charges, such as recon- 
 ditioning. Other forms of the clause occur which give a 
 much wider extent to the underwriter's liability, for instance, 
 one which runs — 
 
 To pay warehousing, forwarding, and other special charges ii 
 incurred. 
 
 Under this a policy warranted F.P.A. would be subject 
 to claim for even such special charges as are incurred to 
 avert damage of the nature of particular average. This 
 form of the clause, therefore, seems to go beyond what was 
 originally the intention of assured and underwriter in the 
 arrangement of the insurance on F.P.A. terms.^ 
 
 If particular charges are the direct outcome of a peril 
 insured against they are recoverable from the underwriter. 
 
 Sue and Labour Clause. — Particular charges are also 
 recoverable on the policy in case they are incurred under 
 the circumstances detailed in the sue and labour clause 
 (see p. 120), viz. — 
 
 1 In Meyer y. Ralli, 1876, i C.P.D. 358, in an action on a policy 
 covering a cargo of rye, F.P.A., it was held that underwriters were 
 liable for the amount of expenses necessarily incurred to avert a total 
 loss on that part of the cargo which, after reconditioning, was capable 
 of being forwarded to destination. 
 
 In Great India Peninsula Railway Company v, Saunders, x86i, 
 30 L.J. Q.B. 2t8, forwarding charges on railway iron, insured F.P.A., 
 were held not to be recoverable from underwriters as they were no! 
 incurred to avert a total loss on the iron.
 
 xiu SUE AND LABOUR EXPENSES 223 
 
 And in case of any loss or misfortune it shall be lawful to the 
 assured, their factors, servants, and assigns, to sue, labour, and 
 travel for, in, and about the defence, safeguard, and recover)- of the 
 said goods and merchandises and ship, etc., or any part thereof, 
 without prejudice to this insurance ; to the charges whereof the said 
 company will contribute in proportion to the sum herein assured. 
 
 Probably the best way to arrive at a knowledge of the 
 import of the clause is to examine the three leading cases 
 connected with it. 
 
 (l) In Kids ton v. Empire Marine Insurance Company, 
 1866 and 1867,1 the action was brought on a policy insuring 
 chartered freight free of particular average, but with the 
 sue and labour clause. The vessel was condemned at an 
 intermediate port, but a ship was found to take the cargo 
 on to destination at an expense less than the original freight. 
 The assured claimed from the underwriters their proportion 
 of the costs incurred in so forwarding the cargo, on the 
 ground that by this forwarding they averted the danger of 
 a total loss on the policy ; they based their claim on the 
 words of the sue and labour clause, and were held to be in 
 the right. The expenses in question were incurred on 
 behalf of one particular interest, freight, to avert what would 
 otherwise have been a loss on the policy insuring that 
 interest, and the steps taken, resulting in the incurring of 
 these expenses, were taken by the assured, their factors, 
 servants, or assigns. 
 
 It may be remarked that in the wording of this clause 
 in the policy there is an almost unavoidable ambiguity. 
 The words run — 
 
 For, in, and about the defence, safeguard, and recovery of the 
 said goods and merchandises and ship, or any part thereof^ 
 
 This would almost make it appear (and were it not for 
 the words " or any part thereof" it certainly would appear) 
 that the clause was intended to cover only cases in which 
 efforts were made to recover both ship and cargo. But 
 this is not correct, it is not in consonance with the decisions. 
 It must be remembered that the policy was originally 
 
 1 L.R. I CP. 535: L.R. a C.P. 357.
 
 224 MARINE INSURANCE chap. 
 
 drawn to cover both ship and cargo, the only interests then 
 known to insurance ; the and was originally used in this 
 clause to make the policy include all the interests (goods 
 and merchandise and ship) that may be insured ; it extends 
 the sphere within which the possible obligations of the 
 underwriter may operate, but it is held that in any actual 
 case only one interest need be concerned. It would there- 
 fore be more correct to word the clause — 
 
 Goods or merchandises or ship or freight or etc., or any part 
 thereof. 
 
 (2) In Aitchison v. Lohre, House of Lords, 1879,^ the 
 action was brought on a policy insuring the vessel Crimea. 
 She sustained much damage from sea perils, so that she 
 became leaky, water-logged, helpless, innavigable, and in 
 danger of being totally lost. In this state those on board 
 signalled to the steamer Texas for assistance, and by her the 
 ship was towed into Queenstown without agreement as to re- 
 muneration. The repair or estimate for repair of the material 
 damage to the vessel amounted to over 100 per cent. The 
 Court of Queen's Bench held that the payment of 100 per 
 cent absolved the underwriters as far as material damage 
 was concerned, and dismissed a further claim amounting to 
 ^500 (for general average), and one for salvage. The 
 Court of Appeal confirmed the sufficiency of the 100 per 
 cent payment for material damage, and allowed the claims 
 for general average and salvage. The House of Lords 
 affirmed the sufficiency of the 100 per cent payment for 
 material damage, and disallowed the claim made under the 
 sue and labour clause for salvage. The principal judg- 
 ment in the House of Lords was pronounced by Lord 
 Blackburn. He gave as his reason for disagreeing from 
 the Court of Appeal his view that, as regards the insurance 
 of a ship, the sue and labour clause was intended to 
 encourage the personal efforts of the assured, his servants, 
 etc., for the preservation of the vessel, by providing that 
 underwriters should bear the expense incurred in those 
 
 1 4 App. Cas. 755.
 
 XIII SUE AND LABOUR — AGENCY, SALVAGE 225 
 
 persons' efforts ; that it was not intended to operate, and 
 did not, in fact, operate to provide for the expenses or 
 reward of such other persons as rhight, for the sake of 
 what recompense the Admiralty Court might eventually give 
 them, perform services to the vessel on their own account 
 and for their own profit. " The owners of the Texas did 
 the labour here, not as agents of the assured, and to be 
 paid by them wages for their labour, but as salvors acting 
 on the maritime law, which, as explained by Eyre, C. J., in 
 Nicholson v. Chapman^ 1793,^ gives them a claim against the 
 property saved by their exertions, and a lien on it, and that 
 quite irrespective of whether there is an insurance or not, 
 or whether if there be a policy of insurance it contains the 
 suing and labouring clause or not." 
 
 The length to which this limitation of the effect of the 
 clause has been pushed may be leamt from the decision 
 of Uzielli V. Boston Marine, 1884.2 In this case the 
 plaintiffs were underwriters who had reinsured a risk with 
 the defendants on a policy covering the risk of total loss 
 only, and containing the sue and labour clause. The 
 plaintiffs claimed under the sue and labour clause expenses 
 incurred by their original assured in trying to save a venture, 
 which, however, became a total loss. It was held that on 
 the reinsurance policy there was liability for the total loss, 
 but not for the suing and labouring expenses, because these 
 were incurred by the original assured, who were not the 
 factors, servants, or assigns of the assured in the reinsur- 
 ance policy, i.e. the original underwriters. 
 
 (3) In Dixon v. IVhitworth, 1879 and 1 880,8 jj^g amount 
 that can be recovered under the sue and labour clause is 
 dealt with. The plaintiff contracted to transport Cleopatra's 
 Needle from Alexandria to London for £ 1 0,000. He insured 
 the obelisk and the vessel in which it was stowed against total 
 loss and the risks covered by the sue and labour clause ; 
 he valued vessel and obelisk at ^4000 in his policies, the 
 sum insured on which amounted to ^3000. The vessel 
 
 » 3 II. B. 254. » L.R. 15 Q.B.D. 11. 
 
 » I^R. 4 C.P.D. 371.
 
 t26 MARINE INSURANCE chap. 
 
 and obelisk were towed by a steamer which had to cast 
 them off in the 15ay of Biscay in consequence of a severe 
 storm. Later they were picked up by another steamer, 
 taken into Ferrol, and ultimately towed to London. The 
 Admiralty Court awarded ;^20oo for salvage, valuing the 
 Needle and the vessel at ;^2 5,000. Mr. Dixon claimed 
 from his policies under the sue and labour clause ;^iSoo, 
 being the same proportion of i^2000 that the sum insured, 
 ^1^3000, bears to the value named on the policy /4000. 
 In this contention he was supported by Mr. Justice Lindley. 
 The defendant appealed, when it was decided that he was 
 not liable to repay to the assured any part of the ;^2000 
 awarded as salvage ; the ground being that as the salvors 
 were not in the service of the assured there was no 
 Aadenda. liability under the sue and labour clause of the policy.^ 
 
 Summary. — The sue and labour clause is therefore an 
 additional contract, supplementary to the total loss and 
 particular average contract between assured and under- 
 writer, referring solely to the separate interest specified in 
 the policy, and dealing with no expenses but those incurred 
 by the factors, servants, or assigns of the person protected 
 by the policy. Of course it is always understood that the 
 expenses are not excessive in amount, and not for work 
 undertaken in a foolhardy or imprudent way. 
 
 It is evident that the expenses embraced under the sue 
 and labour clause are after all but a very limited class of 
 those that may be incurred to safeguard property. For it 
 might be that the property insured could not be saved 
 except by taking steps to save other property not insured 
 on the same policy. Similarly, it might be impossible to 
 save cargo without ship or ship without cargo. It might 
 be that the only person capable of taking the steps necessary 
 to save all interests (or any) is not the agent of any one 
 assured anywhere, but is a man who is ready to do the 
 work on conditions of hire or share of values saved, or a 
 lump sum paid down. If the assistance thus proffered is 
 accepted, or if the operations are for the common benefit 0/ 
 
 • See p. 324 re Aitchison v. Lokre.
 
 XIII SUE AND LABOUR CLAUSE — SUMMARY 227 
 
 the whole venture, the expenses are no longer recoverable 
 from underwriters under the sue and labour clause, for the 
 expenses are not special, but connmon to several if not to 
 all interests in the venture ; they are not particular, but 
 general ; they are not the payments of servants or factors, 
 but the recompense of salvors ; they are not suing and 
 labouring expenses, but they are General Average expendi- 
 tures. They will be discussed later under the heading of 
 " General Average."
 
 CHAPTER XIV 
 
 INSURANCES ON TIME : TIME POLICIES 
 
 Insurances on Time. — The discussions contained in the 
 preceding pages ha\e referred to the nature and obligations 
 of the contract of marine insurance as embodied in the 
 ordinary form of voyage poHcy on goods and on ship. The 
 only other usual form of policy is the time policy. The 
 system of insuring for a period of time has, on the evidence 
 of the Ordinance of Louis XIV. (Tit. vi., Art. 7), prevailed 
 for at least two centuries. It is worth noting that the 
 ordinance provides for the insurance on time of both ships 
 and cargoes, together or separately {conjointement ou 
 sipar^menf). 
 
 Insurance of Goods on Time. — The insurance of goods 
 on time is of a somewhat different character from the 
 insurances so far discussed. Goods have so far been con- 
 sidered as in transit from one port to another, so that the 
 specification of any particular time during which they are at 
 risk is unnecessary. But it was specially stated above 
 (p. 41) that a voyage insurance on goods at and from 
 one port to another, with leave to call at intermediate ports, 
 does not cover the goods if the ship is used either at 
 loading, calling, or discharging port as a mere storehouse. 
 Take, for instance, vessels kept lying at port of call waiting 
 for orders to proceed to destination. The cause of delay 
 in getting orders is usually the state of the market, and the 
 delay is consequently far more than is required for merely 
 getting the orders for which the ship originally put in. 
 Consequently, unless the cargo-owner desires himself to run
 
 CHAP. XIV TIME INSURANCES 229 
 
 the risk of loss during this extraordinary delay at port of 
 call, he should specially insure the cargo for the period 
 during which the vessel is thus extraordinarily delayed. 
 The same principle regulates the period for which the cargo 
 is covered at the ports of loading and discharge ; for any 
 period exceeding what is the reasonable time for loading or 
 discharging, according to the custom of the port where the 
 loading or discharge occurs, the assured cannot claim the 
 protection of his voyage policy, and if he does not wish 
 himself to bear the burden of the risk for this period he 
 must effect a special insurance. 
 
 Open Covers. — There are other forms of time insurance 
 on goods. The one that first occurs is the ordinary open 
 cover. It is a kind of floating contract covering so much per 
 vessel irrespective of the amount which has .ilready been 
 declared by other vessels. Such a document usually runs a 
 year ; or, to use the technical form, the sailings of the 
 vessels declared on the policy are warranted to occur 
 not later than 30th June or 31st December of a named 
 year. 
 
 In every case with which the writer is acquainted the 
 open cover is a mere document of honour ; it is an 
 unstamped undertaking given by the underwriter without 
 receipt of anything of the nature of consideration. In it 
 the underwriter undertakes to issue stamped policies for an 
 amount not exceeding a named sum by every vessel, 
 sailing before a fixed date, of specified class, size, or character 
 in which the assured has interest to insure, the rate of 
 premium being either stated definitely or as " to be agreed." 
 The open cover also usually contains a clause providing for 
 its cancellation by either of the parties on giving notice, 
 ordinarily of one month's duration. This kind of document 
 is nothing but a perpetual cover-note running without break 
 between certain dates. Like a cover-note it is an honour 
 document not enforceable in any court of law, but equally 
 with the cover-note it is an undertaking to issue a stamped 
 enforceable document for a consideration in some way 
 specified. Rut the stamped enforceable documents are in 
 every respect ordinary voyage policies without any special
 
 230 MARINE INSURANCE chap. 
 
 significance arising out of their origin in what is really a 
 time contract. 
 
 Time Policy on Goods. — But there are cases in which 
 the contract of insurance on goods is actually embodied in a 
 time policy, such are the insurances on effects of captains 
 and ofllcers of "steamers running in regular employments. 
 From the nature of the interest insured it is almost certain 
 that some of the articles (clothing, etc.) insured at the 
 beginning of the period are during the currency of the 
 policy replaced by others of the same kind. So far as the 
 writer is aware no question of the attachment of the policy 
 to these later acquired effects has ever arisen, and it seems 
 hardly likely that the question will ever arise in any case 
 of bonAjide insurance. But this consideration is useful as 
 affording a stepping-stone to an insurance of a similar 
 character which might be adopted by a merchant. 
 
 Suppose a merchant is in the habit of shipping weekly 
 from London to New York about ;£2000 worth of goods ; 
 he would have in the year fifty-two risks of £1000 each. 
 These he could insure by fifty - two separate policies of 
 £2000 each, or by one policy covering ;^20oo on each 
 shipment made by the merchant, one a week for the year. 
 This would be a time policy, and to be legal it must not 
 extend beyond twelve months (see p. 20).^ There are 
 two possible ways of working a policy like this : — 
 
 (i) It might be arranged that no shipment should exceed ;^2000, 
 and that the underwriter should make a return of premium for the 
 amount by which the value of any shipment fell short of ;/^2000 : 
 e.g. a return of premium on £'^^0 if the shipment amounted only 
 to /1420, on £i,oo for a shipment ol £\(iOQ, etc. etc.* This system 
 would give to the assured a policy covering an actual insurable 
 
 > The requirements of the Stamp Act would be fully met by a 
 payment of 3d. per cent on ;^io4,ooo. Possibly, as the policy is a 
 time policy, 6d. per cent on ;^2ooo would suffice ; or, taking the passage 
 at twelve days, there would be on an average two shipments always at 
 risk, i.e. ^^4000, so that 6d, per cent on ;^40oo might be taken as 
 anpU payment ot stamp duty on this policy regarded as a time 
 policy. 
 
 ' In such cases the Revenue Authorities would probably consent to 
 a return of the proportionate amount of stamp duty.
 
 XTV FLOATING POLICY 231 
 
 interest, the amount of which could always be substantiated in a 
 court of law. 
 
 (2) There might be no arrangement for return of premium, in 
 which case the underwriter would nevertheless be entitled to ask for 
 proof of amount of interest in case claim were made against him. 
 
 Floating Policy. — The ordinary floating policy on goods 
 is not strictly speaking a time policy • it is really a con- 
 solidation of a series of voyage policies. The amount is 
 the aggregate amount of various shipments declared on the 
 policy ; the voyages covered are those stated in the text 
 of the policy, and the stamp ought to be 3d. on every ;^ioo, 
 or fraction of £ 1 00, contained in the insured value of each 
 separate shipment. The mention of any time within which 
 the policy must be used up is merely an underwriter's device 
 to make sure that the amount of his liability in any one year 
 is definitely ascertained. No provision of the Stamp Act is 
 broken by extending the period within which declarations 
 may be made. 
 
 These are the usual forms of insurance common in 
 England which may with more or less accuracy be described 
 as time insurances on goods. On the Continent,^ especially 
 in manufacturing districts at some distance from the sea- 
 board, the needs of commercial men have led to the 
 completer elaboration of time policies on goods. There it 
 is often impossible to name the vessel which will convey the 
 goods to their destination over sea, and the goods pass 
 from the maker's and owner's control within a short distance 
 of the factory door. One of the most interesting forms of 
 policy arising out of these circumstances is that common in 
 Switzerland under the name of " Pauschal-police." By it 
 insurance is effected on all the shi[)ments of goods made 
 by the assured on certain voyages or to certain destinations, 
 not exceeding a fixed amount per diem in return for a 
 certain fixed j)remiiim ; for instance, "on all goods which 
 happen to be in transit on one and the same day from A. to 
 B., C, r3., or E., and vice versd, the company hereby insures 
 the sum of one million francs as their aggregate value, in 
 return for an annual premium of four per milie, that is, 4000 
 francs." In such policies the maximum line in any one cou 
 * And in the United .Stales of America.
 
 232 MARINE INSURANCE chap. 
 
 veyance is usually 50,000 francs (^2000). In case of loss or 
 damage the assured has to show from his books, etc., the 
 value of all his goods in transit on the day of the accident ; 
 in case their value exceeds the amount insured the company 
 is liable only for the proportion that the amount insured 
 bears to the total value in transit. The want of such policies 
 will probably never be felt in England where the distance 
 from sea-board to factory is so small that it is only on the 
 rarest occasions that the exporter cannot leam the name 
 of the ship taking his goods, and the railway and cartage 
 risk is so short as hardly to call for insurance. But it will 
 be wonderful if the Pauschal policy does not take hold in 
 America and Russia, where it seems to be as much needed 
 as in Central Europe. 
 
 Disbursements insured on Time. — Of late years it has 
 become usual for amounts to be insured in connection with 
 ships and steamers under the name of disbursements. 
 There are two things described as disbursements : — 
 
 (i) Cash actually paid or to be paid by the shipowner or 
 amount of obligations definitely incurred by him, to enable 
 his vessel to earn a freight on completion of her voyage. 
 
 (2) Sums which the shipowner insures on his venture in 
 addition to what he covers as value of ship and of freight, but 
 irrespective of any particular item of expenditure or obligation 
 Insurances on the second class are not always viewed 
 with favour ; they usually mean simply that the shipowner 
 adds to the insured value of his venture without altering 
 the valuation in his policies. And when disbursements are 
 insured on time, as is nearly always the method adopted in 
 the case of steamers, it is evident that they can scarcely be 
 insurances of the first-named kind of interest. In conse- 
 quence such insurances are usually done with the condition, 
 "full interest admitted," which at once reduces the policy 
 to the level of a mere honour document.^ 
 
 Freight insured on Time.— When a vessel is chartered 
 on time, the shipowner is evidently exposed to loss by 
 perils of the sea, etc., of the hire for the period for which 
 
 > They are usually effected against Total Loss Only ; and import- 
 ant questions arise as to the interest whose total 'oss constitutes a 
 total loss ou disbursements.
 
 XIV DISBURSEMENTS — FREIGHT — SHIP ON TIME 233 
 
 the vessel is chartered The interest he has the right to 
 insure depends on the terms of the charter : he has no 
 right to insure sums which under charter-party he is entitled 
 to receive whether the ship is lost or not. 
 
 Diminisliiiig Clause. — If the hire in such a case is paid 
 month by month, as is very ordinary, the amount at risk is 
 diminished month by month by the amount of the monthly 
 hire. There is, therefore, a great difference between the 
 risk run by the shipowner when the freight is payable by 
 monthly instalments and when it is only payable at the 
 completion of the engagement In time charters the 
 method of payment by monthly instalments is now so 
 usual that underwriters insuring fi-eight under such 
 charters generally employ a diminishing clause by which the 
 risk is reduced monthly as payment of freight accrues. 
 
 But freight is also insured, " chartered or, as if chartered, 
 on board or not on board." That is to say, the underwriter 
 insures a sum on freight whether the vessel is under engage- 
 ment or not, carrying cargo or not, and whether the cargo 
 has already paid freight or not. In the case of steamers 
 such insurances are done on time. If, as sometimes happens, 
 the words " full interest admitted " are added to the policies 
 in which these insurances are expressed, the policies being 
 wager policies become simply honour documents, and are 
 of no value in any court in England (see p. 77). 
 
 Ships insured on Time. — Turning to the consideration 
 of the insurance of vessels on time, it may at once be 
 remarked that it is only rarely that sailers are insured in 
 this way, unless when they are detained at port of loading, 
 call, or discharge for a period exceeding that reasonably 
 needed for loading, calling, or discharging.' Insurance on 
 time does not well adapt itself to sailers with their long 
 voyages of 120 to 200 days ; though some sailers engaged 
 m regular trade on short voyages {e.g. tank petroleum- 
 carrying sailers from New York to Antwerp) are covered 
 m this way. But it is specially adapted to steamers, which 
 make more passages and quicker runs, so many and so 
 short, indeed, that without some such system as that of 
 
 ' But in America and especially in France theie is now (1903) a 
 growing tendency to insure sailers qn time.
 
 J34 MARINE INSURANCE chap. 
 
 insurance on time there would be gpreat difficulty in getting 
 the insurance to keep up with the voyages covered. 
 
 Steamers' Time Policy Form.— The form of policy on 
 steamers for time is the ordinary Lloyd's voyage form with 
 the addition of three special clauses : — 
 
 (i) The time wording, with its supplement the con- 
 tinuation clause. 
 
 (2) The separate valuations. 
 
 (3) The return clause. 
 
 (i) Time Wording. — The time wording follows the 
 words "at and. from," being inserted in the place where in 
 a voyage policy the details of the voyage are given. It 
 runs in a fomiula that may almost be taken as stereo- 
 typed : — 
 
 say for and during the space of calendar months 
 
 commencing 
 
 (beginning and ending with Greenwich mean time), 
 as employment may ofrer, in port or at sea, in docks or graving- 
 docks, and on ways, gridirons, pontoons, at all times, in all places, 
 and on all occasions and services and trades whatsoever and where- 
 soever, under steam or sail, with leave to sail with or without pilots, 
 to tow or assist vessels or craft in all situations, and to be towed and 
 to go on trial trips. With liberty to discharge, exchange, and take 
 on board goods, specie, passengers, and stores, wherever the vessel 
 may call at or proceed to, without being deemed a deviation, and 
 with liberty to carry goods, live cattle, etc., on deck or otherwise, 
 but warranted free from any claim in respect of jettison of cattle or 
 goods carried on deck. 
 
 On examination this wording will be found almost exactly 
 similar in construction to the clause in the policy enumerat- 
 ing the perils insured against. First come definite details, 
 then general words. To these are added a special clause 
 naming one particular class of risks, towage, and salvage, 
 and being towed. It looks as if the words referring to 
 these and to trial trips have been added in consequence of 
 some difficulty — experienced or anticipated — about the 
 application of the words " employment, services, and 
 trades" to towage in cases where the vessel insured is not 
 notoriously a tug, and to trial trips, which are exceptional 
 things outside a steamer's ordinary work, and are, in fact, not
 
 XIV TIME POLICY ON STEAMERS 235 
 
 " employment " except in the shipbuilder's and engineer's 
 sense. An additional reason for mentioning these is that 
 this is the wording of a steamer's policy, and towage and 
 trial trips are peculiar to steamers. But as a vessel, though 
 a steamer, may find occasion or even necessity to use her 
 sail power — indeed the policy says in as many words 
 " under steam or sail " — she may need the assistance of a 
 tug just as if she were a sailer. For such cases, and for 
 the frequent occasions on which steamers are moved in 
 dock by tugs, the words " to be towed " have been added. 
 Next comes a very important clause limiting the application 
 to a time policy of the idea " deviation " (already considered 
 in the discussion of the voyage form), and one in which the 
 underwriter grants permission to cany goods, live cattle, 
 etc., without prejudice to the steamer's policy, but without 
 addition to its liability. The intention of the whole is 
 clear : it is to cover the vessel on all occasions and under 
 all circumstances whatsoever within a definite period of 
 time. To make the range of the policy quite clear the 
 period is stated in calendar months, commencing at a 
 named date, to begin and end not with the time that may 
 prevail at the places where the vessel may be on these 
 occasions, but with the standard English time, Greenwich 
 mean time. This prevents any dispute between assured 
 and underwriter as to the exact moment of commencement 
 or lapse of a policy, be the vessel at home or abroad. 
 
 Since the judgment of Lord Esher, M.R., in Stewart v. 
 Merchants Marine, 1885,^ the law is that, as far as regards 
 the memorandum in a time policy, the provisions of fran- 
 chise and of sinking, stranding and burning, refer not to 
 the whole time insured, but to each separate voyage. 
 Previous to that decision underwriters were in the habit of 
 using the following clause, calling it the Non-cumulative 
 Clause : — 
 
 The warranty and conditions .is to average under 3 per cent to 
 be applicable to each voyage as if separately insured, and not to the 
 whole tinfie insured. 
 
 ' L.R. 16 Q.B.D. 619.
 
 136 MARINE INSURANCE chap 
 
 Some underwriters continue the use of it still. In 
 connection with this a difficulty of great practical import- 
 ance repeatedly occurs : neither in the decision of Stewart 
 V. Merchants Marine} nor of any other case, is any definition 
 of " voyage " to be found. Various attempts have been 
 made to supply this want, and the following is the definition 
 given in the 1903 time clauses : — 
 
 The warranty and conditions as to average under 3 per cent to be 
 applicable to each voyage as if separately insured, and a voyage 
 shall be deemed to commence at one of the following periods, to be 
 selected by the assured when making up the claim, viz. : at any 
 time at which the vessel (i) begins to load cargo, or (2) sails in 
 ballast to a loading port. Such voyage shall be deemed to continue 
 during the ensuing period until either she has made one outward 
 and one homeward passage (including an intermediate ballast 
 passage, if made) or has carried and discharged two cargoes, which- 
 ever may first happen, and further, in either case, until she begins 
 to load a subsequent cargo, or sails in ballast for a loading port. 
 When the vessel sails in ballast to effect damage repair, such sailing 
 shall not be deemed to be a sailing for a loading port, although she 
 loads at the repairing port. In calculating the 3 per cent above 
 referred to, particular average occurring outside the period covered 
 by this policy may be added to particular average occurring within 
 such period, provided it occur upon the same voyage (as above 
 defined), but only that portion of the claim arising within such 
 period shall be recoverable hereon. The commencement of a 
 voyage shall not be so fixed as to overlap another voyage on which 
 a claim is made on this or the preceding policy. 
 
 Continuation Olanse. — A vessel might at the close of 
 her time policy be known to be at sea in a damaged con- 
 dition, or there might be reason to fear that she was lost 
 In such circumstances, if the shipowner had to go to his 
 underwriters to insure for another period he might find it 
 impossible — either actually or commercially — to effect such 
 insurance. He would thus be put in a worse position than 
 if he had insured voyage by voyage. 
 
 To prevent such contingencies a clause has been devised 
 called the Continuation Clause. In the Institute Time Clauses 
 of 1903 the v/ording adopted for this clause is as follows • — 
 
 i L.R. 16 Q.B.D. 619.
 
 XIV CONTINUATION CLAUSE 237 
 
 Should the vessel at the expiration of this policy be at sea, or 
 in distress, or at a port of refuge or of call, she shall, provided 
 p^e^'ious notice be given to the underwriters, be held covered at a 
 ptv rata monthly premium, to her port of destination. 
 
 The continuation clause is thus in effect a supplementary 
 agreement to prolong, in certain circumstances, the insurance 
 on a vessel after the expiry of the period agreed upon and until 
 arrival at destination. In cases where the original period 
 is twelve months this would appear to conflict with the 
 provisions of the Stamp Act of 189 1, § 93 (see p. 20, 11. 15 
 and 16), and for many years it was the practice of under- 
 writers to print their continuation clause on an attached slip 
 (which in the case of extremely careful assured and under- 
 writers was not even gummed to the policy, but only pinned 
 on), so that, in case the policy had to be produced in court, 
 the clause could be removed without mutilation of the policy, 
 which could then be used in an action without any chance 
 of invalidation in consequence of infringement of the Stamp 
 Acts. But any such arrangement is necessarily unsatis- 
 factory. Fortunately the revenue authorities allowed them- 
 selves to be persuaded of the commercial necessity of 
 some arrangement for the benefit of the assured such as is 
 contained in the clause quoted above. They were also 
 induced to believe that both assured and underwriters were 
 willing, indeed anxious, to fulfil every requirement of the 
 revenue authorities, and that both parties to the contract of 
 insurance desired to be in a position to issue and to accept 
 documents which satisfy every requirement of the State in all 
 its branches. For many years there were questionings and 
 mild agitations on this matter, and in 1901 things came to a 
 head The Finance Act of 1 90 1 (i Edw. VII. ch. 7) legalised 
 the continuation clause by the following provisions: — 
 
 PART II.— STAMPS 
 
 II. — (i) Notwithstanding anything contained in the Stamp Act, 
 1901, a policy of sea insurance made for time m.iy contain a 
 conlinaation clause as defined in this section, and such a policy 
 shall not Ix: invalid on the ground only that by reason of the 
 coniinuation clause it may become available fur a period exceeding 
 twelrc months.
 
 ijS MARINE INSURANCE chap. 
 
 (2) There shall be charged on a policy of sea insurance containing 
 such a continuation clause a stamp duty of sixpence in addition to 
 the stamp duty which is otherwise chargeable on the policy. 
 
 (3) If the risk covered by the continuation clause attaches, and a 
 new policy is not issued covering the risk, the continuation clause 
 shall be deemed a new and separate contract of sea insurance 
 expressed in the policy in which it is contained, but not covered by 
 the stamp thereon, and the policy shall be stamped in respect of that 
 contract accordingly, but may be so stamped without penalty at any 
 lime not exceeding thirty days after the risk has so attached. 
 
 (4) For the purposes of this section, the expression " continuation 
 clause" means an agreement to the following or the like effect, 
 namely, that in event of the ship being at sea or the voyage not 
 otherwise completed on the expiration of the policy, the subject- 
 matter of the insurance shall be held covered until the arrival of the 
 ship, or for a reasonable time thereafter not exceeding thirty days. 
 
 Assured and underwriter alike express "for this relief, 
 much thanks." Each party has resolved that no advantage 
 shall be taken of the fact that no decisive interpretation of 
 the word voyage has been given by the Courts : both have 
 determined to meet every requirement of the revenue 
 authorities in the most liberal spirit, in order to be sure that 
 the insurance document issued by the one and accepted by 
 the other shall be perfectly indefeasible as far as completely 
 correct observance of revenue requirements can render it so. 
 
 Presumption of Loss. — There is one important case on 
 the time wording of a policy which lapsed in the course of 
 a voyage, Reid v. Standard Marine, i886,^ before Mr. 
 Justice Field and a special jury. In this case a twelve 
 months' policy lapsed eighteen days after the vessel started 
 on a twenty-five days' voyage. The policy was not renewed 
 nor sought to be renewed, and the vessel was never again 
 heard of. No direct evidence of the date of her loss was 
 obtainable. It was held that the assured is not bound to 
 prove that the loss occurred during the currency of the 
 policy, and that if the evidence points to the probability of 
 the vessel's loss before the date of the lapse of the policy, 
 the underwriters are liable to pay the amounts insured by 
 them under their policies. 
 
 * 3 Times L. R. 87OL
 
 xrv VALUATIONS 239 
 
 (2) Valuations. — The separate valuations clearly indicate 
 the inadequacy of the old form of policy to the requirements 
 of modem trade. In treating of particular average we had 
 to deal with a 3 per cent franchise on ship. ' With steamers 
 ranging in value from ;^5o,ooo to ;^5oo,ooo, the insertion 
 of this amount in the policy as the valuation would prevent 
 the recovery by the shipowner of any claim for particular 
 average not reaching ^1500 in the case of the lower value, 
 and ;^ I 5,000 in the higher. This is a liability which no 
 shipowner who desires the protection of insurance would 
 dream of taking upon himself. Consequently the expedient 
 was adopted of breaking up the whole value into two or 
 more items, each termed a valuation, and of inserting in 
 the policy a clause : ^ — 
 
 Average payable on each valuation separately or on the whole, 
 without deduction of thirds, new for old, whether the average be 
 particular or general. 
 
 In steamers of moderate value the valuations are usually 
 two : — 
 
 (i) Hull and materials, masts, spars, sails, boats, etc, 
 and cabin furniture (i.e. the ship and its gear regarded as a 
 sailer). 
 
 (2) Machinery, boilers, and everything connected there- 
 with {i.e. the whole distinctive gear and outfit of a 
 steamer). 
 
 The great passenger liners, when insured, are covered by 
 policies with as many as four or even more valuations. 
 The value of their cabin furniture alone is as much as that 
 of a ship of respectable size ; and in addition to the ordinary 
 propelling engines, there are all kinds of subsidiary machines 
 on board — electric light engines, dynamos and fittings, 
 secondary pumping engines, machinery for refrigerating or 
 ice -chambers, for artificial ventilation, and sundry other 
 gear. But still, as a rule, English underwriters retain in their 
 policy on steamers on time the old 3 per cent franchise, 
 although they occasionally substitute 1 per cent or a lump 
 
 ' For the meaning of " Hull and Machinery," see Lord Esher in 
 Roddick V. Indemnity AI. At. Ini. Cv., Ct. Appeal, June 1895, 11 
 Tunes I^ R. 480.
 
 240 MARINE INSURANCE chap. 
 
 Bum, say ^^500, as the minimum limit of liability. The 
 practice of ihe Mutual Insurance Clubs of the north-east 
 coast is to pay all claims for average exceeding i per cent. 
 In former years this practice was to a limited extent adopted 
 by underwriters at Lloyd's and elsewhere, but recently that 
 course has been almost entirely abandoned. It was found 
 that the reduction of the franchise to even I per cent was 
 not all that was required by many steamship-owners, who de- 
 sired to protect themselves against every loss, however small. 
 They- founded mutual associations worked on the assess- 
 ment principle, called Small Damage Clubs, which reimburse 
 to owners any loss excluded from the ordinary policy by the 
 condition of franchise whether that be 3 or i per cent. 
 The existence of these facilities for insurance of small 
 damage has deprived the franchise of all its moral value : 
 there is no longer any certainty that the shipowner runs 
 any part of the risk himself. The franchise is now nothing 
 but an expression of the minimum limit of liability on the 
 policy in which it appears. As we have already seen, 
 something of the same kind has happened with the deduc- 
 tion for thirds which used to prevail universally. 
 
 The fact is that shipowning as a business has entirely 
 changed in character since the adoption of steam in the 
 ordinary carrying trade of the world. The values exposed 
 to loss have so much increased that it would be impossible 
 for the average steamship-owner to run the risks which the 
 shipowner used to run. Then, increasing competition has 
 reduced the margin of profit so much that he can less 
 than ever afford to run serious risks uncovered. Lastly, 
 free advantage has been taken of the facilities offered by 
 capitalists for the financing of fleets of steamers. The 
 lenders naturally require full protection against loss, so that 
 again the altered state of trade is the cause of changes in 
 the methods of insurance. 
 
 (3) TIu Return Clause. It is evident that if the premium 
 on a time risk is fixed on the supposition that the vessel is to 
 be at work during the whole duration of the insurance — either 
 actually carrj'ing cargo at sea, or loading or discharging in 
 port — some provision may fairly be made by the assured
 
 TIT RETURNS 241 
 
 for the reduction of the premium in case the vessel does 
 not find employment of this continuous nature. Such 
 provision is embodied in the return clause. There is great 
 diversity of wording in the different forms of this clause. 
 Mr. Owen {Notes and Clauses, pp. 121 to 123) gives about 
 a dozen varieties. But the main content of all is that when 
 for a stipulated number of consecutive days, usually thirty, 
 the vessel is in the comparative safety of dock or port,^ 
 although still remaining for the modified perils at the risk 
 of the underwriters, a return is made to the assured of so 
 much per cent per period. Under some forms of the 
 clause the vessel has merely to be in port for the stipulated 
 period to justify claim for the return ; under others she 
 must remain unemployed, or be laid up and not be 
 under average. It is also usual to stipulate that no amount 
 of the nature of return be paid unless the vessel reaches 
 the close of the policy without the occurrence of a total 
 loss, actual or constructive ; and it is consequently not 
 usual to credit returns for laying up until the policy has 
 expired. This is secured by the addition of the words 
 " and arrival " at the end of the return clause. 
 
 It appears equally equitable that if, for some valid reason 
 or other, the insurance be cancelled there should be a return 
 to the assured for the period • during which no risk attaches 
 to the underwriter, unless the vessel is actually or con- 
 structively a total loss. The provisions for the laid-up return 
 and the cancelling return are usually contained in one clause, 
 as for instance — 
 
 To return per cent for every consecutive days the vessel 
 
 may be laid up in port or in dock, the vessel during such period 
 being at the risk of the underwriters ; and per cent for every 
 days of unexpired time on cancelling and arrival. 
 Or ( per cent for each uncommenced month if 
 
 it be mutually agreed to cancel this Policy. 
 .\s follows for each consecutive thirty days ^^^ 
 To return- the vessel may he laid up in port, viz.— r-irrival 
 
 per cent if in the United Kingdom not 
 under average. 
 
 per cent under average, or if abroad. 
 
 ' For the meaning of the words porl, hiirhour, etc., in the return 
 clause sec Mr. Justice Bucknill in Columbian,, 1901 [Leyland v. 
 D. b- F. M. I. Co., Ltd.).
 
 14a MARINE INSURANCE chap, xiv 
 
 The latter is the form adopted in the 1903 time 
 clauses. 
 
 It is to be remarked regarding the cancelling return, that 
 the clause in the policy does not constitute an agreement to 
 cancel, it only determines the amount of return payable in 
 case cancellation takes effect. In fact there is no reason 
 for regarding policies of insurance as different from other 
 documents of contract with respect to resiliation : without 
 previous agreement to the contrary a contract can only be 
 cancelled by mutual consent of the parties. It therefore 
 appears to be impossible for either assured or underwriter 
 to enforce the cancellation of a policy without consent of the 
 other. 1 
 
 Warranty of Seawortliinesa — In one respect time 
 policies are strikingly diverse from voyage policies : the 
 former are exempt from the warranty of seaworthiness to 
 which the latter are always subject (see below, p. 272, 
 Warranties). ^ 
 
 ^ This appears to differ from what is laid down by Mr. Justice 
 Charles in his decision of the Abrota, case (26th Jan. 1895, n Times 
 L. R. 196) respecting the cancellation of a charter-party. In that case 
 the voyage for which the vessel was chartered became, through stranding, 
 impracticable in a commercial sense ; and a loss would have fallen on 
 the freight policy but for the word? : " No claim from the cancelling 
 of any charter . . . allowed." Mr. Justice Charles observed that it 
 was " true that the word cancellation originally imported an act done, 
 but it might mean that on the occurrence of certain facts the contract 
 should be deemed to be cancelled or put an end to " But it is sub- 
 mitted that there is no state of facts, except mutual agreement of the 
 parties, which can bring into play the cancelling return clause of a 
 marine policy. 
 
 The decision of the Divisional Court was reversed on appeal (Ct. 
 App. May 1895: 11 Times L. R., 416), Lord Esher, M.R. , said : "As 
 a general rule, neither of the two parties to a contract could by him- 
 self cancel the contract. It could only be cancelled by the mutual 
 assent of both parties."
 
 CHAPTER XV 
 
 LIABILITIES 
 
 It became apparent early in the history of seagoing 
 commerce that the owners of ships might be liable for 
 damage done by their vessels, or by persons in their 
 employment, to goods carried on board these vessels, to 
 other vessels, or to goods carried by them. The most 
 obvious form of accident giving rise to liability of this 
 kind is the collision of two vessels. 
 
 Collision Liabilities not covered by ordinary Lloyd's 
 Policy. — As respects insurance of collision liabilities we do 
 not find that any provision existed in England before 1836, 
 when the case oi De Vaux v. Salvador'^ came before Lord 
 Denman in the Court of King's Bench. The ship La 
 Valeur came into collision with a steamer in the Hugh 
 River, considerable damage occurring to both vessels. The 
 owner of La Valeur claimed compensation from the owners 
 of the steamer ; and the claim having been referred to 
 arbitration, it was awarded that each vessel should pay 
 half of the sum of the damage sustained by both vessels. 
 Under this award the ship had a balance to pay to the 
 steamer. The owner of Lia Valeur brought an action 
 against his undenvriter to recover the sum he had thus 
 been compelled to pay: he claimed it as a particular 
 average loss, alleging that it arose out of a peril of the sea. 
 The Court held that he could not recover, the ground of 
 this decision, as stated by Lord Denman, being that the 
 obligation to pay the sum in question was neither "a 
 necessary nor a proximate effect of the perils of the sea, 
 but growing out of an arbitrary provision of the law of 
 nations . . . not dictated by natural justice, nor possibly 
 
 » 4 A. & E. 430.
 
 t44 MARINE INSURANCE chav. 
 
 quite consistent with it."l It is worth remarking how near 
 the commencement of the era of steam-shipping is the date 
 of this decision regarding tlie indirect elTects of the peril 
 which has become ahnost the most frequent and disastrous 
 in modem navigation. Similarly underwriters on an ordinary 
 policy on ship have been held not liable for expenses in- 
 curred by the shipowner in disposing of a cargo damaged in 
 a collision and rejected by the cargo owners as worthless.^ 
 
 Running-down Clause. — As the shipowner had no pro- 
 tection from his ordinary policy in the matter of his collision 
 liabilities, it became necessary to draw up a special contract 
 to cover him. This contract is known as the collision clause, 
 or as it is better named the running-down clause (R.D.C.). 
 It is now extremely unusual to find a ship policy without 
 some form of this contract either printed in it in the body of 
 the text, or in the margin, or attached to the policy. 
 
 Extent of Shipowner's Inability. — By the Merchant 
 Shipping Act of 1894 (57 & 58 Vict. c. 60), § 503,3 the 
 full amount for which a shipowner, British or foreign, is in 
 our courts liable for loss of life or personal injury either alone 
 or together with loss or damage to property — provided he is 
 not by his own default or privity concerned in the same 
 — is £1 5 per ton.^ The liability under the latter head alone 
 is ;^8 per ton. The tonnage on which this liability is cal- 
 culated is in the case of sailing ships the net register 
 tonnage, in the case of steamers the gross tonnage without 
 deduction on account of engine-room space. 
 
 * It is striking that in the same year 1836, in the case of the ship 
 Paragon, before the Supreme Court of Massachusetts (^Peters v. 
 
 Warren Insurance Company), Mr. Justice Story held that American 
 law was of exactly the opposite effect. In a later case ((General 
 Mutual Insurance Company v. SJuriooocf) Mr. Justice Curtis adopted 
 Lord Denman's view, so that now American and English jurisprudence 
 agree on this matter. See Phillips, Law of Insurance, § 1137a. 
 ^ Field S.S. Co. V. Burr, 1899 (15 Times L.R. 193, Ct. Appeal). 
 
 * Reproducing the provisions of the Merchant Shipping Amendment 
 Act of 1862 (25 & 26 Vict. cap. 63), § 54. 
 
 * For apportionment see the Victoria (Admiralty 3rd July 1881, 
 Butt, J.), Aspinall M. L. Cases VI. N.S. p. 335 : Cj a ton to be ex- 
 clusively applied to life claims, and the balance of such claims and the 
 cargo claims are to rank pari passu against the balance of ;^is a ton.
 
 XV RUNNING-DOW^^ CLAUSE 245 
 
 Until within the last few years it was the universnl 
 practice of English underwriters to refuse to cover ship- 
 owners against any liability to third parties, except liability 
 done to property by collision, and that only to the extent 
 of three-quarters. All other liabilities were described (in 
 what certainly seems to be an inconsequent phrase) as " not 
 insurable" or "not covered by underwriters." It was 
 explained that the shipowner was supposed to bear one- 
 fourth of the collision liabilities and the whole of all other 
 liabihties connected with his vessel. The practical result 
 of these restrictions will appear in the course of examining 
 the clauses generally adopted. 
 
 Various Forma of Rtmning-down Clause. — In 1884 
 there were nine or ten distinct varieties of the running-down 
 clause, in 1890 there were some fifteen or sixteen.^ But 
 in some points they all agree : as already explained, there 
 is in all the customary clauses the limitation of the under- 
 writer's liability to three-quarters of the shipowner's. But 
 with modem steamers and ships of large tonnage the 
 remaining quarter of this liability has been found to be 
 so serious in amount that shipowners have formed mutual 
 associations to take this risk among others. Thus, all the 
 additional security which the original underwriter thought 
 he had obtained for the reasonable and careful handling of 
 the ship by refusing to cover the flill collision liability has 
 vanished. As has already been shown, something similar 
 has happened in almost all cases where underwriters have 
 restricted their liability to the assured. It appears, there- 
 fore, that adherence to this limited form of cover cannot 
 now be justified on any ground of principle or commercial 
 policy, but simply on custom. Similarly, the customary 
 running-down clause expressly excludes from the liabilities 
 of underwriters all liability for sums paid, or due to be paid 
 for loss of life or personal injury. This stipulation, intro- 
 duced originally for the convenience and safeguard of 
 underwriters, has also acted as a lever to force shipowners 
 to cover in mutual associations their liability to pay for life 
 and limb. There is then left only material damage ; and 
 
 ' Owen's \tariut Insurant* Notes and Clauies, 3rd txi 1890.
 
 246 MARINE INSURANCE chap, 
 
 even in this limited sphere further limitations occur, the 
 clause being usually worded so as to include only such 
 damage as occurs in consequence of collision of the ship 
 insured with "another ship or vessel." Even without that 
 explicit wording there is authority for saying that in a 
 policy of marine insurance the word " collision " means 
 solely collision with another ship or vessel (per Lord 
 Coleridge in Richardson v. Burrows, Q.B.D. 1880; see 
 Lowndes, Law M. L p. 199).^ Consequently, damage 
 done to a floating buoy, pontoon, or similar structure, does 
 not fall within the scope of the clause now under discussion ; 
 much less does damage to stages or piers, floating or fixed, or 
 to such works as jetties, breakwaters, quays, or dock-walls. 
 The clause in which the foregoing conditions were 
 expressed ran as follows (Lloyd's Clauses, July 1883) : — 
 
 R. D. C. And it is further agreed, that if the ship hereby insured 
 shall come into collision with any other ship or vessel, and the 
 insured shall in consequence thereof become liable to pay, and shall 
 
 f)ay to the persons interested in such other ship or vessel, or in the 
 reight thereof, or in the goods or effects on board thereof, any sum 
 or sums of money not exceeding the value of the ship hereby assured, 
 calculated at the rate of £% per ton on her registered tonnage, we 
 will severally pay the assured such proportion of three-fourths of the 
 sum so paid as our respective subscriptions hereto bear to the value 
 of the ship hereby assured, calculated at the rate of £,% per ton — or 
 if the value hereby declared amounts to a larger sum, then to such 
 declared value — and in cases where the liability of the ship has been 
 contested with our consent in writing, we will also pay a like pro- 
 portion of three-fourths of the costs thereby incurred or paid, pro- 
 vided also that this clause shall in no case extend to any sum which 
 the insured may become liable to pay or shall pay in respect of loss 
 Addenda, of life Or personal injury to individuals for any cause whatsoever. 
 
 As this clause incorporates the English statutory limita 
 tion of liability, the protection it affords may not be sufficient 
 to protect the shipowner to the extent of three-fourths of his 
 liability in all cases. Most foreign countries have fixed the 
 limit of liability of a vessel at her value ; or put in another 
 way, any claim of whatever magnitude for damage done by 
 a vessel is legally satisfied by surrendering to the injured 
 
 ' See p. 182, and Mr. Justice Bigham in Chandler v. Blogg, 14 
 Addenda. Times L. R. 66.
 
 XV RUNNING-DOWN CLAUSE 
 
 247 
 
 party the ship which has done the damage. When an 
 English vessel does damage in collision in waters not 
 within the jurisdiction of our courts, that vessel cannot 
 effectively claim the benefit of the law of her flag. It was 
 to provide full cover to the extent of three-quarters that 
 the foregoing clause was modified by the deletion of the 
 words referring to ^8 per ton. The serious decrease in 
 the insured value of vessels occurring within the last two or 
 three years has led to a revival of the use of the ;^8 a ton 
 clause. When vessels are declared as worth sums varying 
 from ;^4, IDS. to £•] per ton, it is natural that the under- 
 writers, whose premium income depends on the amount 
 insured, should object to give the cover granted in the un- 
 limited form of clause. In many foreign jurisdictions 
 it is extremely difficult to make sure that the value attri- 
 buted to a vessel in a collision suit will be reasonable, 
 especially if the vessel damaged in the collision is a native 
 craft. The result of these considerations has been, as 
 stated above, a revival of the £% per ton clause. 
 
 The English limitation of liability to £% per ton for 
 destruction and damage of property alone, and to ^15 per 
 ton for destruction and damage of property and loss of life 
 or personal injury, takes effect for each separate occasion on 
 which the vessel becomes liable. That is to say, the limit 
 is not applied to the sum of the liabilities incurred on any 
 voyage or in any one year, but to the sum of the liabilities 
 incurred in each separate collision for which the vessel in 
 question is found to blame. Sometimes cases occur in which 
 a vessel breaking away from control strikes one ship, glides off 
 and runs into a second, and so on, the whole string of dis- 
 asters arising from one original single fault. In such cases the 
 courts have tempered the severity of the burden laid on the 
 defaulting shipowner. In the case of the Creadon (Admir- 
 alty, 8th April 1885') Mr. Justice Butt decided that where 
 a vessel came into collision with two others, with but a 
 brief interval between the accidents, the first of them being 
 the efficient cause of the second, no second act of negligence 
 on the part of the cUifaulting ship having come into play, 
 * Asp. Mar. L.C. 585.
 
 t48 MARINE INSURANCE chap." 
 
 the shipowner is entitled to make his limited liability cover 
 his responsibility for both accidents. The ground given 
 for this decision was that in the case in question the second 
 accident was inevitable after the first occurred.^ 
 
 Classes of Collisions. — It becomes important for the 
 determination of the liability on a policy to determine the 
 class to which any particular collision belongs. There are 
 four classes of collisions : — 
 
 I. Neither vessel being in default, no negligence occur- 
 ring, nobody to blame : i.e. inevitable accident, the result of 
 circumstances over which no one has had control — force 
 majeure^ the act of God. 
 
 II. Neither vessel being distinguishable as in fault : i.e. 
 inscrutable accident. 
 
 III. One of the vessels being in default : one ship solely 
 to blame. 
 
 IV. Both of the vessels contributing by their default or 
 negligence to the accident : both to blame. 
 
 I. Accidents of the first class are rare : perhaps the 
 universal insurance of collision liabilities has contributed 
 to produce this rarity. But they are easy to imagine : 
 suppose a cyclone breaking over a river crowded with 
 shipping, all properly moored and fast according to the 
 requirements of good seamanship for the place. If in the 
 course of such a tempest one vessel is, without any 
 negligence on the part of her captain and crew, thrown 
 against another and damage is done, there seems to be a 
 fair case for considering the damage as due to inevitable 
 accident. The mere fact of one vessel driving down on 
 another or striking her is not sufficient to render the former 
 liable for the damage done to the latter ; there must be 
 some proof of negligence on the part of the former vessel 
 to constitute liability on her part.^ 
 
 * If such a case occurred in American waters, or in the w.iters o( 
 any Continental state, and if the damage done to the first vessel 
 exceeded the value of the offendhit; vessel, would the second ship have 
 no recourse against any one for the damage sustained by her ? The 
 same question would arise in case of several separate collisions on one 
 voyage. 
 
 ' See Majsden's Law of Collisions at Sea, 3rd ed. p. i.
 
 XV CLASSES OF COLLISION 249 
 
 IL In the second class, namely, in cases where the 
 collision has manifestly resulted from fault somewhere, but 
 the evidence tendered does not show to the satisfaction of 
 the court where the fault lay, the English practice is that 
 no damages can be recovered, each vessel bearing her own 
 loss. The practice in other countries varies ; for instance 
 in America, according to some authorities, the loss in such a 
 case is divided : in France the loss is equally divided. 
 But it does not often happen that collisions can be classed 
 as inscrutable accidents, and the tendency is more and 
 more to regard cases of doubt as cases in which both are 
 to blame. 
 
 III. Where one ship only is to blame, that ship has to 
 bear the loss and damage inflicted on the other. If the 
 owner of the defaulting vessel sees that the sum due by 
 him exceeds the statutory liability of his vessel, he makes 
 special application for the limitation of the claim against 
 him to the amount of that statutory liability. For by the 
 Act of Parliament already cited, the limitation takes effect 
 only in cases where the loss or damage for which the 
 shipowner is held liable has not resulted from his own 
 fault or with his privity, so that the authorities must be 
 satisnea on that point before they will grant the limitation. 
 
 In this case the application of the loss to the under 
 writer who insures against three-quarters of collision 
 liabilities is simple. If he has given the so called "un- 
 limited " clause {i.e. containing no reference to £,Z a ton), 
 he pays the same proportion of three-fourths of the whole 
 amount paid by the shipowner that his subscription bears 
 to the value of the vessel stated in the policy. If he has 
 given the £% a ton clause, he pays the same proportion 
 of three-fourths of the whole amount paid by the shipowner 
 that his subscription bears to the value of the ship at ^8 a 
 ton, unless the value of the ship stated in the policy exceeds 
 ^8 a ton, in which case he pays the proportion that his 
 subscription bears to that value. As the ^^8 a ton clause 
 does not fully protect for three-quarters of collision 
 dama>.;(;b any ship valued under /jS a ton, it becomes 
 necessary for the shipowner, if he wishes to be fully
 
 2SO MARINE INSURANCE chap. 
 
 protected, to do an additional insurance against three- 
 quarters of collision liabilities only for the difference 
 between the policy valuation of his vessel and her value 
 calculated at £8 a ton. For, as we have seen, in deter- 
 mining the shipowner's collision liability no reckoning is 
 taken of the actual value of his vessel, whatever be her age 
 or condition. 
 
 IV. The fourth and by far the most difficult case 
 is where both vessels are to blame. In actual experience 
 these cases are far from rare, they have given rise to much the 
 greatest amount of dispute as regards the law of collision. 
 
 With respect to this class of collisions the English 
 practice of determining the incidence and apportionment of 
 damage differs from that of many other nations. The old 
 Admiralty rule was that where both vessels were to blame, 
 the damages sustained by both were to be added together 
 and the sum halved, and each vessel had to pay one-half. 
 If a case is worked out on this rule it will be found that 
 there are two ways of arriving at the same result : — 
 
 (a) Each ship paying one -half of the total damages 
 into a common fund, and thert taking out the amount of 
 the damages sustained by herself. 
 
 (d) The ship which has suffered less damage paying to 
 the one which has suffered more the difference between 
 the halves of their damages. 
 
 The first plan requires in all three payments, the second 
 only one. The second became the customary practice of 
 settlement in the Admiralty Court. 
 
 Abroad, the treatment of cases of both to blame is as 
 follows : ^ — 
 
 United States of America 
 
 as in England. 
 
 France 
 
 according to the degree of each 
 
 
 ship's fault. 
 
 Belgium 
 
 as in France. 
 
 Holland 
 
 ench bears her own loss. 
 
 Germany 
 
 neither can recover. " , 
 
 Italy 
 
 each bears her own loss. 
 
 Spain 
 
 as in Italy. 
 
 Condensed from Marsden's Collisions at Sea, 3rd ed. pp. 158-160.
 
 XV SINGLE LIABILITY CROSS LIABILITY 251 
 
 Portugal as in Italy. 
 
 Russia (probably) loss rests where it falls. 
 
 Scandina\Ta court decides in each case whether damages 
 
 pKiyable by the one to the other and 
 their amount. 
 
 Egypt loss made good by both vessels in propor- 
 
 tion to their values. 
 
 It is evident from this statement that an agreement between 
 the parties concerned in a collision to enter action in the 
 courts of any particular country may enormously affect the 
 amount of damages recoverable and payable. Where the 
 vessels in collision belong to one nationality and the 
 cargoes on board belong to persons of the same nationality, 
 it is quite usual for them to agree to settle in accordance 
 with their national law. 
 
 Single Liability and Cross Liability. — The practice of 
 settling the damages springing out of a collision in which 
 both vessels are to blame by making one payment, has 
 resulted in the doctrine that the liability in such a case 
 is not a cross liability of each ship to the other, but is a 
 single liability of the less damaged to the more damaged 
 ship. This distinction becomes extremely important when 
 the damage done to both ships and cargoes exceeds ;^8 
 per ton of the offending vessels and suit for limitation of 
 liability has been granted. Suppose two large steamers 
 A. and B., each with a valuable cargo, get into collision, 
 each contributing by negligence to the accident. Then the 
 damages to property may easily exceed the statutory limit of 
 ^8 a ton, and the question arises whether in the case of each 
 vessel the limit is to be applied to her half of the total 
 damage, or the limit is to be applied, in the case of the less 
 damaged vessel, to the difference between the halves of 
 the respective damages of the two vessels. This point 
 came up in the cases of Chapman v. Royal Netherlands 
 Steam Navigation Company, 1879,^ and of Stoomvaart 
 Maatschappy Necierland v. Peninsular and Oriental Steam 
 Navigation Company ( The Voorwaarts and T/ie Khedive)!^ 
 The latter case went to the House of Lords in July 1882. 
 
 » L.R- 4 P.D. 157. • LR. 7 App. Cas. 800.
 
 J5a MARINE INSURANCE chap. 
 
 It was decided that settlement between the shipowners was 
 to be effected on the principle of single liability. Con- 
 sequently, when the statutory limitation of liability is 
 granted it is applied to the tonnage of the vessel which has 
 a balance to pay ; and this amount {i.e. the maximum 
 statutory liability of the less injured vessel) is divided 
 among the other claimants of damages in proportion to the 
 damage they have suffered. This principle was applied 
 to a policy of insurance in the case of the Balnacraig, 
 {London Steamship Owmrs' Mutual Insurance Association 
 V. Grampian Steamship Company , 1889 and 1890).^ 
 
 In Appendices II. and III. of his admirable Contract 0/ 
 Marine Insurance, Mr. M 'Arthur has made a special study 
 of collision liabilities and of the effects of the different forms 
 of the running-down clause. The only recent important 
 variation of this clause is the provision contained in the 
 Institute Clause, that when both vessels are to blame for a 
 collision, and neither of them limits her liability, claims 
 under the clause shall be settled on the principle of cross 
 liabilities. It will be found on working out cases of this 
 kind that the assured comes out of a cross liability settle- 
 ment with results more favourable than a single liability 
 settlement gives. The clause of the Institute of London 
 Underwriters runs as follows : — 
 
 And it is further agreed that if the ship hereby insured shall 
 come into collision with any other ship or vessel, and the assured 
 shall in consequence thereof become liable to pay, and shall pay by 
 way of damages to any other person or persons any sum or sums 
 not exceeding in respect of any one such collision the value of the 
 ship hereby insured, this company will pay the assured such 
 proportion of three-fourths of such sum or sums so paid as its sub- 
 scription hereto bears to the value of the ship hereby insured ; and 
 in cases in which the liability of the ship has been contested, or 
 proceedings have been taken to limit liability, with the consent in 
 writing of this company, the company will also pay a like pro- 
 portion of three-fourths of the costs which the assured shall thereby 
 incur or be compelled to pay ; but when both vessels are to blame, 
 then unless the liability of the owners of one or both of such 
 vessels becomes limited by law, claims under this clause shall be 
 settled on the princiijles of cross liabilities, as if the owners of each 
 
 » L.R. a4Q.B.D. 3a & 663,
 
 XV SHIPS OF SAME OWNERS IN COLLISION 353 
 
 I'essel had been compelled to pay to the owners of the other of such 
 vessels such one-half or other proportion of the latter's daniages as 
 may have been properly allowed in ascertaining the balance or sum 
 payable by or to the assured in consequence of such collision. 
 
 Pr(r7)iiied always that this clause shall in no case extend to any 
 sum which the assured may beconu liable to pay or shall pay fot 
 removal of obstructions under statutory powers, for injury to 
 harbours, wharves, piers, stages, and similar structures, consequent 
 on stuh collision, or in respect of the cargo or engagements of the 
 insured vessel, or for loss of life or personal injury. 
 
 Ships of Same Owners in Collision. — -All these arrange- 
 ments and adjustments of liability apply only when the 
 insured shipowner has become liable to pay and has paid to 
 the other shipowner sums in respect of his responsibilities. 
 The case is somewhat altered when the two ships belong to 
 the same owner. There can be no liability on his part as 
 the owner of the one to pay anything to himself as the 
 owner of the other, he cannot sue himself (see pp. 169, 170). 
 But he is liable to the cargo-owners of both vessels for 
 damage suffered by them. As regards the hulls, although 
 the owner may have insured them with entirely different under- 
 writers, he cannot under the ordinary collision clause recover 
 anything from either set of them in respect of collision 
 liabilities. He consequently has himself to bear his collision 
 damages, unless they exceed 3 per cent, and are claimable 
 as the direct results of a sea peril. To avert difficulties of 
 this kind the following clause, known as the sister ship or 
 same ownership clause, is occasionally used : — 
 
 And it is further agreed that the principle involved in this clause 
 shall apply to cases in which the vessels are the property in part or 
 in whole of the same owners. 
 
 liut the cases in which it has come into operation are most 
 infrequent. 
 
 Vessels in Tow. — An extension has lately been given 
 to the operation of the running - down clause by the 
 decision in the case of the Niobe {M'^Cowan v. Baine, 
 1891).' The Niobe was l)eing towed by the Flying 
 Serpent steam-tug, which ran into the Valctte^ In con- 
 sequence of bad look-out on board the Niobe her helm 
 was not ported till too late to avert the collision. Had she 
 
 ' 7 Times I.. R. 713 (House of Lords).
 
 254 MARINE INSURANCE chap. 
 
 ported in time she would have so controUad the movements 
 of the Flying Serpent that her course would have been for- 
 cibly altered, or she would at least have warned the Flying 
 Serpent of her danger. The Niobe was held to blame for 
 the collision, and the underwriters of the hull of the Niobe 
 were held liable under the running-down clause attached to 
 their policy for their proper proportion of the damages and 
 expenses attaching to the Valetta, from the collision. 
 
 Generally the doctrine of tug and tow is that the tug is 
 the servant of the tow, being there simply to supply the 
 necessarj' motive power. But it would seem to be hardly 
 equitable to make a towed vessel responsible for damage 
 done in consequence of the fault of her tug unless she has 
 some way contributed to it or failed to take the proper 
 steps to prevent it.^ 
 
 Items included in Collision Claims. — It is to be re- 
 marked that as the running-down clause is not part of the 
 ordinary policy of marine insurance, but is a separate con- 
 tract, it is not interpreted with the same strict reference to 
 the doctrine of proximate cause as the policy is. In the 
 running-down clause one is no longer dealing with a contract 
 of indemnity for material damage immediately resulting from 
 certain named perils, but with a guarantee of repayment 
 of a stated proportion of liabilities involuntarily incurred by 
 the assured. Nothing in the wording of the running-down 
 clause excludes claims for loss of time, or loss through failure 
 to meet engagements sustained by the unoffending vessel, 
 and, in fact, it not unfrequently happens that these secondary 
 results of the accident are as great in their amount as the cost 
 of repairing the material damage inflicted in the collision. 2 
 
 ^ Sir Barnes Peacock in Smith v. St. Lawrence Tawboat Company 
 (Privy Council, 57 C. P. 314), "It appears to be clear that when no 
 directions are given by the vessel in tow, the rule in the case of tug 
 steamers is that the tug shall direct the course. The tug is the moving 
 power, but it is under control of the master or pilot on board the 
 ship in tow." Quoted by Barnes, J., in Altairs (Adm. 13 March 1897). 
 
 * E.g. Cost of dispersing wreck of unoffending vessel paid by 
 offending vessel held to be liability of undervvxiters of offending vessel 
 who insure collision liabilities. Burger v. Indemnity Mutual, 1899, 
 per Mathew, J., in Q.RD. 15 Times L.R. 506.
 
 XV FULL PROTECTION POLICY 255 
 
 Four -fourths, R.D.C. — The running- down clause dis- 
 cussed above deals with only three-quarters of the ship- 
 owner's liabilities ; in a few cases underwriters have con- 
 sented to extend the provisions of the clause to cover the 
 whole of the assured's liabilities arising out of damage done 
 to property by collision of the insured ship with another ship 
 or vessel. The clause thus extended is known as the four- 
 fourths running-down clause. 
 
 Other Liabilities. — It has been already pointed out 
 that in consequence of the restricted responsibility assumed 
 by underwriters for collision and other liabilities, shipowners 
 felt themselves compelled to resort to mutual associations 
 for fuller protection. The position taken up by underwriters 
 has been described as the result of lack of enterprise and 
 initiative, in fact, of failure to appreciate the necessities of 
 the shipowner's position. However this may be, it is worth 
 recording that in 1886 three Lirerpool Marine Insurance 
 Companies — the British and Foreign, the Union, and the 
 International — introduced what they called a full protection 
 policy, which was in effect a Lloyd's policy on the hull of a 
 vessel without the collision clause, but with clauses added' 
 dealing with all the important liabilities of the shipowner. ^ 
 The part of this document dealing with Habilities commences 
 as follows : — 
 
 And so far as concerns the aforesaid insurance against liabilities 
 the company promises and agrees as follows : that is to say, that the 
 company will protect and indemnify the insured against any such 
 liabilities incurred by him or them (without his or their actual fault 
 or privity) at any time while the ship is insured by this policy as 
 aforementioned, in respect of his or their ownership of or other 
 interest in the insured ship, or in respect of any contract for the 
 carriage of any ^oods or passengers in the insured ship, for any 
 losses, claims, demands, damages, or expenses which may arise frmn 
 or in consequence of 
 
 certain losses and damages which are detailed in six para- 
 graphs following. The first two of these go to the root of 
 collision liabilities with a directness that is quite refreshing 
 After the tedious roundabouts of the running-down clause, 
 
 ' The full text of this policy is given in Appendix F.
 
 256 MARINE INSURANCE chap. 
 
 whether three-fourths or four-fourths, limited to £^ a ton or 
 unlimited : — 
 
 (i) Any loss of life or injury to any person whomsoever or any 
 life salvage. 
 
 (2) Any loss of or damage to any other ship or boat or any 
 goods, merchandise, or other things whatsoever on board any other 
 ship or boat. 
 
 The item of life salvage is one of importance, as the 
 reward for the saving of life at sea forms the first lien 
 on the ship and goods saved. In the case of passenger 
 steamers the shipowner might have a large amount to pay 
 for life salvage, without having any means of enforcing 
 from any of the lives saved any contribution to the costs 
 of their salvage.^ 
 
 As was stated above, the dictum of Lord Coleridge in 
 Richardson v. Burrows ^ restricts the meaning of " collision " 
 in the running-down clause to collision with another ship 
 or vessel. But it is notorious that harbour boards, pier- 
 owners, telegraph cable companies, and the General Post 
 Office (as the owner of British inland and cross -channel 
 telegraphs) are entitled to make claims for damage done 
 to their property : consequently, cover is granted in § 3 for 
 
 (3) Any damage done to any harbour, dock, pier, quay, jetty, 
 stage, buoy, telegraph cable, or other fixed or moveable thing what- 
 soever, or to any goods or property being thereon. 
 
 These sections exhaust the liabilities of the shipowner 
 for loss of or damage to things outside the ship. The 
 policy then turns to what is carried in the ship : — 
 
 (4) Any loss or damage of or to any goods, merchandise, or other 
 things whatsoever, whether on board the said ship or not, which 
 may arise from any unauthorised deviation of the said ship, or from 
 any improper navigation of that or any other ship or boat. But 
 this is not to include any loss or damage which may arise proximately 
 or otherwise from improper stowage, or by any emanation from or 
 action of any part of the cargo or any previous cargo, or from any 
 uncleanliness of the ship when loading, or from any want of proper 
 ventilation. 
 
 ' Life salvage not recoverable under Lloyd's policy, see Tfu Amo/ 
 Ct Appeal, 14th May 1896. 
 
 ' See Lowndes, Law M. L p. 199.
 
 XV FULL PROTECTION POLICY 257 
 
 This clause practically grants to the shipowner indemnity 
 as regards all claims brought by parties interested in cargo, 
 whether already loaded or not, in consequence of the action 
 of the shipmaster when beyond the owner's control. The 
 clause is very wide - reaching ; it is extremely hard to 
 imagine what may not be included under the words " im- 
 proper navigation of that or any other ship or boat." Prob- 
 ably the meaning would be made clearer by the addition 
 of some such words as " in the course of the voyage in- 
 sured." In connection with the words " improper naviga- 
 tion," it is right to remark that in the case of the lVa?-kworih 
 (Court of Appeal, June 1884, Esher, M.R., Bowen and 
 Fry, L. J J.) it was held that when a collision for which 
 a vessel is held to blame is caused solely by a defect in her 
 steam steering-gear, negligently repaired ashore by people 
 employed by the shipowner, that constitutes " improper navi- 
 gation " within the meaning of the Merchant Shipping Act. 
 In connection with paragraph 5, dealing with removal 
 of wreck, there are three cases of interest : — 
 
 {a) In the case Earl of EffJinton v. Norman (Court 
 of Appeal, April 1877)1 it was held that when 
 harbour officials, in pursuance of the provisions of 
 the Harbour Acts of 1847, remove wreck which 
 blocks the entrance or approach of a harbour, the 
 " owner," who by the Act has to bear the expense 
 of this, is the shipowner to whom the vessel belonged 
 when she was wrecked, and not the underwriter on 
 the ordinary marine policy who has paid a total 
 loss and claimed the salvage. This decision has 
 been in part overruled by the decision of the House of 
 Lords in The Crystal (Arrow Shipping Co. v. Tyne 
 Commissioners ]nnG 1894 : 10 Times L.R. 551), but 
 in that decision the Lord Chancellor (Herschell) 
 said : " It is unnecessary to determine whether the 
 underwriters are to be treated as the owners within 
 the meaning of the statute." ^ 
 {b) In Cas/elluin v. Thompson (Common Bench, 
 
 • 3 Asp. Mar. L.C. 471. » 7 I^ T. N.S. 
 
 434.
 
 158 MARINE INSURANCE chap. 
 
 November 1862) ^ it was held that when a flat- 
 owner raised his sunken flat and her cargo without 
 getting the cargo-owner's consent or approval of the 
 incurring of the expenses necessarily involved, he 
 was hound to deliver the cargo in return for the 
 agreed freight and without any lien for share of 
 expenses. 
 (c) In a somewhat similar case, Prehn v, Bailey 
 (Court of Appeal, 20th July 1881, Jessel, M.R.),2 
 it was held that when the Thames Conservancy 
 lifted a vessel and cargo, sunk in collision by the 
 vessel's own fault, and delivered them to the ship- 
 owner on payment of the cost of raising, the ship- 
 owner (having limited his liability) had no lien on 
 the cargo and no claim on it for a share of the ex- 
 penses. 
 The hardship of the position of the shipowner in the 
 three cases cited is justification enough for any attempts on 
 the part of underwriters to protect him from such liabilities 
 as those described. In paragraph 5 we consequently 
 find— 
 
 (5) Any attempted or actual raising, removal, or destruction 0/ 
 the wreck of the said ship or the cargo thereof, or any neglect or 
 failure to raise, remove, or destroy the same, but deducting the value 
 of any salvage, wreck, or cargo which irtay be recovered by the 
 insured, or which may be available for or chargeable with such 
 claims or expenses. 
 
 Having exhausted the liabilities the policy proceeds to 
 deal in paragraph 6 with — 
 
 (6) The costs and expenses incurred by the insured in resisting 
 any claims covered by this policy, or in any legal proceedings in 
 relation to any such claims, provided such costs or expenses shall 
 have been incurred with the consent in writing of the company. 
 
 Thereafter special provision is made for excluding all 
 claims below £\o, except claims for costs; and excluding 
 
 1 See Barraclough v. Brown, 1896, 12 Times L. R. 250, /. M. 
 Lennard (House of Lords, 19 July 1897) ; and Burger v. Indemnity, 
 1899, IS Times L. R. 506. * 6 P.D. 127.
 
 XV FULL PROTECTION POLICY 259 
 
 absolutely all claims arising from improper stowage, the 
 latter no doubt on the ground that the stowage is entirely 
 within the control of the shipowner or his agents. 
 
 Next follows a section obliging the assured to limit his 
 liability where he can legally do so, under penalty of the 
 company being free to refuse him any indemnity beyond 
 that to which he would have been entitled had he so limited 
 his liability. 
 
 Thereafter comes the important clause : — 
 
 In no case shall the aggregate amount of the indemnity to be 
 made or contributed to by the company in respect of any one 
 occasion exceed in all (including interests and costs) ^30 per ton on 
 the gross tonnage of the insured ship. 
 
 These are the sole limitations to the scope of the pro- 
 tection afforded by the special policy in question. The 
 document is, as far as the insurance of liabilities goes, simple 
 and to all appearance adequate. It is at least an attempt 
 on the part of professional underwriters to give to the ship- 
 owners an insurance of their tonnage both against the perils 
 it may be exposed to and the liabilities it may incur, and 
 to give this in one document combining the traditional 
 form of Lloyd's policy and a form designed to meet the 
 reasonable wants of protection with respect to liabilities 
 which are extremely serious and press on shipowners with 
 unmistakable weight.
 
 CHAPTER XVI 
 
 WARRANTIKS AND REPRESENTATIONS 
 
 In the language of marine insurance the word "warranty" 
 is used to denote two entirely different things : * — 
 
 A. It sometimes denotes "stipulations . . . which are 
 exceptions to the general terms of the contract, by which 
 the underwriter is to be exempted from certain risks, either 
 wholly or in part " (Marshall, p. 353, note a). For instance, 
 it is not unusual to hear the F.P.A. clause described as the 
 F.P.A. "warranty," the F.C. and S. clause as the F.C. and 
 S. " warranty," and sometimes the memorandum is called 
 absolutely " the warranty." The reason is plain ; as these 
 clauses run in the form " warranted free from," etc., it 
 is not unnatural that they should be called " warranties." 
 It is also not impossible that this "use of the word was 
 encouraged by underwriters, for, as will be found later, the 
 effect of a " warranty " in the sense about to be explained 
 is very stringent, and the application of this word to denote 
 an exception or exemption from the general terms of the 
 contract may have been intended as a sign of the strictness 
 with which that exception or exemption would be inter- 
 preted by the underwriter in his own favour. 
 
 B. In the stricter sense a warranty in a contract of 
 marine insurance is :— 
 
 * Cf. Arthur Cohen in I^w Quarterly Review, April 1895, "A 
 warranty is a condition rendering the contract voidable in case of non- 
 compliance, and not a stipulation for breach of which action lies. It 
 is this essential distinction between a condition and a stipulatioo that 
 Mr. Amouid and Mr. Phillips have overlooked."
 
 CHAP. XVI WARRANTIES 261 
 
 I. " A stipulation inserted in writing on the face of the 
 policy, on the literal truth or fulfilment of which 
 the validity of the contract depends " (Amould, 
 p. 625). Or 
 II, A fundamental essential factor or condition inherent in 
 each and every contract of marine insurance without 
 exception. 
 The former class of warranties being stipulations set 
 forth on the policy are called express (or expressed) 
 warranties. The latter being essential to the whole 
 universe of marine insurance do not require any form of 
 expression, appear in no policy or other document, but 
 remain immanent and are of absolutely controlling effect : 
 they are therefore termed implied warranties?- 
 
 I. Express Waxranties. — No covenant can amount to 
 an express warranty unless it appear written (or printed) 
 on the face of the policy. In Pau'son v. Barnevelt, 1779,* 
 the case turned upon the importance to be attached to a 
 written paper of instructions, stating that the vessel insured 
 " mounted twelve guns and twenty men," wrapped up with 
 and enclosed in the policy when it was brought to the 
 underwriters for signature. Lord Mansfield said it was a 
 mere question of law, and without hearing the evidence of 
 the defendants' witnesses (who were ready to state that a 
 written memorandum enclosed was always considered as 
 part of the policy-), " decided that a written paper did not 
 become a strict warranty by being folded up in the policy" 
 (Park, p. 479). The same enfinent judge ruled in Bize v. 
 Fletcher^ I779," that the contents of a slip of paper wafered 
 
 * It should be observed that the word "warranty" has in marine 
 insurance a sense quite different from what it has in the general Eng- 
 lish law of contract, in which it is used to denote an independent 
 subsidiary contract, breach of which does not entitle the offended 
 party to avoid or rescind the contract, but only to take action for 
 breach or for set-off. The covenant in contracts other than those 
 of marine insurance, corresponding to a warranty as descrit>ed above, 
 is termed a "condition." In Httberi v. Pigon. 1783, I^rd Mansfield 
 •aid, "The warrHnty in a contract of insurance is a condition or a 
 contingency, and unless that be perfortued there is no contract " 
 (Marshall, p. 375). 
 
 * I Dougl. I a. note 4.
 
 262 MARINE INSURANCE CHAP. 
 
 to the policy did not amount to a warranty. But any 
 explicit reference on the face of the policy to any special 
 rules or conditions is treated as amounting to a warranty, 
 these rules or conditions being, although extrinsic to the 
 policy, regarded as incorporated in the contract {Routledge 
 V. Bur re II, 1789 i; Pettigrew v. Pr ingle y i832).2 So 
 long as the covenant appears on the face of the policy it 
 may be written either in the body of the policy or in the 
 margin {Bean v. Stiiparty 1778),^ or at the foot {Blackhursi 
 V, Cockell, 1789),* or written transversely in the margin 
 {Kenyon v. Berthon, 1778).^ As Lord Mansfield said in 
 the case last cited, "As to its being only in the margin 
 that makes no difference ; it is all part of the contract 
 when it is once signed." The only thing necessary is, 
 therefore, that it be on the face of the policy when it is 
 signed. 
 
 The cases and decisions reported on express warranties 
 date mainly from the period of the great wars of the end of 
 the eighteenth century and beginning of the nineteenth. 
 They are, consequently, chiefly concerning warranties of 
 nationality, armament, equipment, sailing date, and convoy ; 
 these were points of such special importance to the under- 
 writers of that period that they expressly embodied them 
 in their form of contract with the assured. 
 
 No special form of words is essential to the validity of a 
 warranty, the word " warranted " need not appear ; e.g. in 
 Kenyan v. Berthon, 1778,^ the words were, "In port 20th 
 July 1776." One single wt)rd may be sufficient, e.g. the 
 Mount Vernon, an " American " ship {Baring v. Claggett, 
 1802),^ was so described in a policy on goods carried by 
 her, and this description was held to be equivalent to an 
 express warranty that she was an American. The nation- 
 ality of the carrying ship as described by that one word 
 attested her neutrality, and so affected the safety of the 
 goods loaded in her as regarded capture, seizure, or 
 detention by enemies. 
 
 * I H.BL ass. ' 3 B. & Ad. 514- 
 
 * I Dougl. II. * 3 T. R, 363. 
 
 * I DougL la, D. * 3 B. & P. 30I.
 
 XVI WARRANTIES 263 
 
 Warranties of nationality in time of war are of great 
 importance, not only as stipulating the flag of the vessel, 
 but as involving also the proper documenting of her in the 
 way required by the laws of her country and the treaties 
 of her Government with that of the country of destination 
 {Bartnir V. C/aggett, i8o2).i 
 
 Similarly with warranties of armament and equipment. 
 They indicate the capacity of a vessel to beat off enemies, 
 and to have, even after hostile encounters, sufficient navi- 
 gating power to complete the voyage. 
 
 As to convoys, the safety of any venture in time of war 
 is so evidently affected by the presence or absence of a 
 friendly armed convoy, that the risk would be to the under- 
 writer of an entirely different character were the undertaking 
 to sail under convoy not literally fulfilled. 
 
 Penalty for Breacli. — In these cases it is evident that 
 there is no hardship to the assured in demanding the exact 
 fulfilment of the very words of the warranties ; to pass any 
 less strict application of them as permissible would be to 
 deprive the warranties of the most of their value. To 
 prevent any misuse of warranties the penalty attaching to 
 their non-fulfilment has been made severe ; if the statement 
 is false or the promise broken, the party to whom it is 
 made is entitled to rescind the contract, and is discharged 
 and exonerated. 
 
 Interpretation of Warranties. — The words of a 
 warranty are always to be taken in their commercial sense. 
 Within that sense they are to be strictly and literally 
 taken. In Bean v.' Stupart, I778,''^ the warranty read, 
 "Thirty seamen besides passengers;" only twenty-six 
 men signed on as mariners, but there were some boys on 
 board, besides cook, steward, and surgeon. It was held, 
 after hearing evidence, that this crew fulfilled the require- 
 ments of the warranty, which meant merely " thirty persons 
 engaged in navigating the ship besides passengers." In 
 De Hahn v. Hartley, 1786,^ action was taken upon a policy 
 insuring goods, ^^^ Juno, at and from Africa to the West 
 
 » 3 B. & P. 201. • I Douifl. n. • I T. K. 343.
 
 264 MARINE INSURANCE CHAP. 
 
 Indies, containing the warranty, "Sailed from Liverpool 
 with . . , fifty hands or upwards." The policy was held 
 void because the Juno sailed from Liverpool with only forty- 
 six hands, arriving in Beaumaris six hours later, and pro- 
 ceeding thence with fifty-two hands on board. It was in 
 his judgment on this case that Lord Mansfield remarked : 
 "A warranty must be strictly complied with." On the 
 other hand, a warranty cannot be extended by inference 
 beyond what is necessarily contained in it. The case of 
 Hyde v. Bruce, ^7^3?- turned upon a warranty that a ship 
 should have twenty guns ; she had in fact twenty-two guns, 
 but only twenty-five men, far too small a crew to handle the 
 guns. But Lord Mansfield held that the warranty had 
 been fulfilled. " If a warranty be meant to mislead, it is a 
 fraud as much as a false representation. In this case there 
 is no ground to impute fraud, and therefore the plaintiff is 
 entitled to recover." No reconciliation of these judgments 
 is possible except on the ground of literal interpretation 
 of the commercial sense of the words expressed in the 
 warranty, and no more. 
 
 Sailing Warranties, — The same principle explains 
 what would otherwise be a strange diversity in the sailing 
 warranties of the period named. It was decided in Bond 
 V. Nutt, ^in? that a warranty to sail by a named date is 
 fulfilled by the vessel merely starting on her voyage by that 
 date, even though she proceeds only within the limits of her 
 port of loading, provided she is and remains in every point 
 ready and able to proceed further without delay. But if 
 the warranty runs, " to sail from " a named port by a named 
 day, the meaning is (according to Lord Ellenborough in 
 Moirv. Royal Exchange Assu7-a?ice, 1814)8 that she should 
 be out of the named port by that day. 
 
 Modem Warranties. — The warranties which are most 
 in use nowadays are, in the case of certain voyages, e.g. to or 
 from the Baltic, warranties of date of sailing {e.g. warranted 
 sailing on or before 30th September) ; to San Francisco 
 or the Far East, warranties as to the cargo of the vessel 
 
 ^ 3 DougL 213. '2 Cowp, 601. • 4 Camp, 84.
 
 XVI 
 
 WARRANTIES 265 
 
 {e.^. no coal, scrap iron or steel, or combustible or injurious 
 chemicals ; or, warranted laden under the inspection of 
 the grain or petroleum stowage inspector at port of loading). 
 Again, the warranty may be one of some course not to be 
 taken by the vessel (e.g: warranted not to attempt the pass- 
 age of Torres Straits, briefly " no Torres "). These are the 
 customary sailing ship warranties of the day. For steamers 
 insured on time, provision has to be made by underwriters 
 dealing in one form with all the undesirable voyages that a 
 vessel of the kind may undertake within a year. The 
 following standard of warranty -requirement for ordinary 
 steamers has been adopted by Liverpool underwriters, and 
 formally declared to be the condition on which all their 
 quotations are made in the absence of express understanding 
 to the contrary : — 
 
 Liverpool Slip Warranties 
 
 (1) Warranted not to enter or sail from any port in British North 
 America. 
 
 (2) Warranted not to be in the Baltic or White Sea between ist 
 October and 31st March, both days inclusive. 
 
 (3) Warranted not to sail with over-net register tonnage of grain 
 from any port in North America between 1st October and 31st 
 March, both days inclusive. 
 
 (4) Warranted not to ^ail with over-net register tonnage of ore, 
 iron, or phosphate, to or from any port in North America between 
 1st September and 31st March, both days inchisive. 
 
 (5) Warranted no east of Singapore (Java, Bangkok, and Saigon 
 excepted). 
 
 (6) Warranted no Bilbao. 
 
 (7) Warranted no Straits of Magellan. 
 
 All these conditions must be literally complied with, and 
 in case of breach the policy becomes void from the moment 
 of breach. To avert what might be the serious conse- 
 quences to an owner of the unauthorised breach of 
 warranty by a master, many shipowners word their devia- 
 tion clause to cover also breach of warranty, t'.e. of express 
 warranty. The following form is that adopted in the 
 Institute clauses : — 
 
 Held covered in case of any breach of warranty as to carpo, 
 trade, locality, or date of sailing, provided notice be given, and any
 
 266 MARINE INSURANCE chap. 
 
 additional premium required be agreed immediately after receipt of 
 advices. 
 
 Eepresentations. — In consequence of the strictness 
 with which warranties are interpreted and the severity 
 with which non-compliance is punished, the assured and 
 his representatives are most careful not to give a warranty 
 unless they are positively certain that it will not be in- 
 fringed. This is specially the case when the provisions 
 contained in the warranty refer to matters over which the 
 assured has not himself absolute control. A shipowner 
 may have chartered his ship to people who, he is confident, 
 will not load in her such cargo as dangerous chemicals, 
 but unless he has made provision in the charter-party to 
 that effect it would not be safe for him to accept in his 
 policy a warranty of no dangerous chemicals on board. He 
 may even have arranged informally that there be no load- 
 ing of such cargo, and yet, having made no contract with 
 the charterer to that effect, he finds it impossible (with due 
 regard to the validity of his insurances) to accept the 
 warranty. All he can safely do is to inform his under- 
 writer how the matter stands ; he makes a representation^ a 
 less formal and less binding statement, whose incorrectness 
 brings upon him less serious penalties. 
 
 Penalty for Incorrect Representation.^ In the con- 
 tract of marine insurance, as in other contracts of the fullest 
 good faith {uberrima fidei), the incorrectness or nonfulfil- 
 ment of a representation renders the contract voidable at 
 the option of the other party, even though the subject of 
 the representation does not affect the matter of the con- 
 tract^ The penalty is thus only slightly less severe than 
 that for breach of warranty. 
 
 Fulfilment of Representation. — It is in what consti- 
 tutes fulfilment that the main and distinctive difference 
 betv/een warranty and representation lies. For the former 
 one must have absolute and literal compliance, for the 
 latter substantial compliance suffices. The distinction is 
 clearly laid down by Lord Mansfield in De Hahn v. Hartley, 
 
 » T.R. 343.
 
 XVI REPRESENTATIONS 267 
 
 1 786,^ " A representation may be equitably and substantially 
 answered, but a warranty must be strictly complied with." 
 This difference in the matter of fulfilment indicates that 
 the transition between warranty and representation is a 
 drop from a higher to a lower level : we have no longer 
 to deal with a condition written on the face of a policy to 
 be carried out literally and absolutely, but with a com- 
 munication conveyed either by word of mouth or by writing 
 not appearing on the face of a policy, but folded, pinned, 
 wafered, or otherwise attached to it, and demanding only 
 substantial fulfilment Thus, in Pawson v. Watson, 1778,2 
 a written paper wrapped up with and enclosed in a policy 
 when tendered to the underwriters for signature was held 
 not to be a warranty, but only a representation. Conse- 
 quently the statement it contained, that the ship " mounts 
 twelve guns and twenty men " was held to be fulfilled by 
 her taking an equivalent number of guns and swivels and a 
 crew of men and boys equivalent to the twenty men speci- 
 fied in the representation. There is thus a latitude of 
 interpretation, an admission of equitable fulfilment of the 
 statement which is absolutely foreign to the nature of a 
 warranty. 
 
 Classes of Representations. — Representations may be 
 of different weight : their importance differs according to 
 the source whence they come. It would evidently not be 
 fair to attribute to a statement made by a cargo-shipper 
 regarding the position of a vessel, or the expected date of 
 her sailing, the same importance as would properly attach 
 to a similar statement made by the shipowner or charterer 
 in whose control the ship was {e.g. Bowden v. Vaughan, 
 1809).' Apart from this consideration, it is evident that 
 the mode of expressing a representation may have a great 
 influence in determining the amount of importance due to 
 it. A merchant or broker offering an insurance may be 
 able to make certain statements of fact which he has 
 derived from the best infonned sources : he may be able 
 
 > I T.R. 343. 
 • a Cowp. 785. » 10 Vas,\ 415.
 
 268 MARINE INSURANCE chai'. 
 
 to state definitely whether a vessel has sailed or not, or 
 when she sailed or is to sail. Or he may only be able 
 to say that the vessel is expected to sail, or reported to 
 have sailed, or to be about to sail, or that his opinion or 
 some one else's opinion is that she has sailed or will sail 
 about certain named dates. Representations thus fall into 
 three classes : — 
 
 (fl) Representations of fact.' 
 
 fa of the assured (principal 
 (i) „ „ expectation. -{ or agent), 
 
 I /3 of some third party. 
 
 It is evident that class (<5) is of decidedly less weight than 
 class (a), and that of class (d) the subdivision fi is of much 
 slenderer fibre than the subdivision a. It would be ridiculous 
 to deal with a second hand report of some one else's opinion 
 as of equal import to a contract with one's own allegation 
 of fact. Cases have arisen in which the courts have 
 attached no penalty to the nonfulfilment of representa- 
 tions material to the risk, but still merely expressions of 
 probable expectations, and made dond fide {^Barber v. 
 Fletcher^ I779>^ and Boivden v. Vaughan, 1809).^ 
 
 The important matter to be determined in connection 
 with representation is whether it is material or not ; in 
 other words, whether or not the representation has been 
 of such a character that it can reasonably be considered to 
 have influenced the underwriter to accept the risk, or to 
 accept it at a reduced premium. If so the representation 
 is material. The incorrectness of a material representation 
 constitutes one of the causes which vitiate an insurance, 
 and is known as misrepreseniaiion. The failure to proffer 
 a representation material to a risk submitted to an under- 
 writer constitutes another of the causes which vitiate an 
 
 ' Sometimes termed positive representations, and subdivided into 
 affirmative, dealing with things as they are at the moment the 
 repiesentation is made, and promissory, referring to things as they will 
 be at a later time. But a representation may be of a negative 
 content ; so that, apparently, this class would be better described aa 
 absolute, and subdivided into actual {ot present) and/uture, 
 
 ' I DougL 306. • 10 East 415.
 
 XVI IMPLIED WARRANTIES 269 
 
 insurance, and is known as concealment. These two 
 subjects will be treated later (pp. 2 7 4-2 78). 
 
 II. Implied Warranties. — Having discussed express 
 warranties and representations, both of which classes of 
 statements refer only to the particular policy in which they 
 appear, or respecting which they are made, we now pass to 
 the implied warranties which form the necessary substratum 
 of every English contract of marine insurance. 
 
 There are three great conditions which English law 
 insists on finding present in every marine venture before it 
 will enforce insurances made : — 
 
 {a) That the venture insured be carried out without 
 deviation. 
 
 {b) That the traffic in which the venture is made be not 
 illegal. 
 
 {c) That the vessel in which the venture is made be 
 seaworthy. 
 
 (a) The subject of deviation having been already dis- 
 cussed in the examination of the text of the policy (pp. 
 61 to 63) need not be considered again here. 
 
 ip) Legality of trade. If the trade in which a venture 
 is made is illegal the law does not protect the merchant or 
 shipowner against third parties. It would be inconsistent 
 with this principle if the law were to enforce claims made 
 on underwriters for loss or damage occuning in the course 
 of such trade. In Redmond v. Smith, 1844,^ Chief Justice 
 Tindal said : " A policy on an illegal voyage cannot be 
 enforced, for it would be singular if the original contract 
 being invalid, and therefore incapable to be enforced, a 
 collateral contract founded upon it could be enforced." 
 
 But as a slight obliquity of vision or a temporary 
 blindness of justice, "as she is in England," prevents her 
 from regarding as illegal any breach of foreign revenue 
 laws by English subjects, foreign smuggling is not in 
 English law illegal trading. In PlancfU v. Fletcher^ 1779,* 
 Lord Mansfield said : " At any rate this was no fraud in 
 this country. One nation does not take notice of the 
 
 ' 7 M. & Cn. 457. * I Dougl. 351.
 
 ■70 MARINE INSURANCE chap. 
 
 revenue laws of another." Similarly, blockade running is 
 not illegal in this country so long as the United Kingdom 
 is a neutral ; and ventures engaged in such traffic in these 
 circumstances can be insured here with perfect legality. 
 (Ex parte Chevasse in re Glazehrooke^ 1865, before Lord 
 Westbur)').^ The same holds of carrying contraband of 
 war.'- Under the Laws of War, vessels and cargoes attempt- 
 ing to run blockade or contraband of war being conveyed 
 to alien enemies are liable to confiscation, but insurance to 
 cover these eventualities is quite legal. 
 
 On the other hand, so soon as the United Kingdom is at 
 war every traffic with the enemy is illegal, and consequently 
 no insurance of any venture connected with such traffic is 
 enforceable at law. It is clear that this provision proceeds 
 entirely from considerations of public policy, as it does not 
 refer to any particular trade or to contraband. Similar 
 considerations have led to the regulation that insurances of 
 enemy's property against capture by British ships are not 
 recoverable {Furtado v. Rogers, 1802).^ 
 
 {c) Seaworthiness. As was mentioned above (pp. 46, 47), 
 this condition is slightly indicated in the customary forms 
 of charter-party and policy of insurance by the use of the 
 quaint phrase, " the good ship or vessel." What is meant 
 by the warranty of seaworthiness of a vessel in connection 
 with any marine venture in which she is engaged, is that in 
 case of an insurance by voyage the assured guarantees 
 that, for the voyage named in the policy — 
 
 ' 34 L.J. (Bkpcy) 17. 
 
 '•* "At no time has opinion been unanimous as to what articles 
 ought to be ranked as being of this nature, and no distinct and 
 binding usage has hitherto been formed, except with regard to a very 
 restricted class" (Hall, International Law, 4th edition, 1895, p. 665). 
 Parsons has been cited as giving in his work on Maritime Law the 
 following definition of contraband trade as in his judgment settled 
 by the practice of maritime nations, viz., "Trade with a belligerent 
 intended to provide him with military supplies, equipments, instru- 
 ments, or arms. Goods are contraband which are in fact munitions of 
 war, or certainly may become so, or which are designed or capable of 
 being used for the support or assistance of an enemy in carrying on 
 war ofifensively or defensively." 
 
 » 3 B. & P. 191.
 
 XVI SEAWORTHINESS 271 
 
 (i) The vessel's fabric is fit as far as a vessel of the 
 kind can be, 
 
 (2) Her gear is sufficient in quantity and quality, 
 
 (3) She is competently commanded and officered and 
 fully manned, 
 
 (4) She is properly provisioned, 
 
 (5) She is not ovei loaded, 
 
 (6) If a steamer, she is adequately supplied with coal. Addenda. 
 As all these requirements are stated in strict connection 
 
 with a named voyage, it is evident that there is no absolute 
 standard of seaworthiness. A steamer may be adequate to 
 a voyage to the Far East which would not be fit to face 
 the North Atlantic in winter; a sailer may be equal to 
 work in the Mediterranean, but short of the standard 
 required for the Baltic or North Sea trade. This has long 
 been recognised by the English courts, so much so that in 
 the case of Thompson v. Hopper^ 1856,1 it was laid down by Addenda 
 Mr. Justice Willes, that in the case of river steamers sold 
 from Lyons to owners on the Danube these vessels in 
 descending the Rhone must be seaworthy for the Rhone, 
 and from Marseilles to Galatz they must be ready for the 
 sea. Put generally, that is to say, that where a voyage 
 consists of various parts of different degrees of peril, the 
 warranty of seaworthiness will have been fulfilled if at the 
 commencement of each new degree of peril the vessel is 
 made adequate thereto. For example, in a combined risk 
 on dock, river, lake, and ocean, it will be sufficient if at the 
 commencement of each successive stage of the voyage the 
 vessel is in such condition, in all the respects above named, 
 as renrlers her adequate for the stage then commencing. 
 If the vessel at the commencement of any one stage be 
 unseaworthy for that stage the policy is thereafter void, 
 and no loss thereafter can be recovered, even though the 
 defect may have been remedied before loss, and the loss 
 may not have proceeded from it {Quebec M<irine Insurance 
 Company v. Commercial Hank of Canada, 1870, quoted in 
 M 'Arthur's Contract of M. 1. p. 1 7).- The implied warranty 
 
 ' a6 L.J. (Q.H.) 18 ; 6 !■:. & a 17a. 937. 
 ■•< L.K. 3 i'.C. 234.
 
 27a MARINE INSURANCE chap 
 
 of seaworthiness having been broken, the insurance is void 
 ab initio. 
 
 Seaworthiness as respects Time Policies. — The only 
 policies not subject to the warranty of seaworthiness are 
 time policies {Gibson v. Snia/l, House of Lords, 1854).! 
 The reason alleged for this unique exception is that there 
 is nothing to prevent a time policy lapsing and a new one 
 beginning ^ when the vessel is at sea, beyond the know- 
 ledge and control of her owner or manager as respects 
 seaworthiness : that consequently insistence on the warranty 
 in such a case might become inequitable. No doubt there 
 is much to be said in favour of this contention, but it 
 appears almost equally inequitable that after a vessel has 
 returned to the control of her owner or manager, or ol 
 those who are in other respects acting as his agents in her 
 management, the underwriter should still remain deprived 
 of the protection which he would enjoy if the vessel were 
 insured voyage by voyage. In view of this a clause has 
 been drawn which seems to protect both parties to the 
 insurance equitably : — 
 
 This policy shall be subject to the same warranties of seaworthi 
 ness as if the vessel were insured separately for each voyage. 
 
 By this the owner of a vessel which has commenced in 
 seaworthy condition the voyage on which his old policy 
 lapses and the new one begins, is effectually protected to 
 the end of that voyage, and the under-Afriter is assured ol 
 the proper information and control of the owner or manager 
 at the close of that voyage. 
 
 Causes vitiating Insurance. — From what precedes it 
 is evident that as the three essentials of a valid insurance 
 are : — 
 
 (l) Completion of the vessel's passage {t/et navis),^ in 
 the voyage insured {viaggium^\ i.e. the prescribed customary 
 course of navigation, 
 
 » 4 H.L. Cas. 353. 
 
 ' Not "attaching," for that implies seaworthiness, the matter in 
 uncertainty. 
 • See p. 37.
 
 XVI VITIATION OF INSURANCE 273 
 
 (2) Legality of the traffic in which the voyage is made 
 for the venture concerned, 
 
 (3) Seaworthiness of the carrying vessel ; 
 
 then three of the causes which vitiate a policy must be ; — 
 (i) Deviation. 
 
 (2) Illegality of trade. 
 
 (3) Unseaworthiness of the vessel. 
 
 (i) With regard to deviation (pp. 61-63) there is not 
 usually much difficulty nowadays in making sure of the 
 facts. It is certainly much easier to trace the movements 
 of a vessel than it was thirty years ago. 
 
 (2) Illegality of trade is also a matter more easily dealt 
 with than in the time of the last sea wars in which England 
 was involved. Thanks to regular postal communication 
 and the development of submarine and overland telegraphs, 
 the news of political complication is now so quickly 
 diffused that there cannot now be that doubt of the 
 intentions of an owner on any venture that may occasionally 
 have arisen l;efore these facilities existed. 
 
 (3) Unseaworthiness, however, has certainly become 
 more ditficult to establish, and probably this difficulty will 
 increase from year to year. The burden of proof lies on 
 the underwriter ; the presumption of English law is that 
 every vessel is held to be seaworthy until the contrary is 
 proved.^ The difficulty involved will become apparent if 
 one considers the alteration in the position of the shipping 
 trade, and consequently of the shipowner, in the last hundred 
 years. At the commencement of that period there was no 
 fixed minimum requirement of strength of materials or of 
 equipment determined by Government officials, and classi- 
 
 * But in some cases (e.g. vessel foundering shortly after sailing 
 without any apparent cause sufficient to account for it) where the fair 
 presumption from the facts is that the disaster arosr from causes exist- 
 ing at the time of sailing, it falls upon the assured to rebut the 
 inference of unseaworthiness, i.e. he has to assume the burden of 
 establishing seaworthiness. See Parsons, i. 379 ; Maclachlan's 
 Arnould, 6lh ed. , ii. 678, citing Daiiison v. liurnand, 1868, L. R. 
 4 C. P. 117. The great leafling case on seaworthiness is Mills v. 
 Roebuck, Kxchef)uer, 1769 ; P;irk, p. 335 : see also Eden v. Parkinson 
 and Munro v. I'andam (both apud Park, p. 333).
 
 274 MARINE INSURANCE chap 
 
 fying registries were still in their infancy. Consequently 
 seaworthiness had then to be determined by the best 
 information obtainable as to the requirements of a vessel 
 for the one particular voyage in view. But all that has 
 been altered in consequence of the supervision now 
 exercised by the Board of Trade, and of the requirements 
 of the registries as to the vessels classed by them. In 
 fact the standard of minimum requirements of material, 
 workmanship, and equipment having been fixed for the 
 shipowner by recognised authorities whom he is either 
 absolutely or practically compelled to obey or to follow, 
 it has become a matter of extreme difficulty in any but the 
 most extraordinary and flagrant cases to make good any 
 allegation or suspicion of unseaworthiness. The same holds 
 good of the arrangements made by the Board of Trade for 
 the command and officering of ships ; as regards sufficiency 
 of crew the recent appointment of a Departmental Committee 
 of the Board to investigate the question of manning, indicates 
 a tendency to regard that matter as one that may in time 
 fall within the Board's administration. 
 
 Breach of express warranty is also a cause which vitiates 
 an insurance, unless, as was already remarked, provision is 
 made in the policy to cover the vessel, in case such breach 
 occurs, at a premium either stipulated in the policy or 
 stated to be left for future arrangement. 
 
 There still remain representations to be dealt with as 
 affecting the validity of a policy. What if the person 
 offering the risk makes an incorrect statement, a false 
 representation ? What if he or the underwriter abstains 
 from conveying infomiation in his possession, the absence 
 of which makes an appreciable difference in the nature of 
 the risk offered ? In other words, what if he makes a 
 misrepresentation or a concealment of material facts or 
 intentions ? To take these two subjects in their order : — 
 
 (i) Misrepresentation is defined by Phillips, § 529, as 
 *• a false representation of a material fact, by one of the 
 parties to the other, tending directly to induce the other to 
 enter into the contract, or to do so on terms less favourable 
 to himself, when he otherwise might not do so, or might
 
 XVI MISREPRESENTATION 275 
 
 demand terms more favourable to himself." This definition 
 is almost the exact obverse of the words used above (p. 268) 
 in trying to form a test to discover whether a representation 
 is material or not This would almost lead to the con- 
 clusion that all misrepresentation is material. In the 
 discussion of this subject, Lowndes (Law M. I. p. 85), 
 after approving Amould's view (p. 551) that misrepresenta- 
 tion fraudulently made should vitiate a policy even though 
 it be not material, goes on most admirably to say : " It 
 may be doubted whether such a case ever arises in 
 practice, for who would attempt to deceive by stating 
 something not material to the risk ? WTiat is intended is, 
 perhaps, merely this, that if a fraudulent design can be 
 proved, the materiality of the misstatement need not be 
 discussed." In law, whether a particular representation 
 be material or not is in each case a question of fact. 
 
 The subject of misrepresentation has been discussed at 
 great length and with great learning by many writers : by 
 none more exhaustively and learnedly than Judge Duer in 
 his Lecture on the Law of Representations (New York, 
 1844), afterwards incorporated in his monumental work on 
 Marine Insurance (2 vols.. New York, 1845-6). The 
 difficulty felt by the lawyers has been to decide whether 
 the effect of misrepresentation should be stated as pro- 
 ceeding from the presence of fraud in the statement made, 
 or from something in the nature of the contract of insurance 
 which is subverted or violated by the mere misrepresenting 
 of any matter connected with it. This is hardly the place 
 to attempt any examination of this difficult point of legal 
 theory. But it is of importance to see how the mattei 
 looks in practice. When a merchant, shipowner, or broker 
 offers a risk for insurance, his object, shown by the very 
 fact of his making the offer, is to transfer from himself to 
 the underwriter, in return for a premium to be paid and 
 received, the risk in (|uestion. In making the offer he 
 gives certain details, which may be classed under three 
 categories — the unfavourable, the customary, the favourable. 
 The unfavourable, as will be found in the next paraj^raph, 
 he is bound to disclose ; the customary he is entitled
 
 S76 MARINE INSURANCE chap 
 
 to pass over, as the uiulerwriter is considered bound to 
 know them ; only the favourable remain. An underwriter 
 is therefore entitled to assume that a would-be assured tells 
 him the unfavourable facts because he dare not conceal 
 them without imperilling his insurance, passes over the 
 customary' because he need not detail them, and expounds 
 the favourable because he desires to do so. If that is true 
 of the information volunteered by the intending assured, it 
 is doubly true of the content of replies made by him to 
 questions put by the underwriter. The mere fact that 
 questions are put on any special point must indicate that 
 that point is one which the underwriter, rightly or wrongly, 
 considers of some importance in regard to the risk. The 
 questions may appear frivolous, so might the conclusions 
 drawn by the underwriter appear if he were confident 
 enough or careless enough to express them. Indeed from 
 one single representation made in identical terms to two 
 underwriters they may form entirely different opinions 
 regarding a risk. But to each of them the representation 
 may have been of actual weight in inducing him to arrive 
 at his particular conclusion. It seems, therefore, enough for 
 general practical purposes to say that (so long as it is 
 borne in mind that a representation is fulfilled by substantial 
 compliance) misrepresentation occurs in any information 
 volunteered or given in reply to inquiry, whenever any 
 statement made is not substantially correct, provided it 
 might fairly be held to affect an underwriter's opinion of a 
 risk or of the proper premium for it. A man is entitled to 
 say he has no information if he really has none : it will 
 then be open to the other side to ask him to get the 
 information required ; but a man is not entitled to invent 
 information if he has it not, or to colour, improve, or 
 adorn what he has. He may, however, before conclusion 
 of the insurance withdraw or correct any representation he 
 has made. 
 
 (2) Concealment The intending assured is fully en- 
 titled to say he has no information if he really has none ; 
 but the case is altered if he has it and is not willing to 
 communicate it voluntarily or in reply to the underwriter's
 
 rvi CONCEALMENT 277 
 
 questions. What then ? He is not permitted to " disre- 
 member," he is not entitled to remember to forget any 
 material fact, he is under the necessity of disclosing it. 
 But in this prohibition of suppression of material facts the 
 obligation is mutual ; it is as binding on the underwriter 
 as on the assured. There must be no concealment or 
 nondisclosure of any material fact lying exclusively within 
 the knowledge of either party.^ The penalty for such 
 concealment is, that the contract is thereby made voidable 
 within reasonable time at the option of the party against 
 whom the concealment was made {Alorrison v. Universal 
 Marine, 1 872-3). ^ The mutuality of the obligation to 
 disclose was most weightily laid down by Lord Mansfield 
 in Carter \. Boehm, 1776.8 Good faith is the foundation 
 on which he built up that judgment : he stated a long Hst 
 of things which the intending assured need not communicate, 
 — ** what the underwriter knows, what way soever he came 
 by that knowledge ; or what he ought to know ; or takes 
 upon himself the knowledge of; or waives being informed 
 of, or what lessens the risk agreed and understood to be 
 run. . . . The rule is adapted to facts which are privately 
 known to one party and which the other is ignorant of, or 
 has no reason to suspect." 
 
 The same difficulty arises over the materiality or 
 immateriality of a concealment which was found to prevail 
 with respect to representation. In law, the question 
 whether any one undisclosed circumstance be material or 
 not is in each case a matter of fact. But there is this 
 special point of difference between misrepresentation and 
 concealment : misrepresentation, being conveyed in an actual 
 statement, may be of various shades, tints, or grades of in- 
 tensity as well as of various degrees of blame ; concealment 
 being merely negative, a simple failure to inform, is of only 
 one degree of intensity, though it may be of various degrees 
 of blame. Consequently it is much easier to conceive the 
 misrepresentation of an immaterial fact than its concealment. 
 
 ' ITie parties to the insurance must be ad idem. Mathew, J. 
 In I^ingy/. I'nion Murine, 11 Times L. K. 359. Addenda 
 
 ' L. R. 8 Kx. 40. * 3 Burr. 1905,
 
 278 MARINE INSURANCE chap, xvi 
 I 
 
 There is an interesting pair of cases arising out of one 
 risk respecting concealment as it affects insurances clone 
 through brokers, Blackburn v. Vigors^ 1887,^ and Black- 
 burn V. Haslam, I 888.2 jp j],e former the plaintiff instructed 
 an insurance broker to effect on his account a reinsurance 
 on an overdue ship. Whilst the broker was trying to place 
 the risk he came across information tending to show that 
 the vessel was wrecked. He did not communicate this 
 mformation to his principal, but merely returned the order, 
 saying he could not complete it. The plaintiff thereupon 
 gave the order to another broker, who succeeded in placing 
 the risk with the defendant Vigors, neither the principal nor 
 the second broker being aware of the information which 
 had come within the knowledge of the first broker. Mr. 
 Justice Day held that the plaintiff was entitled to recover, 
 there being no concealment on the part of the plaintiff, 
 the knowledge of the first broker not having become the 
 knowledge of the plaintiff, nor of the second broker. The 
 Court of Appeal reversed this judgment, but the House of 
 Lords restored it. In the second case [Blackburn v. Haslavi)^ 
 where the policy was effected by the first broker after the 
 unfavourable news had come into his possession, it was 
 held in Queen's Bench that his concealment vitiated the 
 policy. There was no appeal. The comparison of the 
 cases is instructive ; the difference of the knowledge of the 
 two brokers was decisive as regarded the validity of the 
 Addenda, policies they effected. 
 
 Summary. — The results of the preceding discussion 
 may be put briefly thus : misrepresentation and concealment 
 can never occur when a statement is made of what is 
 substantially the truth, and the whole truth, respecting the 
 risk under submission, an obligation which in the case of 
 concealment is incumbent on the underwriter as well as on 
 the intending assured. From this it is evident that in a 
 genuine valid insurance neither party is permitted to forget 
 the cardinal requirement of perfect, unbroken good faith 
 f^uberrima fides. ) 
 
 » L.R. 12 App. Cas. 531. * 21 Q.B.D. 144. 
 
 » 21 Q.B.D. 144.
 
 CHAPTER XVII 
 
 GENERAL AVERAGE 
 
 A.T the close of the discussion of the expenses dealt with 
 under the Sue and Labour Clause (p. 126) it became 
 necessary to distinguish and separate them from certain 
 other classes of expenditure which were designated General 
 Average Expenditures. The opportunity will now be taken 
 to consider not only these expenditures, but also the nature 
 of General Average and the forms it may assume. 
 
 Early Sea Law. — It must first of all be noted that one 
 of the earliest remnants of ancient maritime law preserved to 
 us deals with jettison made for the sake of saving ship and 
 cargo, and with the way in which loss arising out of such 
 jettison was to be treated both as to its final incidence and 
 CO its apportionment. 
 
 In the Sentential of Paulus, wiitten about A.D. 200, the 
 following passage occurs (Book ii. Tit. 7): — 
 
 On the Rhodian law : 
 
 (i) When jettison of goorls takes place for the purpose of 
 lightening a ship, let that which has been jettisoned on behalf of all 
 be restored by the contribution of all. 
 
 (2) If a ship or ma.st be lost by the force of a tempest, the shippers 
 are not held to contribution, unless the ship was saved by their tearing 
 out the mast for safety sake. 
 
 (3) If after lightening by jettison a ship jicrishes and the goods 
 of some are hauled out by (livers, it is decided that account is to be 
 taken of him who jettisoned goods while the ship was safe. 
 
 (4) ft is proper that gOf^KJs discharged into boats for the sake of 
 lightening the ship, and in conserjuence lost, be made good by the 
 contribution of the goods save<l in the ship, but if the ship is lost 
 no account is taken of the boat saved with goods. 
 
 (5) A oiicction of the contribution for jettison shall be made 
 wnen the ship is saved.
 
 28o MARINE INSURANCE chap. 
 
 In the Digest of Justinian, Book xiv. Tit. 2, headed " On 
 the Rhodian Law respecting Jettison," issued about A.D. 
 530, the words of Paulus are found put thus (f. l) : — 
 
 By the Rhodian law it is provided that when a jettison of goods 
 takes place for the purpose of lightening a ship, that which has been 
 jettisoned on behalf of all is restored by the contribution of all. 
 
 In the same title at f. 9 an extract is given from Volucius 
 Maecianus, who flourished about A.D. 150: — 
 
 The petition of Eudaimon of Nicomedia to the Emperor 
 Antonine : Lord Emperor Antonine, having made shipwreck in 
 Italy, we were pillaged by the customs -farmers inhabiting the 
 Cyclades Islands. Antonine replied to Eudaimon, " I indeed am 
 lord of the world, but the law [is lord] of the sea. Let this be 
 settled by the Rhodian law (which has been devised for nautical 
 matters) in so far as it is not opposed to our laws. Such also was 
 the judgment of the late [Emperor] Augustus." 
 
 Earlier references in Roman literature acquaint us with 
 the commercial fame of the Rhodians, and a compilation of 
 sea laws exists which was known as the Maritime Law of 
 the Rhodians. The best authorities consider that this com- 
 pilation is not genuine in the sense of being the Rhodian 
 law which is referred to in the Digest.^ It is striking that 
 the first extract from the Digest given above is word for 
 word what appears in Paulus prefixed by the reference to 
 Rhodian law. It would almost appear as if Paulus had 
 taken his wording from an actual Rhodian statute, the 
 existence of which was known to the compilers of the 
 Digest Certainly the first paragraph of Paulus is of entirely 
 different grammatical construction from the following four. 
 Had the writer desired to convey that all five paragraphs 
 came from the Rhodian law he could easily have done so. 
 Besides, the phraseology of the Digest seems to indicate that 
 (i) Paulus took his wording from what the compilers of 
 the Digest believed or knew to be some Rhodian statute, 
 and that (2) the Rhodians had a statutory or a customary 
 law dealing with maritime affairs of all kinds. Otherwise 
 there would be no point in giving the title its very definite 
 
 ' See Robert D. Benedict, IVAai do we knmv of the Rhodian Mari- 
 time Z^M( f ( Brooklyn Institute Lecture, 25th Feb. 1897).
 
 XVII G. A. AN AFFREIGHTMENT LIABILITY 281 
 
 heading, and in relating the petition of Eudaimon which 
 had nothing to do with jettison. 
 
 It is, of course, quite possible that the name Rhodian 
 Law was also applied to what was not so much the statu- 
 tory law of Rhodes as the customary law of the Levant. 
 In any case, the provision regarding jettison quoted above 
 has been cited as "the Rhodian Law" from the days of 
 the Digest until the date of decisions given in the English 
 courts within the last decade.^ The practice sanctioned 
 in the Digest with regard to losses by jettison has been 
 extended to other losses. Even in Roman law it was 
 applied to many sacrifices of somewhat similar nature, and 
 it has later been developed into a principle according to 
 which all extraordinary sacrifices and expenditures made or 
 incurred voluntarily in order to avert from the whole venture 
 some threatening peril, are divided pro rata over the whole 
 of the items composing the venture. It is this involution 
 of the whole venture in the payment for the loss or damage 
 that is indicated by the word general, or common, or gross, 
 in the phrase general average, common average, or gross 
 average {avarie grosse, grosse havarei), which is the name 
 used in modem commerce to denote loss arising from volun- 
 tary jettison and other similar casualties. 
 
 General Average not primarily an Insurance Liability. 
 — It is clear, from the preceding, that the thing called 
 general average is not in any way dependent on insurance 
 for its existence : there is a liability of cargo-owner and 
 shipowner to one another for general average quite inde- 
 pendent of any contract of either with third parties, such as 
 the contract of insurance is. In other words, general 
 average properly and originally forms part of the obligations 
 that arise out of the contract of affreightment,- and is only 
 secondarily connected with insurance. The late Mr. 
 
 • Zi.^. Brett, L. j., in Burton v. English, 1883 ; Watson, L., in 
 Strange. Scott, 1882; Blackhnrn, I^. , \n Ailchison v. Lohre, 1879. 
 
 ' But in Pirie v. Middle Dock Company, i88i, 4 Asp. 390, Watkin 
 Williams, J., said : "This right and its correlative obligation are not 
 founded upon any contract, nor do they arise out of any relation 
 created by contract between the parties : they spring from a rule of
 
 282 MARINE INSURANCE CHAK 
 
 Richard Lowndes, a past-master in all matters connected 
 with this subject, remarked in the preface to the second 
 edition of his classical work, The Imiv of General Average^ 
 1874, that the sul)ject of general average can never be as 
 well understood as when it is studied apart from insurance, 
 " with which it is only accidentally associated, and as an 
 outlying branch of the law of affreightment to which it 
 naturally belongs." If this distinction be clearly borne in 
 mind, it will help to remove difficulties arising out of what 
 may be described as a crossing or conflict of the various 
 interests of the assured who may find himself involved in a 
 disaster of the nature of general average. 
 
 Different senses of words " General Average." — It is 
 worth remarking at the outset that, as a cause, result, or 
 accompaniment of this conflict, we have a diversity of senses 
 in which the phrase " general average " is employed. 
 Sometimes it is used to denote the loss to be borne in 
 common by all the interests concerned ; sometimes to 
 denote the contribtition to be paid by each separate party 
 concerned (each one in the proper proportion of his interest) 
 towards making good that loss. 
 
 Meaning of "Average." — The word "average" did 
 not appear in the ordinary Lloyd's policy until the addition 
 of the memorandum in 1749, in which the words "free of 
 average, unless general . . . free of average under £^ 
 per cent . . . under £1 per cent unless general" occur. 
 From this wording it appears that, by I749» two kinds 
 of average had been distinguished, average on tht. parlicula? 
 goods insured and general average. 
 
 Etymology of "Average." — The etymologists have not 
 succeeded in throwing much light on the proper meaning 
 of the word. It is striking that no language except English 
 has preserved the termination occurring in the mediaeval 
 Latin averagium, which Ducange explains as signifying loss 
 in transit, such as leakage ; the P>ench, Italian, Spanish 
 (and in fact all the Romance languages), have taken their 
 
 law applicable to all persons who chance to have interests on board of 
 a ship at sea exposed to some common danger: threatening the whole. 
 ... It is a law founded upon justice, public policy, and convenience."
 
 XVII GENERAL AVERAGE ETYMOLOGY 283 
 
 form from the simpler mediaeval Latin word haveria, havaria^ 
 or averia, which, however, usually means property, especially 
 horses or cattle. It is so difficult to find a transition from 
 this signification to that of loss or damage, that an attempt 
 has been made to trace the Romance forms from an Arabic 
 original awdr, meaning defect The matter is further 
 complicated by the discovery in mediaeval legal English 
 of the word aver, equivalent to live cattle. Latinised into 
 overturn, a word used in medireval English law to denote 
 the best live beast due to the feudal lord on the death of a 
 tenant, a tax or impost. From this original was formed 
 the word average, signifying the rendering of a serA'ice or 
 the payment of a tax or contribution. As taxes or imposts 
 are usually levied in some proportion to the means of the 
 contributor, the word average came to acquire its specially 
 English sense of "proportional" or "mean" (as in the phrases 
 average cost, above the average, below the average, etc.). 
 
 Average in Fire Insurance. — Wliat is in fire insurance 
 termed the principle of average is simply that, in case 
 the value of any insured goods exceeds the amount insured, 
 the assured shall bear that proportion of any fire loss 
 suffered by the goods which the excess of the value above 
 the amount insured bears to the whole value : the assured 
 is thus in effect his own insurer for part of the value. 
 
 " Avarie" in French Law. — There can be little doubt 
 that as far as marine insurance is concerned the word 
 average was suggested by or adopted from the French 
 avarie. The Ordonnance de la Marine of Louis XIV. 
 treats of averages in its seventh title : — 
 
 An. I. — Every extraordinary expenditure made for ships and 
 goods conjointly or separately, and all damage affecting them 
 from their loading and (lepartiire until their return and discharge, 
 shall be reputed averages. 
 
 Art. 2.— The extraordinary expenses for the ship alone, or for 
 the goods alone, and the damage affecting ihcm in particular, are 
 simple and particular averages ; and the extraordinary expenditures 
 made, and the damage suffered for the benetit and common safety of 
 the goods and of the vessel, are gross and common averages. 
 
 General Average in English Law. — The idea 0/ 
 general iverage oncj being introduced into England, its
 
 284 MARINE INSURANCE CHAP. 
 
 developments here can best be traced in the reports of the 
 cases decided by the courts, whether these cases refer to 
 the contract of afTre'ghtment — involving shipowner and 
 cargo-owner, or to the contract of insurance — involving 
 assured and underwriter. 
 
 BiRKLEY V. Presgrave^ i8oi.^ — The ship-,4r^<?, when 
 entering Sunderland, her port of discharge, was caught by a 
 squall of such violence that it was found necessary to let go 
 the anchor. To secure the ship she was fastened by a 
 warp to the south pier ; but this warp parted. More 
 cable was paid out, and the vessel was let drift alongside 
 the north pier, to which she was fastened with hawsers and 
 tow-lines, such as are generally used for mooring a ship. 
 The captain was afraid that the Argo would be fallen on 
 by another vessel drifting down on her ; he therefore cut 
 the cable and moored his ship to the pier with the cable. 
 When he was doing this the other ropes broke, partly from 
 the violence of the storm and partly from another vessel 
 drifting down on the Argo. The shipowner claimed as 
 general average the value of the hawsers and towing-lines 
 as well as the value of the cable cut. The claim was 
 disputed, and formed the subject of the leading case, Birkley 
 V. Presgrave^ iSoi.^ At the trial the claim for the hawser 
 and towing-lines was withdrawn ; it was admitted that as 
 they had been used merely for the purposes for which they 
 were provided, their value was not properly claimable in 
 general average. But the value of the cable was claimed 
 on the ground that it had been *• appropriated to a different 
 use from what it was originally intended for, and which 
 contributed to the preservation of ship and cargo." It 
 was in the course of this case that Mr. Justice Lawrence 
 gave the following famous definition of general average : 
 *' All loss which arises in consequence of extraordinary 
 sacrifices made, or expenses incurred, for the preservation of 
 the ship and cargo comes within general average, and 
 must be borne proportionally by all who are interested " 
 In the judgment of Lord Chief Justice Kenyon in the same 
 case we find the following : " All ordinary losses and 
 
 ' I East 320.
 
 XVII G.A. SACRIFICES — BIRKLEY V. PRESGRAVE 285 
 
 damages sustained by the ship happening immediately from 
 the storm or perils of the sea must be borne by the ship- 
 owner. But all these articles which were made use of by 
 the master and crew upon the particular emergency, and 
 out of the usual course, for the benefit of the whole concern, 
 and the other expenses incurred, must be paid proportionally 
 by the defendant as general average." From these judg- 
 ments we conclude that a sacrifice to be properly claimable 
 according to English law as general average must be (i) 
 voluntary, (2) extraordinarj', (3) intended for the common 
 safety of ship and cargo, and (4) incurred in an emergency.^ 
 
 It must not be a loss (i) inevitable, (2) of things 
 employed in the purpose for which they were intended, 01 
 (3) employed or sacrificed for the safety of any separate 
 interest or interests. Tested by this criterion, it will be 
 found that the value of a mast cut away 2 after it is in a state 
 of wreck is not claimable ; nor is that of hawsers parted 
 when trying to hold a ship at her moorings or alongside a 
 quay ; nor is that of materials used to repair ship or cargo 
 after damage at sea, or of anything sacrificed unnecessarily 
 or without pressure of circumstances. 
 
 Baily (General Average, p. 19) adds to these another test, 
 namely, that the act must be judicious. " No act," he says, 
 " can be a general average act unless it is a justifiable act, 
 and no act can be justifiable unless it is judicious ; whence 
 we arrive at the conclusion that a general average act must 
 
 ' In Pirie v. Middle Dock Company, 1881, 4 Asp. 388, Mr. Justice 
 Watkin Williams names five essentials — 
 I. There must be a common danger. 
 a. There must be necessity for the sacrifice. 
 
 3. The sacrifice must be voluntary. 
 
 4. There must be a real sacrifice, and not a mere destruction or 
 
 casting off of that which had become already lost, and con- 
 sequently of no value. 
 
 5. There must be a saving of the imperilled property through the 
 
 sacrifice. 
 * Who must order the sacrifice to render it valid as general average 
 sacrifice? In Ralli v. Troop (.Sup. Court of U.S., N. York, Mass. 
 Register, 24th April 1895) it was held that the action of the municipal 
 authorities of (Calcutta in smiiliug the/. \V. I'arker, jute-laden, op 
 fire, was not a voluntary sacrilice.
 
 286 MARINE INSURANCE chap. 
 
 be a judicious act. It becomes necessary, therefore, to 
 determine in every case whether the act performed is 
 judicious. To arrive at a correct opinion on this point, we 
 must take into account hoiv matters stood at the time when 
 the act was performed. To judge of the actions of men by 
 results alone would lead often to erroneous opinions." 
 This test may be expressed more simply by saying that the 
 sacrifice must be reasonable. 
 
 The safety of a venture may be secured, or an attempt may 
 be made to secure it, not only by sacrifice, but also by the in- 
 curring of expenditure. This is seen in the following case : — 
 Job v. I^a ngton, 1856. ^ — The bark Snowdon, on a voyage 
 from Liverpool to St. John's, Newfoundland, ran ashore on 
 the Irish coast. At low water the vessel was left high and 
 dry ; before she could get off all the cargo and ballast had 
 to be discharged ; after discharge the cargo was stored in 
 Dublin. But to get the ship off a channel had to be cut ; 
 she was got off with the assistance of a steam-tug, and was 
 removed to Liverpool for repairs. It was agreed by both 
 sides that all the expenses incurred in the misadventure, 
 until all the cargo was discharged, were general average 
 expenditures. But the question arose whether the expenses 
 incurred after the whole of the cargo was taken out were 
 chargeable to general average or fell properly upon the 
 ship alone. This gave rise to the case fob v. Langton. 
 1856.^ In the Court of Queen's Bench Lord Campbell 
 pronounced these expenses not to be claimable in general 
 average, but to be payable by the ship alone. All that he 
 considered to be general average were the expense of 
 discharge, the expense incurred while both ship and cargo 
 were exposed to the same perils, which attempts were made 
 to avert on behalf of both interests. 
 
 Claims by Salvors — Ransom from Captors. — 
 Although the sacrifices and expenditures chargeable to 
 general average are in the end made good by all parties 
 interested, it does not follow that expenses incurred or 
 payments made on behalf of both ship and cargo are 
 general average. For such expenses or payments may in 
 many cases fail to fulfil the criterion of general average 
 1 6 E. & B. 779 ; 26 L.J. Q.B. 97-
 
 XVII G. A. EXPENDITURES— SCHUSTER V. FLETCHER 287 
 
 laid down in Birkley v. Presgrave : ^ they are not incurred 
 or made to avert a danger then imminently threatening the 
 destruction of the venture. For instance, if salvors pick up 
 at sea a ship laden with cargo and take it into a port of 
 safety, they may decline to liberate what they have picked 
 up without getting payment of what they consider an 
 adequate salvage. If such payment is effected by the 
 shipowner, it is no doubt one beneficial to the whole 
 venture ; but it is not an expenditure incurred in emer- 
 gency and to avert an imminent danger, and therefore it 
 does not constitute general average.^ On the other hand, a 
 similar payment made to captors, whether in the course of 
 declared war or irregular hostilities, or after seizure by 
 pirates, may be a general average loss, as in such a case 
 the question may be one between saving the venture by 
 means of the payment, or suffering the venture to expire by 
 capture or seizure of the vessel and its contents. 
 
 Schuster v. Fletcher, 1878.^^ — As with sacrifices, sc 
 with expenditures ; what is incurred for the advantage of 
 any number of separate interests, and not for that of the 
 whole venture, is not general average. For example, in 
 Schuster v. Fletcher^ iSjS,'^ a shipowner took an active part 
 in saving and transhipping the cargo of his stranded ship. 
 He brought the cargo to its destination, and by so doing 
 earned his freight. There had been difficulty in identifying 
 some of the cargo, owing to obliteration of marks, and some 
 part of it being found unidentifiable had to be sold and the 
 proceeds to be distributed. All this was done by the 
 shipowner, who charged as remuneration for his work a 
 sum debited partly to the separate interests salved and 
 delivered and partly to general average. The case came 
 before Chief Justice Cockburn, who in a most trenchant 
 judgment decided that the services for which remuneration 
 was claimed had nothing to do with general average. He 
 said: '"Here the shipowner had an interest in getting the 
 ship off and bringing the cargo into port, in order that he 
 
 * X East 220. 
 
 ' In Aikhi<,on v. I.ohre, 1879, Loid Blackburn stated tfiat salvage 
 had always bf;en recovered from underwriters as a loss by the peril 
 insured against. » L. k. 3Q. B.D. 418.
 
 288 MARINE INSURANCE chap. 
 
 might earn his freight. ... A great deal of what he has 
 done was in the performance of his own contract. He was 
 bound to use every eflfort to convey the cargo safely to 
 destination, and could only give up the task when it was 
 hopeless. 1 As to the expense incurred in respect of the 
 articles which were identified, it was incurred for his own 
 benefit, for unless he had delivered the goods to the proper 
 owner he could not have obtained his freight ; and, as 
 to those unidentified, he took no further trouble, but sold 
 them through a broker, who received his brokerage.^ In 
 every respect, therefore, the charges cannot be supported." 
 
 Port of Refuge Expenses. — The class of expenditures 
 which come most frequently into consideration in con- 
 nection with general averages is that included under the 
 words " Port of Refuge Expenses." But such expenses 
 may be occasioned by two entirely dissimilar classes of acci- 
 dent. A vessel may put into an intermediate port either — 
 
 (i) Because the vessel has suffered such damage by 
 stonn as to necessitate repairs. Or, 
 
 (2) Because it is necessary to replace or repair some 
 part of the vessel or her gear which has been sacrificed or 
 intentionally damaged for the general safety. 
 
 In other words, she may put in to repair damage which 
 is of the nature either (i) of particular average, or (2) of 
 general average. In both cases, if the putting in has been 
 a matter of necessity for the general safety, the inward 
 expenses, such as towage and pilotage inwards and harbour 
 dues, are charged to general average, as also the cost of 
 
 ^ Regarding these words, see Lord Herschell in the case of the Sir 
 Walter Raleigh [Rose y. Bank 0/ Australasia, H.L. 20th March 1894) : 
 " My Lords, I think that that is an overstatement of the law. He 
 might elect to carry it on after the ship had been lost, but he is not 
 bound to do so. 'It cannot be said that the task was hopeless when 
 he was not able, at the cost of some trouble, to bring the cargo into 
 port.' That is all that was said on the point." 
 
 ' As to charges on unidentified cargo, see the case of the Sir Walter 
 Raleigh {Rose v. Bank 0/ Australasia, H.L. 20th March 1894), in which 
 Lord Herschell gives his o[)inion that where the shipowner acts 
 reasonably in incurring extraordinary expenditure for the benefit of the 
 adventure generally, there is nothing in point of law that prevents hit 
 charging that expenditure upon those who are interested.
 
 XVII PORT OF REFUGE EXPENSES 2S9 
 
 discharging the cargo and bringing it to warehouse. With 
 regard to the other expenses, we are now in possession of 
 judgments of the Court of Appeal and the House of Lords. 
 In Alwood V. Sellar, 1879,' the Sullivan Saunn, from 
 Savannah to Liverpool, put in to Charleston to replace her 
 foretopmast which had been cut away for the general 
 safety. She discharged her cargo, which was warehoused, 
 and afterwards reloaded it and took it on to destination. 
 The Court of Appeal decided that in such a case of putting 
 in to repair injury caused by a general average act, the 
 expenses of warehousing and reloading goods necessarily 
 discharged to pennit of the carrj'ing on of repairs, the 
 pilotage and other necessary expenses outward, are, equally 
 with the inward charges and cost of discharge, recoverable 
 as general average. On the other hand, in Svendseti v. 
 IVallace, 1885,^ the ship Olaf Trygvason, from Rangoon to 
 Liverpool, sprang a leak and had for the common safety to 
 put back to Rangoon. The House of Lords held that 
 when a vessel puts in to repair such injury as this, namely, 
 injury of the nature of particular average, the cost of 
 reloading the cargo is not recoverable in general average, 
 but forms a particular charge on freight. 
 
 This should be contrasted with the Peshawur^ (before 
 Alverstone, L.C.J., in K.B.D., loth April 1908), where a 
 steamer within a few minutes after leaving her loading 
 berth at Antwerp, drifted with the tide, dropped anchor, 
 and when trying to avoid other craft took the ground. 
 Coming off later, with the assistance of tugs, she had to 
 slip her anchor, and then struck the quay wall, seriously 
 damaging her stern-post and rudder, the after peak filling 
 with water. She was brought back to her loading berth, 
 her cargo was discharged, and she was docked for repair. 
 Some cargo was forwarded to destination by another vessel. 
 The Lord Chief Justice held that the slipping of the anchor 
 was not a general average act, that tlie return to loading 
 berth was not putting back to a port of refuge, and that 
 when the vessel got alongside the quay with the after peak 
 full of water there was no peril common to ship and cargo. 
 
 • L.R. 4 Q.B.D. 342 ; 5 Q.B. D. 286. ' L K. 10 App. Cas. 404. 
 
 U
 
 ago AfARINE INSURANCE chap. 
 
 The unloading of the cargo, though necessary to the repair 
 ©f the ship, was not a general average act, consequently 
 damage done to the cargo by handling was not recoverable 
 in general average. It will be interesting to note the 
 effect of this judgment in reducing within smaller limits the 
 sphere of general average. 
 
 It was stated above (p. 285) that losses to be properly 
 claimable according to English law as general average 
 must not be losses or damage of things employed in the 
 purpose for which they were intended. In Waltheiv v. 
 Mavrojani, 1870,^ Lord (then Mr. Justice) Hannen stated 
 this principle thus: "The proposition that general average 
 includes all extraordinary expenses incurred for the purpose 
 of continuing the voyage is not warranted by the principle 
 which governs contribution to general average." There are 
 two striking exceptions to this rule which are admitted by 
 English average adjusters : — 
 
 (1) Jury rig. 
 
 (2) Damage to engines in working a steamer off the 
 strand. 
 
 (i) It has long been customary to regard as recoverable 
 in general average the value of materials used, destroyed, 
 or cut up for the purpose of fitting a vessel with such 
 temporary masting and rigging as she may require. There 
 is no legal decision on the point, but the practice seems to 
 have grown into undisputed custom. No doubt the object 
 of the use or destruction of such materials is the completion 
 of the adventure ; that is to say, it is the object which the 
 shipowner and master had in view from the beginning for 
 the earning of an agreed freight, and not the preservation 
 of the whole venture in an emergency. At the same time, 
 the custom is not unreasonable in so far as the materials 
 thus used are put to uses for which they were not originally 
 intended In practice the whole cost of jury rig is treated 
 as general average ; the cost of spare spars, actually put on 
 board for use in case of accident, equally with that of ropes, 
 etc., intended for the ordinary service of the ship, but 
 utilised in such cases for rigging. Lord Blackburn in 
 
 1 L.R. s Ex. ii6.
 
 XVII DAMAGE DONE TO ENGINES 291 
 
 Svendsen v. Wallace^ 1885,^ speaks of the practice as "one 
 which is not in general inconvenient," and although, he 
 continues, " it throws a considerable onus on those who 
 impugn it to show that the particular circumstances are such 
 as to render an adherence to the practice in that case against 
 principle," he does not go so far as to say that it is justifiable 
 on the principle of general average adopted by English 
 law. 
 
 (2) Damage done to engines in working a steamer ojj 
 the strand is one stage further away from true general 
 average according to the English principle. For in this 
 case the machinery is used simply to move the vessel ; and 
 although the circumstances of the work are not those 
 originally contemplated when the adventure was com- 
 menced, yet the mode in which the engines move is 
 exactly the same as when the vessel is being propelled by 
 them at sea. That the machinery is worked under excep- 
 tional strain in such a case is almost certain, but that is, 
 after all, only somewhat rough or unusual use of the 
 ordinary appliances of the ship. It very seldom occurs 
 that there is in such an operation any intentional sacrifice, 
 although in many cases there may be in the mind of the 
 master the knowledge that the order is a risky one and 
 might result in damage. Lowndes (General Average, 
 p. 119) tries to distinguish between the cases in which 
 the engines are exposed to some extraordinary danger 
 and those in which they are not ; but as a rule claims 
 are made for recovery in general average of the damage 
 sustained by engines worked when a vessel is ashore 
 irrespective of the peculiar circumstances of each case. 
 There has hardly yet been time to fonn a custom on this 
 point, and it is worth remarking that recently American 
 underwriters of cargo in English steamers have refused to 
 admit liability for their proportion of the amounts charged 
 in general average under this heading. It is not easy to 
 convince one's self that all the damage that has been 
 attributed to this cause did actually result from it, and in 
 many cases the engines have been worked in this excep- 
 * L.R. 10 App. Cas. 404.
 
 S9a MARINE INSURANCE chap. 
 
 tional way not for the prevention of any imminent danger, 
 but simply to bring back the vessel to the proper channel 
 or fairway. 
 
 In the case of the Rodney^ 1904, in K.B.D. {S.S. 
 Trafalgar Co. v. British and Foreign M. I. Co.^ Ltd.), it 
 was decided that as the vessel was not in peril there was 
 no general average, and the damage done to the engines 
 by working to float the vessel was not allowed. 
 
 In close connection with damage to engines occasioned 
 by working a steamer off the strand, stand the items ol 
 coals and other stores expended in such an operation. 
 The inclusion of these items as general average has been 
 strongly opposed, and it certainly seems that if the 
 inclusion of damage to engines in working off is doubtful 
 when regarded in the light of strict principle, the inclusion 
 of coal and engine-room stores is more than doubtful. 
 For these supplies are actually consumed for the very 
 purpose and in the very mode for which they were 
 provided. If the inclusion of them is, even in case of 
 imminent peril, regarded as not free from doubt, it is 
 evident that where the vessel is in no danger, but is simply 
 trying to put herself into position to complete the adventure, 
 the inclusion of these items as general average can hardly 
 be correct. 
 
 But in the case of the Bona^ 1894 (i i Times L.R. 40), 
 Sir Francis Jeune, President of the Admiralty Division, 
 decided that when a vessel, having been stranded, was got 
 off by her engines, which were in consequence damaged, 
 the cost of repairs to the engines and the cost of the coal 
 consumed in getting her off was a matter of general 
 average. He held that the service which the coal was 
 expended to provide was extraordittary in its nature.^ 
 
 Wages and Provisions of Crew. — In the case of 
 Atwood v. Sellar^ a question arose respecting the right to 
 claim in general average the wages and provisions of the 
 
 ' This judgment was confirmed by the Court of Appeal (I.ord 
 Esher, M. R. , Lindley, L. J., Rigby, L. J.), ist l-ebruary 1895, 11 
 Times L.R. 209. 
 
 • L.R. 4 Q.B.D. 342 ; s Q.B.D. 286.
 
 XVII WAGES AND PROVISIONS 293 
 
 master and crew during detention for repairs at a port of 
 refuge. In his judgment in the Court of Appeal, Lord 
 Justice Thesiger said : "As a matter of fact, it is extremely 
 doubtful whether the expenses for wages of crew or 
 provisions in a port of refuge have ever been disallowed by 
 our courts as constituting a claim for general average, in a 
 case where the ship has put into the port to repair damage 
 itself belonging to general average. ... If, then, the 
 question before us stood only upon principle, we should 
 have no hesitation in deciding it according to the principle 
 we have stated. . . . But the authorities remain to be 
 considered." The Enghsh practice has been not to allow 
 to the shipowner these expenses, regarding them as part of 
 what was paid for by the cargo-ownei or charterer in the 
 freight ; and the increase of these expenses in consequence 
 of detention at a port of refuge is viewed in exactly the 
 same light as that arising from prolongation of the voyage 
 by contrary winds occasioning no casualty. In Fletcher v. 
 Poole, 1769, Lord Mansfield held that extraordinary wages 
 and provisions expended during a vessel's detention at 
 Minorca, where she had put in in distress for repairs, could 
 not be allowed as a charge against the underwriter on 
 the ship. In Eden v. Poole, I785,''^ an action was brought 
 to recover the expenditures for wages, provisions, and 
 the demurrage during the detention of a ship at Ferrol, 
 where she put in to repair. Marshall (p. 730) reports that 
 " the underwriters contended that the freight and not the 
 ship was liable for this loss, and that the charge of 
 demurrage could not be allowed upon this policy" (on ship 
 and goods). " Mr. Justice Buller was of this opinion, and 
 nonsuited the plaintiff." Still more to the point is the 
 decision in Power v. WJiiimore, 18 15,'* on a policy on 
 goods from London to Lisbon. The ship having sustained 
 damage by winds and weather was oblij^ed to put in to 
 Cowes, where a considerable expense was incurred in 
 repairs, in pilotage, in paying and maintaining the master 
 and mariners, and in raising money for those purposes. On 
 her arrival in Lisbon the assured " was adjudged by the 
 
 • I'ark, 89 ; Marshall, 730, 733 note. 
 
 • Park, 91 ; Marshall, 730, 733 note. 
 » 4 M. & Sel. 141.
 
 294 MARINE INSURANCE CHAP. 
 
 maritime court there to pay general average in respect ol 
 the expenses, losses, and damages so incurred. . , . The 
 Court held . . . that, as there had been no sacrifice of 
 part for the preservation of the rest, none of the above 
 expenses were properly the subject of general average by 
 the law of England" (Marshall, p. 546). Lord Ellen- 
 borough said : " General average must lay its foundation in 
 a sacrifice of a part for the sake of the rest ; but here there 
 was no sacrifice of any part by the master, but only of his 
 time and patience." Lowndes (General Average, p. 241) 
 reports that in Wilson v. Bank of Victoria, 1867,' Mr. 
 Justice Blackburn, alluding to the matter, incidentally spoke 
 of the English practice as a matter settled and well known. 
 
 Demurrage. — As the English law makes no allowance 
 in general average for such actual outlays of the shipowner 
 as wages and provisions at a port of refuge, it also refuses 
 to recognise the shipowner's claim for delay of the ship at 
 such port ; in other words, for demurrage at a port of 
 refuge. Similarly, the cargo-owner is not entitled to any 
 recovery such as interest on the value of his property for the 
 period of delay. Claims of this nature are not so much 
 claims for actual loss as for failure to realise anticipated 
 profit. In collision cases claims of this nature are admitted. 
 
 Substituted Expenses. — Suppose that in the cases of 
 the Sullivan Sawin {Atwood v. Sellar),^ and the OlaJ 
 Trygvason {^Svcndsen v. Wallace)^^ dealt with above (pp. 
 289 and 292), the captains of these vessels had found that 
 storage in lighters would be cheaper than warehousing 
 ashore, it is evident that it would have been to the interest 
 of all concerned in these ventures not to land the cargoes, 
 but simply to transfer them to lighters to be reloaded thence 
 when the repairs to the vessels were completed. In such 
 cases the costs of putting into, keeping in, and loading from 
 the lighters form what are known as Substituted Expenses. 
 These are incurred by adopting a method of treating the 
 case adopted in preference to the ordinary method on 
 account of its comparative cheapness. They are divided in 
 
 » L.R. a Q.B. 203. " L.R. 4 Q.B.D. 342 ; 5 Q.B.D. 286. 
 
 * L. R. 10 App. Cas. 404.
 
 XVII PROCEDURE OF RECOVERY 295 
 
 the same proportion in which the total cost of the ordinary 
 method of discharge, storage, and reloading is divided among 
 these three headings. In the same way it has become usual 
 to make special agreements to apportion as substituted ex- 
 penses such charges as for extra towage, undertaken to bring 
 a crippled ship to her destination with the minimum of risk, 
 and so to avoid a prolonged stay for repairs at an 
 intermediate port, which might involve discharge of the 
 cargo in whole or in part, and considerable dismantling of 
 the ship, with the consequent charges for warehousing 
 and reloading. There are two points to be noted in 
 reference to such charges : they cannot be regarded as 
 substituted expenses unless — 
 
 (i) They are incurred in connection with something 
 done by the shipowner beyond what he has in his charter- 
 party or bill of lading contracted to do. 
 
 (2) Their amount must be less than the general average 
 charges would have been had the case taken the ordinary 
 course. 
 
 Procedure of Recovery in General Average. — When 
 a general average consists of sacrifices made by a ship, or 
 of expenses incurred by a ship on behalf of the whole 
 venture, the shipowner has a lien on the cargo for its share 
 of these sacrifices or expenditures. The form in which this 
 lien is usually enforced is a demand by the shipowner for 
 the deposit of a sum sufficient to cover the liability of the 
 consignee's cargo, or for signature by the consignee of an 
 agreement securing payment of his proper proportion of 
 general average when ascertained. 
 
 When the sacrifice is one of cargo by jettison, the 
 shipowner, having by the jettison lost the freight payable 
 at destination on the goods thus sacrificed, has also an 
 interest in recovery in general average, and can thus 
 exercise his lien in that case also, and thus act on behalf 
 of the cargo-owner also {GilUtt v. Ellis, \ I Illinois ; Heye 
 v. A^. G. Uoyd, U.S. Courts). 
 
 But where the damage done consists merely in deteriora- 
 tion of the cargo without any diminution of it or change 
 of species, such as would occasion' a loss of freight, tlien
 
 296 MARINE INSURANCE chap, 
 
 the only party interested in recovery is the owner or 
 consignee of the damaged cargo. In the case of the 
 Sardinian^, the steamer after leaving Liverpool for the 
 St. Lawrence took fire, and to prevent total loss of the 
 venture her holds were flooded. The steamer put back to 
 Liverpool. One of the shippers was not satisfied with the 
 steps taken by the shipowners, and brought an action against 
 \.\\t.m {Crooks v. Allan, 1879),^ alleging that the shipowners 
 " refused to give any assistance to enable " any one " to get 
 an average statement made out, or to take any steps to enable 
 the plaintiffs to recover contribution." In his decision Mr. 
 Justice Lush, after saying that the shipowner is the only 
 person who has the right to require security for general 
 average contribution from the other parties to the adventure, 
 proceeded thus: "The right to detain for average con- 
 tribution is derived from the civil law, which also imposes 
 on the master of the ship the duty of having the contribution 
 settled, and of collecting the amount, and the usage has 
 always been substantially in accordance with this law, and 
 has iDecome. part of the common law of the land. I am 
 therefore of opinion . . . that he (the shipowner) is liable in 
 this action for not having taken the necessary steps for 
 procuring an adjustment of the general average and secur- 
 ing its payment." 
 
 Average Bonds and Deposits. — In the judgment of 
 the Judicial Committee of the Privy Council in the case of 
 the Wavertree, 22nd May 1897, Lord Herschell said, with 
 reference to the preparation of a general average statement 
 and the actual settlement and adjustment of the general 
 average contributions, " It is necessary to bear in mind 
 what would happen if all parties stood on their rights. 
 The shipowner would hold the goods until he obtained the 
 general average contribution to which they were subject. 
 If the owner of the goods disputed his claim, he would 
 appeal to the tribunals of the country to obtain possession 
 of them on payment of what was due. These tribunals 
 would have to determine whether the owner of the goods 
 was entitled to them, and what payment he must make 
 
 » SQ.B.D. 38.
 
 ixvJi A\ERAGE BONDS AND DEPOSITS 297 
 
 to release them." The conditions under which cargo- 
 owners may obtain possession of their goods pending 
 the adjustment of a general average formed the subject 
 in dispute in the case of the T/iales,. On a voyage from 
 the River Plate to Liverpool she stranded in December 
 1883 near Bridport ; tugs were engaged, cargo was 
 jettisoned, and the vessel came off and proceeded to 
 Liverpool. There the shipowners required a deposit of 
 ID per cent of the value of the cargo into an account in the 
 name of the adjuster or shipowner, or both jointly, and the 
 signature of an average bond in the form then regularly 
 employed in Liverpool. Several consignees objected to this, 
 but agreed to sign the London form of bond and to pay the 
 deposit into a joint account of the shipowners and themselves. 
 This proposal the shipowners declined ; the consignees 
 then paid under protest and raised an action against the 
 shipowners {fiufh v. Latnport^ Gibbs v. Lamport^ i8S6).^ 
 In the Court of Appeal it was decided that in exercising 
 his lien on cargo for general average the shipowner need 
 not accept a bond or security ; on the other hand the 
 consignee is not bound to sign a bond. The shipowner 
 has the right to demand a deposit, giving the consignee 
 proper information so as to enable him to judge of the 
 reasonableness of his demand and, if he considers it 
 excessive, to tender a sufficient sum.'' 
 
 Amounts made Good. — It is necessary to consider here 
 what amounts are by the law of England recoverable in 
 general average. 
 
 A. WTien the general averat^e items are disbursements, 
 the amount to be made good by the whole venture is 
 the amount of the expenditures incurred plus the cost of 
 providing the funds. 
 
 In former times, when communication was slower and 
 more difficult and banking facilities fewer, a method very 
 generally adopted to raise funds in a foreign port was 
 bottomry. The general practice of maritime nations was 
 to consider the raising of money on bottomry unjustifiable 
 
 ' L.U. 16 Q. B.D. 442, 735. 
 
 ' For the American law in this matter see Wetlman v. Marse (Cir 
 Ct. of Appeals, 1896), 76 Ked. Rep. 573.
 
 298 MARINE INSURANCE chap. 
 
 unless the master had communicated with the shipowner 
 provided the delay arising from that course would not 
 practically defeat the adventure, and had failed to raise 
 the necessary money on his own security. But even with 
 these restrictions extraordinary expenses incurred at an 
 intermediate port were commonly met by bottomry. 
 
 B. When the items of general average are sacrifices 
 these may be : (a) of ship's materials, etc. ; {d) of cargo. 
 
 (a) In general average, as in particular (p. 207), the 
 measure almost universally adopted in estimating damage 
 done to a ship is the cost of the repairs found necessary to 
 make good the damage. 
 
 Deductions from Cost of Repairs in General Average. 
 — In the discussion of particular average on ship it was found 
 (p. 2 1 9) that certain deductions are, as a matter of recog- 
 nised custom, made from the cost of repairs. A similar 
 provision by custom regarding costs of general average 
 repairs has long prevailed. The deductions made in the case 
 of wooden vessels are substantially the same as those made 
 in particular average, nothing being taken off from the cost 
 of repairs of damage sustained on the vessel's first voyage. 
 As regards iron ships the Association of Average Adjusters 
 accepted in 1887 and confirmed in 1888 the following rule: 
 
 That in adjusting claims for general average, repairs to iron 
 vessels shall be subject to the following deductious in respect 
 of " new for old," viz. — 
 
 From Date of Original Register — 
 
 Up to fAll repairs to be allowed in full, except painting or 
 I year old \ coating of bottom, from which one-third is to be 
 (A) \ deducted. 
 
 ^One-third to be deducted off repairs to and renewal 
 of boilers and their mountings, woodwork of hull, 
 masts and spars, furniture, upholstery, crockery, 
 metal and glassware, also sails, rigging, ropes, 
 sheets and hawsers (other than wire and chain), 
 awnings, covers and painting. 
 One-sixth to be deducted off wire rigging, ropes, 
 and hawsers, chain cables and sheets, donkey 
 engines, steam winches, steam cranes and connec- 
 tions : other repairs in fulL 
 
 Between 
 
 I & 3 years 
 
 (B)
 
 XVII 
 
 AMOUNTS MADE GOOD 
 
 299 
 
 Between T Deductions as above under clause B, except that 
 3 & 6 years \ one-sixth be deducted off ironwork of masts and 
 (C) (. spars, and machinery other than boilers. 
 
 {Deductions as above under clause C, except that 
 one-third be deducted off ironwork of masts and 
 spars, repairs to and renewal of all machiner)' and 
 all hawsers, ropes, sheets and rigging ; one-sixth 
 to be deducted off chains and cables. 
 
 After 
 
 10 years 
 
 (E) 
 
 J 
 
 Generally 
 (F) 
 
 One-third to be deducted off all repairs and re- 
 newals, except ironwork of hull and cementing. 
 I Anchors to be allowed in ftill. One-sixth to be 
 deducted off chain cables. 
 
 "The deductions (except as to provisions and stores, 
 machinery and boilers) to be regulated by the age 
 of the vessel, and not the age of the particular part 
 of her to which they apply. No painting bottom 
 to be allowed if the bottom has not been painted 
 within six months previous to the date of accident. 
 No deduction to be made in respect of old material 
 which is repaired without being replaced by new, 
 and provisions and stores which have not been in 
 use. 
 
 Similar provisions have been made for the now less 
 frequent cases of repair of wooden vessels in general 
 average. So far as the writer is aware, no case has come 
 before the courts in which any question has been raised 
 regarding these deductions. It will be found later (p. 316, 
 and Appendix G) that these provisions have been practi- 
 cally approved by the representatives of the maritime 
 nations of Europe and North America. 
 
 (d) It is evident that when the sacrifice is one that 
 involves the total loss of some of the goods, such as jettison, 
 any method based on cost of repairs cannot be applied. 
 The general principle regulating the amount to be made 
 good is thus stated by Lowndes (General Average, p. 291), 
 " The owner of the goods jettisoned is to be so compensated 
 that he shall be in the same position, at the time and place 
 of adjustment, as if not his goods, but those of some other 
 person had been sacrificed." 
 
 From this principle two rules result : — 
 
 (i) That the values taken for sacrifices are those af
 
 joo MARINE INSURANCE chap. 
 
 destination or at an intermediate port, according as the 
 venture is conipleted or broken up before completion. 
 
 (2) That the amount made good for sacrifice itself 
 contributes to the loss involved in the sacrifice. 
 
 The second point will come up again for consideration 
 when contributing values are discussed. Dealing with the 
 first, we find that in order to make the position of the 
 owner of jettisoned goods the same as if his goods were 
 delivered, he must receive the net market value of his 
 goods, i.e. the price he would have received for them on 
 delivery, less the charges which must have been defrayed 
 before they could be sold, and would not have been payable 
 had the goods been lost. For instance, if the goods are 
 shipped with freight payable at destination, then as sacri- 
 ficed goods have not reached their destination no freight is 
 payable by the consignee ; consequently, in such cases 
 freight must be deducted from the market value in arriving 
 at the amount to be made good to the consignee, and the 
 freight remains a sacrifice for which the shipowner will 
 receive the amount made good in general average. If, on 
 the other hand, the goods have been shipped with freight 
 prepaid, the consignee will be entitled to the market price 
 without deduction of freight, and the shipowner will have 
 no claim for freight sacrificed. If the freight is half 
 prepaid and half payable on delivery, the consignee of cargo 
 and the shipowner will each be entitled to claim one-half 
 of the freight of the cargo sacrificed. 
 
 In the Acasier, {Silva v. R. Livingston, 1 894) Barnes, J., 
 decided that when a voyage is broken up short of destina- 
 tion, the loss of freight paid in advance which by the 
 abandonment of the voyage became a total loss, is made 
 good in general average. 
 
 If the sacrifice of cargo does not involve the total loss 
 of part, but only damage to the cargo in whole or in part 
 {e.g. by damage to cotton done by flooding holds with 
 water to extinguish fire), the amount to be made good 
 is ascertained by deducting the net value which the 
 goods have on arrival from the net value of sound goods 
 of the same quality. As the damaged goods are actually
 
 icvi! CONTRIBUTING INTERESTS AND VALUES 301 
 
 delivered, the matter of freight does not come into this 
 comparison. 
 
 Sacrifice of cargo involves sacrifice of freight at risk due 
 by the receivers of the cargo at destination. 
 
 But if a vessel is under time charter, it might appear as 
 if any detention of the vessel occurring in consequence of 
 general average sacrifice might by the consequent loss of 
 time and time freight constitute a claim in General Average 
 for the amount of such consequential loss. The usual 
 practice of British adjusters has been to disallow all such 
 claims. This practice has been confirmed by the decision 
 in the Lcitrim^ case {LeitniJi S.S. Co. v. British and 
 Foreign M. I. Co., Ltd.., 5th Aug. 1902 ; Barnes, J.''). 
 
 Contributing Interests and Values. — There still remain 
 to be considered the interests which, according to English 
 law, contribute to general average, and the values at which 
 these interests are rated. 
 
 In Mr. Justice Lawrence's definition of general average 
 in Birkley v. Presgrave, 1 801'^ (see p. 284), the only interests 
 expressly mentioned are ship and cargo. They are indeed 
 the only material, tangible interests manifestly involved in 
 the venture. But it is quite clear that the derivative or 
 secondary interest freight, being that for which the venture 
 was originally undertaken by the ship, is equally profited 
 by the successful outcome of a general average sacrifice 
 or expenditure, and ought, therefore, equitably to bear 
 a proportionate share of the burden borne by the whole 
 venture. The contributing mass thus consists of ship, 
 cargo, and freight. 
 
 In the consideration of the amount to be made good 
 for cargo jettisoned, it became evident that in order to 
 distribute fairly the burden of loss arising from a general 
 average sacrifice, it is necessary to provide that any 
 amount made good bears the same proportion of the loss 
 as is borne by the properly saved. Consequently, whatever 
 be the value on which any interest contributes, there must 
 be added to it the amount made good for any sacrificed 
 portion of that interest. 
 
 » 18 Times L.R, 81a. » i East 32a
 
 P2 
 
 MARINE INSURANCE chap. 
 
 (1) Ship. — The value of contributing purposes of a 
 ship is her worth to her owner on her arrival at her destina- 
 tion, or if the venture does not reach its destination, then 
 the ship's worth at the place where the interests part 
 company, plus value of materials made good in general 
 average, tninus cost of any repairs done after the general 
 average act and before arrival at port of destination or 
 place of separation of interest.^ 
 
 (2) Cargo. — {a) If the ship reaches destmation, market 
 value on arrival, plus any amount made good in general 
 average for loss of part or for deterioration, minus all charges 
 which would not have fallen on the consignee had the goods 
 been lost, such as landing charges, customs duties, expenses 
 of sale, discount to buyers, and freight paid at destination. 
 
 {b) If the venture is broken up at an intermediate port, 
 market value there with the same additions and deductions 
 as in (a), with the exception that in such a case cargo laden 
 in British ships has no freight to pay, while in foreign ships 
 the freight payable is pro rata distance freight. 
 
 (3) Freights. — As has already been pointed out, it fre- 
 quently happens that freight on goods is wholly or partly 
 prepaid ; this is termed "freight at the charterer's risk," as 
 in case the vessel is lost he has paid the shipowner for 
 services never performed. The remainder of the freight, 
 i.e. the amount payable at destination, is termed "freight 
 at the shipowner's risk." 
 
 {a) Whether the venture reaches destination as a whole 
 or not, it is evident that the charterer's freight or advance 
 freight is always implicitly contained in the market value of 
 the goods ; if it is stated separately it is only as a matter 
 of convenience in accounts or adjustment, and being an 
 actual disbursement of the shipper it is not subject to any 
 deduction. 
 
 {b) On the other hand, the freight received by the 
 shipowner at destination is reduced by the amount of the 
 port charges and crew's wages incurred after the general 
 
 1 For contributing value of a ship arriving as a constructive total 
 loss see Henderson v. Shankland, Ct. Appeal, March 1896 : 12 Times 
 L.R. 250, 251.
 
 XVII ULTERIOR CHARTERED FREIGHT 303 
 
 average act. Had the general average act not been 
 successful he would have lost his freight, but saved the 
 subsequent port charges and crew's wages. 
 
 Of course, if the charterer has hired the vessel on such 
 terms as make him liable for wages or port charges, he is 
 virtually the shipowner pro tempore as regards those items, 
 and in that case his freight is subject to the deductions 
 ordinarily applied to shipowner's freight. 
 
 Ulterior Chartered Freight, — It is the English practice 
 not to consider as a contributing interest any freight which 
 is to accrue to the ship for carriage of a later cargo than 
 that actually on board when the general average act occurs. 
 It is difficult to see how cargo on one voyage can have a 
 common interest with the freight to be earned for carrying 
 cargo on a later voyage. Besides, the inclusion of ulterior 
 chartered freight as a contributing interest might give rise 
 to a general average claim on freight for a voyage which, 
 in consequence of some disaster, could never be completed 
 or even commenced. Also there would not be on board 
 the ship, when the sacrifice or expenditure occurred, any 
 physical or material substance on which a lien could be 
 exercised that would affect the ulterior chartered freight in 
 question. It consequently appears that this interest is too 
 remote for inclusion in the contributory mass. The only 
 case we have on the point is that of the Brigella, 
 {Temperley v. Mackinnon, 1893),^ decided by Mr. Justice 
 Barnes. In that case the steamer sailed from Liverpool 
 without cargo, on 24th August 1891, in order to take up an 
 engagement to carry a carj^o from a United States Atlantic 
 port to a port in the United Kingdom or Continent 
 between Bordeaux and Hamburg. Meeting with bad 
 weather she began to leak in her ballast tanks, and on 26th 
 August put in to Holyhead. On the 29th she left 
 Holyhead to return to Liverpool for repairs, and after their 
 completion she sailed again on 1 6th September. The 
 vessel was afterwards loaded at Baltimore and discharged 
 her cargo at Barrow. An average adjustment was pre- 
 pared according to the alleged provision of American law, 
 
 * 9 Times L. R. 399.
 
 304 MARINE INSURANCE chap. 
 
 under which the chartered homeward freight was burdened 
 with a portion of the Liverpool expenses. The under- 
 writers on that freight were asked to pay what was put 
 down as their liability, but refused. The court found in 
 their favour ; but that was expressedly not because the 
 special interest insured with them was not liable, but 
 because the court held that there was really no general 
 average expenditure. 
 
 Again, in the case of a steamer in ballast under charter 
 proceeding to her loading port, it has been decided that 
 the chartered freight shall contribute to general average 
 sacrifices.' 
 
 Amount Payable by each Contributing Interest. — 
 The determination of the amount of general average 
 payable by any one interest is a matter of simple propor- 
 tion : if the whole contributing mass pays the whole amount 
 of general average sacrifice, the contributing value of each 
 separate item pays in the same proportion. 
 
 Foreign Theories and Practice of General Average. 
 — The preceding pages are an attempt to give a brief 
 account and a few illustrations of the principles adopted by 
 the English law in deciding what constitutes genera, 
 average, and applied by the English courts to cases 
 under their jurisdiction in which the venture closes in the 
 United Kingdom, its colonies or dependencies.^ They are 
 prmciples based on considerations of the attainment of 
 Common Physical Safety. The jurisprudence of Con- 
 tinental countries has proceeded upon quite a different 
 principle, upon considerations of Common Benefit, according 
 to which the safe completion of the venture in question is 
 the end contemplated. This radical difference in view 
 results in an entire divergence in practice. 
 
 Proper Place and Law of Adjustment — (i) Venturt 
 Completed. — In one point the systems agree : as the time 
 
 ^ The Yestor,{Carisbrook S.S. Co. v. London and Prov. M. I. Co.), 
 Ct. Appeal, 7th Aug. 1902: r8 Times L. R. 783, confirming judg- 
 ment of Mathaw, J., in lower court. 
 
 * For the practice of English adjusters, see Rules of Practice of 
 Average Adjusters' Association, printed in Appendix H.
 
 JTvii PLACE AND LAW OF ADJUSTMENT 305 
 
 of the completion or dissolution of the venture is the time 
 for settling finally all matters of common interest or mutual 
 obligation among the various parties to the venture, such 
 as general average, these questions are regulated according 
 to the law of the countiy in whose jurisdiction the venture 
 happens to be when the interests are separated from one 
 another. In the case of a safely-completed voyage that 
 country is of course the country of destination ; so that 
 maritime nations generally have adopted the rule of adjust- 
 ing general average in accordance with the law prevailing 
 at the port of destination, unless special agreement to the 
 contrary has been made in the contract of affreightment. 
 In the decision of Lloyd v. Gutbert, Exchequer Chamber,^ 
 it was stated : " The adjustment of a general average 
 at the port of discharge, according to the law prevailing 
 there, is binding upon the shipowner and the merchant, as 
 they must be taken to have assented to adjustment being 
 made at the usual and proper place, and as a consequence, 
 according to the law of that place." ^ 
 
 But this rule can evidently not be applied in all its 
 simplicity to cases in which a vessel is bound to several 
 ports with cargo for each of them, unless indeed the 
 casualty resulting in general average occurs between the 
 second last and the last port of discharge. There is no 
 doubt that if the accident occurs before the vessel reaches 
 her first port there is a great deal to be said in favour of 
 adjusting the average there, as that is the point at which 
 the venture, as it originally was, breaks up. On the other 
 hand, the benefit derived by cargo destined for the second 
 or other later ports is not acquired by the owners or 
 consignees of these goods until they are actually delivered 
 at destination, and in case of their being lost before 
 arrival at destination, the owner or consignee is left in 
 exactly the same position as if the general average act had 
 resulted unsuccessfully and the whole venture had been 
 
 ■ L.R. I Q.B.D. 115. 
 
 '^ In the iVaiierlree case, 1897, the House of Lords decided that 
 when an average statement is necessary a shipowner is not L>ound to 
 have it drawn up at the port of discharge. 13 Tinics L. K. 419. 
 
 X
 
 jo6 MARINE INSURANCE chap. 
 
 lost. As far as the writer is aware, no case of this kind 
 has yet come before the courts. Lowndes (General 
 Average, p. 274) mentions llie course adopted in the 
 matter of the Saniia^ from Liverpool with cargo to Halifax, 
 N.S., and Portland, Me. This steamer put back to 
 Liverpool for repairs and discharged her cargo. A joint 
 adjustment was made up by a Canadian adjuster and a 
 United States adjuster, showing the amounts payable by 
 the Halifax cargo as general average according to English 
 law, and those payable by the Portland cargo as general 
 average according to American law. 
 
 (2) Venture not completed. — If the voyage is justifiably 
 broken up at an intermediate port the general average is 
 adjusted in accordance with the law of that place and the 
 state of facts then and there. In Fletcher v.' Alexander, 
 1868,^ a vessel with a full cargo of salt from Liverpool 
 to Calcutta stranded near Wexford. A large portion of 
 the cargo was jettisoned, and all the remainder of it 
 except loo tons was so damaged as not to be fit for 
 taking on to destination. The vessel put back to Liver- 
 pool and the voyage was abandoned. It was held 
 that the average must be settled at Liverpool and in 
 accordance with English law. On the other hand, in Hill 
 v. Wilson, 1879," the vessel Virago sailed from Riga to 
 Hull. She stranded and was towed in to Copenhagen, 
 where about eight-ninths of the cargo was sold. Of the 
 remaining ninth about one-half was forwarded to Hull in 
 other vessels, and the other half was taken on by the 
 Virago herself to Hull. It was held that the original 
 voyage was not broken up at Copenhagen ; consequently 
 it was irregular to adjust the average at Copenhagen or in 
 accordance with Danish law. 
 
 Acceptance of Foreign Law by English Law. — It is 
 evident from the preceding paragraph that English law in 
 certain cases recognises the validity of adjustments of 
 general average based on the law of foreign states. This 
 is, in fact, one of the great difficulties of the subject of 
 general averac^^e. It is only too easy to conceive cases in 
 » L.R. 3C.P. 375. ^ 4C.P.D. 329.
 
 XVII ENGLISH AND FOREIGN LAW 307 
 
 which a cargo destined to several ports in different 
 countries is carried in a ship belonging to none of these 
 countries, and the venture is broken up in still another 
 country ; for example, an English vessel from the River 
 Plate to Havre and Hamburg put in to Lisbon and there 
 the voyage broken up. The average in such a case would, 
 according to English law, be properly adjusted at Lisbon 
 in accordance with Portuguese law, unless the contract of 
 affreightment contained some stipulation to the contrary. 
 In the case of the Delatnbrc^ a British steamer, on a 
 voyage from the River Plate to Bordeau.x and Antwerp, an 
 accident leading to general average sacrifice or expenditure 
 occurred before she reached Bordeaux, and the average 
 was adjusted according to the law prevailing at Bordeau.x, 
 the first port of delivery. This was the adjustment of the 
 liabilities of ship and cargo to one another, which was binding 
 on the interests concerned. With the secondary liability 
 of the underwriters to their assured we will deal later. 
 
 As the English law thus in a sense incorporates the law 
 of the country in which a maritime venture is dissolved or 
 completed, it follows that the English shipowner and 
 merchant are frequently, according to their own law, liable 
 for contribution to general average which differs in amount 
 and in its constituent items from the amount for which they 
 would have been liable had the venture closed in a port 
 of the United Kingdom, its colonies, or dependencies. As 
 has been already stated, the Continental countries have 
 proceeded on a principle quite different from the English 
 one, and there are important differences between the 
 practice prevalent in the United States and that in the 
 United Kingdom. 
 
 Diversities of English and Foreign Law and 
 Practice. — That these diversities may be of serious 
 moment is evident when it is remembered that they may 
 result not only from difference of contributing value, but 
 from inclusion or rejection as general average of items 
 which in other countries would be rejected or included. 
 The following table gives a rough sketch of the con- 
 tribuling values }^xtis2i\\\vi^ in different maritime countries : —
 
 308 MARINE INSURANCE chap 
 
 Ship. — In England : its worth to the owner at the time when it 
 
 ouglit to contribute (i.e. at (iestinaiion of the venture 
 
 or at place of outlay or sacrifice). 
 In UniteJ Stales: its value on arrival at place of dis- 
 charge less repairs. 
 In France, Italy, Portugal : half its value at destination or 
 
 at point of separation of interests, as the case may be. 
 In Germany, Holland, Belgium, Denmark, Norway, 
 
 Sweden, Russia, Spain, Brazil, Argentina : its value 
 
 at the end or beginning of the venture, or where the 
 
 interests part company, as the case may be. 
 Cargo. — In England and United States : net market value at 
 
 port of destination or of separation of interests, as the 
 
 case may be. 
 In other European and American countries substantially 
 
 the same valuation prevails. 
 Freight. — In England : gross amount at risk less port charges and 
 
 wages incurred after the general average act. 
 In United States varies: 
 
 In Massachusetts, Maryland, Pennsylvania, South Caro- 
 Ima and Louisiana, two-thirds of the gross freight. 
 
 In New York, Virginia, South Carolina, Georgia, 
 Texas and California, half of the gross freight. 
 In Germany : two-thirds of the gross freight earned. 
 In Holland and Argentina : the freight, less wages and 
 
 provisions. 
 In Belgium : either the net freight or one-half of the 
 
 gross freight. 
 In Denmark : four-fifths of the gross freight. 
 In France, Italy, Spain, Portugal, Sweden, Norway 
 
 Russia : one-half of the gross freight. 
 
 As regards amounts made good there is at least equally 
 embarrassing variety, for instance in the item of crew's 
 wages and provisions during detention in port. As has 
 already been explained (p. 293) this item is not admitted 
 by English practice as general average ; in France it is not 
 general average unless the ship is chartered on time ; in 
 every other European country (with the possible exception 
 of Spain), it is general average, as it is in the United 
 States and all South America. It may indeed be said that 
 no two of the leading maritime states of the world agree 
 completely in their provisions regarding general average. 
 The growth of commerce and the adoption by all maritime 
 countries of the law and practice on general average of the
 
 xvii ENGLISH AND FOREIGN LAW 309 
 
 country in which a venture is dissolved or completed, 
 compelled shipowners and merchants to inform themselves 
 respecting the provisions of foreign codes and decisions. 
 To meet this need comparative tables of the general 
 average provisions of different maritime states were drawn 
 up and published : the first, the writer believes, were issued 
 by Mr. Philip H. Rathbone of Liverpool. In the first 
 edition of his Law of General Average, 1873, Mr. Richard 
 Lowndes of Liverpool included a similar table ; and in his 
 Grosse Haveret, 1884, ^^^- Rudolph Ulrich of Berlin printed 
 a still more detailed table. 
 
 International Systems of General Average. — As early 
 as i860 the increasing frequency and irritating uncertainty 
 of these divergences and dissimilarities led to the forma- 
 tion of a congress of English and foreign jurists, adjusters, 
 merchants, shipowners, and underwriters, who made it their 
 business to tabulate and examine the general average law 
 of different maritime nations, holding meetings at Glasgow 
 in i860, London 1862, and York in 1864. At the last 
 of these meetings a set of International General Average 
 Rules was formed, known as the York Rules. But no 
 practical effect was given to them, and it was not until the 
 Congresses of the Association for the Reform and Codifi- 
 cation of the Law of Nations at the Hague in 1875 ^"^ 
 Bremen in 1876 that attention was again drawn to the 
 matter. At the Antwerp Congress of the Association in 
 1877 the matter was again thoroughly discussed on the 
 basis of the York Rules, and the result was the formation 
 of a series of rules intended to be the basis of a uniform 
 system of general average for all maritime nations, known 
 as the " York and Antwerp Rules." 1 That these rules 
 met some want was clear from the way in which they were 
 
 ' It is interesting to observe that the committee of Lloyd's then 
 expressed their strong feeling that "the difTcrences which exist in 
 various countries upon this sutjjcct would be best met by abolisliing 
 general average altogether. I'ossibly this cannot now be done ; and if 
 so. the coniinittre consider that so far as the English practice is 
 concerned any difference should be met by curtailing, not by enlarging 
 the English rules." Compare Mr. I)oni;l:is Owen's Me/or m vf General 
 Average read at Lloyd's on 9th May 1894.
 
 3IO MARINE INSURANCE chap. 
 
 adopted in contracts of affreightment and of marine insur- 
 ance — being made tlie subject of special contract, and so 
 securing to the parties stipulating for them the settlement 
 of their general average liabilities in accordance with their 
 provisions in so far as these differed from the regulations 
 of the country in which the venture was dissolved or 
 completed. The York and Antwerp Rules were subjected 
 to a revision at the Association's Liverpool Congress of 
 1890, and the result was an expansion of the rules as 
 suggested by the experience of the preceding thirteen 
 years. The revised rules were confirmed at the Genoa 
 Congress of 1892, and this revised and expanded version 
 is what is now meant when the York and Antwerp Rules 
 are referred to. The text is printed in full in Appendix G. 
 As regards deductions from repairs in general average it 
 will be found to agree very closely with the Rules of 
 Practice of the Association of Average Adjusters. 
 
 Greneral Average as regards Affreightment. — It is clear 
 from what precedes that so far as the contract of affreight- 
 n^ent goes, the only meaning that can be attached to the 
 words " liability of an interest for general average," is 
 liability to contribute to general average losses *"''/„, 
 expenditures in the proportion which the contributing value 
 of the named interest bears to the value of the whole 
 contributing mass. 
 
 If there were no such thing as insurance, the whole 
 course of a general average would be as described, each 
 interest would contribute through the purse of its owner, 
 and that would end the matter. 
 
 Application of General Average to Insurance. — But if 
 the owner of any interest is insured on such terms that he 
 has the right of claiming from his underwriter indemnity 
 for his loss under this head, what amount is he entitled to 
 claim ? If the interest is insured for as much as the 
 amount at which it is valued for contribution, the assured 
 obviously has the right of recovering from his underwriter 
 the full amount of the contribution demanded of him : if it 
 is insured for less, then, in accordance with the principles 
 of indemnity and proportion, the assured is entitled to
 
 XVII GENERAL AVERAGE AND INSURANCE 311 
 
 claim from the underwriter that proportion of the contribu- 
 tion of his interests which the amount insured bears to the 
 amount at which the interest in question is assessed for 
 contribution. 
 
 In accordance with the preceding results, we will for the 
 present understand that in all casts in which the marine 
 policy is concerned the words "general average" mean 
 what has been termed with greater explicitness " general 
 average corUributwn." 
 
 Proceeding in this sense, we may say that by the ordinary 
 form of policy the English underwriter contracts with his 
 assured to pay his proper proportion of the general average 
 contribution demanded from the interest he insures. As 
 long as the termination of the venture takes place in the 
 United Kingdom, its colonies, or dependencies, the general 
 average being determined and assessed according to English 
 law, is to the extent of his proper proportion as binding for 
 the underwriter as it is for the merchant or shipowner 
 whom he insures.^ But when the general average obliga- 
 tions of shipowner and merchant are determined by the 
 provisions of foreign law, a question arises as to the extent 
 of the obligations of the English underwriter who contracts 
 to cover against general average. Mr. Justice Park {Insur- 
 ance, pp. 629-631) gives details of three cases in which 
 action arose on the liability of underwriters on Lloyd's 
 policy form for general average contribution paid by the 
 assured in accordance with foreign adjustment, Walpole 
 V. Ewer, 1789,^ Newman v. Cazaht (n.d. ),2 and Power v. 
 Whitmore, 1815.^ In the two former clear evidence was 
 given that " the adjustment was correct according to the 
 
 ' W^hen the contributing value is lower than the insured value, the 
 total amount of contribution is apportioned over the underwriters 
 pro rata of the amounts which they insure. When the contributing 
 value exceeds the insured value, the pro rata share attaching to the 
 difference between ihem falls on the shipowner, as being his own 
 unflerwriter for that amount. S.S. II,tlntoral Co. v. Murten, 
 H.L. 5th Aug. 1902 : 18 Times L. R. 802. 
 
 ' Quoted in Park's Insurance, pp. 629, 630 ; and Ueawcs, Lex 
 Mercaloria, 1789, p. 477. 
 
 * 4 M. & Sel. 141.
 
 312 MARINE INSURANCE chap. 
 
 law and practice of the port where it was settled " (Arnould, 
 p. 963), and the underwriters were held liable to pay. In 
 his judgment in Newman v. Cazalet (n.d.),^ Mr. Justice 
 Duller remarked : " On the general law the plaintiff would 
 fail ; but in all matters of trade, usage is a sacred thing. 1 
 do not like these foreign settlements of average, which 
 make underwriters liable for more than the standard of 
 English law. But if you are satisfied it has been the 
 usage, upon the evidence given, it ought not to be shaken." 
 in Power v. Whitmore, 1815,2 the same point came 
 before the Queen's Bench. Marshall (p. 546) reports the 
 result of the decision (per Lord Ellenborough) that " the 
 general average to which the underwriters are liable is 
 that alone which is admitted by the law of England." 
 Park (p. 631) makes the judgment much less positive, as 
 he admits that this holds only " where the parties are not 
 to be understood as having contracted on the foot {sic) of 
 some known general usage among merchants." But there 
 is no doubt that the impression did prevail, that the effect 
 of the decision was that underwriters in this country could 
 in no case be bound by a foreign adjustment. Arnould 
 (p. 964) corrects this impression, and quotes from Lord 
 Ellenborough's judgment : '* This contract {i.e. the policy) 
 must be governed in construction by the law of England, 
 where it was framed, unless the parties are understood as 
 having contracted on the footing of some other known 
 general usage among merchants relative to the same 
 subject, and shown to have obtained in the country, where 
 by the terms of the contract the adventure is made to 
 determine, and where a general average (if such should 
 under the events of the voyage be claimed) would, of 
 course, be demandable." 
 
 Foreign General Average (F.G.A.) Clause. — To pre- 
 vent dispute on this matter a special clause was formed, 
 called the " Foreign General Average Clause." Its forms 
 vary, e.g.— 
 
 • Quoted in Park's Insurance, pp. 629, 630 ; and Beawes, Lex 
 Xtercatoria, 1789, p. 477. 
 » 4 M. & Sel. 141.
 
 xvii FOREIGN GENERAL AVERAGE CLAUSE 313 
 
 " General average payable according to foreign custom." 
 Or, 
 
 " General average payable according to foreign state- 
 ment." Or, 
 
 " General average payable according to foreign statement 
 if so made up." Or, 
 
 (in the fuller form now adopted as Lloyd's clause) 
 " General average and salvage charges payable as per 
 official foreign statement if so made up, or per York- 
 Antwerp rules if in accordance with the contract of 
 affreightment." 
 
 But even a clause of this nature has not prevented 
 dispute on the question of liability. In Harris v. 
 Scaramanga, 1872,1 the question arose whether English 
 underwriters using a clause of this kind were bound to 
 contribute towards the deficiency in the amount needed to 
 meet a bottomiy bond — this deficiency having been in a 
 foreign statement properly adjusted as general average 
 and apportioned over all the interests concerned in the 
 venture. The courts held the underwriters liable. It 
 seems that the variations in three phrases, foreign statement, 
 foreign custom, a.x\d foreign official adjustment if so 7nade up, 
 indicate various states of feehng in underwriters' minds. 
 In Harris v. Scaramanga} Chief Justice Bovill decided 
 that in agreeing to settle according to foreign statement, 
 underwriters are bound by such statement though it be 
 wrong. This led to the adoption of foreign custom^ which 
 was intended to include all foreign legal and customary 
 regulations properly applicable to each case as it arose. 
 But the word " custom " is often taken in a narrower sense 
 to indicate the established local practice of any particular 
 port, and not the law or general commercial custom of 
 the country in which it is situated. That this difference 
 may be serious is well known to those who know how 
 different are the local commercial customs of Marseilles 
 from those of Dunkirk or Havre, or, to take an even more 
 striking case, the customs of Odessa from those of St. 
 Petersburg. This consideration led to the framing of the 
 
 » L.k. & C.F. 481.
 
 314 MARINE INSURANCE cmai- 
 
 third form — -foreign official adjusttnent if so made up. In 
 most Continental countries average adjusters hold official 
 appointments at the pt)rts where they practise, and their 
 statements have the efiect of a judgment in a court of 
 first instance. But recent cases seem to demonstrate that 
 this form of clause has its dangers, and for the moment 
 there is rather a feeling in favour of return to foreign 
 custom. 
 
 Application of York -Antwerp Rules. — Where the 
 contract of affreightment contains a provision that general 
 average shall be settled according to York-Antwerp rule^ 
 these rules are applied in the adjustment on every point 
 with which they deal. But as they do not form a complete 
 code of general average law, the points not dealt with in 
 them are treated in accordance with the law of destination 
 or other proper place for adjusting the claim. There is 
 room for some interesting questions as to the effect on 
 underwriter's liability of the application of York-Antwerp 
 rules at a destination (or port of dissolution of the venture) 
 where the law of the land is in some respects more 
 favourable to one or other of the concerned than the York- 
 Antwerp rules. It is probable that these questions will 
 first arise in the United States. But if it is borne in mind 
 that the liability for general average on the policy of 
 insurance cannot be greater than that of the assured on 
 the contract of affreightment, it is clear that the issue must 
 be fought out on the latter documents before the question 
 can be raised on the former. When the matter is viewed 
 in this light, it appears that it is almost certainly wrong to 
 import into the consideration of general average such ideas 
 as are derived from the fact that the marine insurance 
 policy is a document for the protection of the assured, and 
 that supplementary clauses added to it must be read as 
 added for his additional protection. The liability for 
 contribution exists quite independent of any right to 
 transfer that liability to third persons. 
 
 General Average Loss as distinguished from General 
 Average Contribution.^ — Up to this point we have dealt 
 with liability for general average as being what is expressed
 
 XVII G.A. LOSS AND G.A. CONTRIBUTION 315 
 
 more fully as liability for contribution to general average. 
 There seems 10 be no room for doubt that had questions of 
 insurance never come in the matter would have remained 
 on that basis. It was commonly so accepted up till 1868, 
 when the case of Dickenson v. Jardine ^ was decided. The 
 facts in that case were : A shipment of 641 packages of 
 tea was insured per Canute, Foochow to London, including 
 the risk of particular average, the policy in the usual form 
 expressly naming jettison as one of the perils insured 
 against. The vessel struck on a reef, and in the efforts made 
 to refloat her 607 packages of tea were jettisoned. The 
 merchant claimed the insured value of these packages from 
 his underwriters, who refused to pay, alleging that their only 
 liability was for general average contribution. It was held 
 by the court (Bovill, C. J., Willes, J., and Montague 
 Smith, J.) that the owner of the jettisoned goods having 
 insured them against jettison itiier alia, " has two remedies 
 — one for the whole value of the goods against the under- 
 writers, and the other for a contribution in case the vessel 
 arrives safely in port ; and he may avail himself of which 
 he pleases, though he cannot retain the proceeds of both so 
 as to be repaid the whole of his loss twice over." That is, 
 the underwriter paying the loss direct will have recourse 
 against all the parties to the venture for their proper 
 contributions to general average. It was not decided 
 whether the direct liability of underwriters came under the 
 head of general average or of particular average, but the 
 majority of average adjusters treated direct claims for goods 
 or ship's materials sacrificed as if they were claims for 
 particular average. This practice continued until the 
 decision of the Court of Appeal in Price v. A\ Shifs 
 Small Damai^e Association, 1889.2 That decision was 
 to the effect that general average sacrifices and particular 
 average losses were of such entirely different character, 
 that they could not be added together for the purpose 
 of attaining the percentage of franchise stipulated in the 
 memorandum. The result of this decision is best seen 
 
 > L. k. 3C.P. 639. * L k 22Q.B.D. 58a
 
 3i6 MARINE INSURANCE chap, xvii 
 
 in the rule of practice which was in consequence of it 
 adopted by the Association of Average Adjusters in 1890 
 and confirmed in 1891 : — 
 
 " That in case of general average sacrifice there is under 
 ordinary policies of insurance a direct liability of an under- 
 writer on ship for loss of or damage to ship's materials, and 
 of an underwriter on goods or freight, for loss of or damage 
 to goods or loss of freij^ht so sacrificed as a general average 
 loss ; that such loss not being particular average is not 
 taken into account in computing the memorandum percent- 
 ages, and that the direct liability of an underwriter for 
 such loss is consequently unaffected by the memorandum 
 or any other warranty respecting particular average." 
 
 The words " ordinary policies " in this rule are not free 
 from ambiguity, but in the discussion that preceded the 
 acceptance of the clause, it was explained that it was 
 desired " by these words to refer pointedly to such policies 
 as have no special clause inserted in them limiting under- 
 writers' liability in cases of general average sacrifice." 
 
 Effect of Decisions in Dickenson v. Jardine and 
 Price V. Al Ship's Small Damage. — The result of these 
 two decisions is that underwriters on a poUcy warranted 
 free of particular average are now responsible for a partial 
 loss by jettison or other sacrifice, if the assured chooses to 
 claim it direct ; the underwriters being, of course, subrogated 
 to the rights of the assured in any recovery he may make 
 in general average from the other interests in the venture. 
 This result is almost enough to make one doubt whether 
 anything has been gained in consistency or simplicity by 
 substituting general average ioss for the general average 
 contribution, which till 1868 was universally accepted as 
 the meaning of the liability imposed on underwriters under 
 the name of " General Average."
 
 APPENDICES 
 
 APPENDIX A 
 
 
 
 Sfii 
 
 %imen 
 
 sup 
 
 3/93- 
 
 
 X. 
 
 Y. & 
 
 CO. 
 
 
 S t . 
 
 , 
 
 
 . /75.000 
 
 
 S s . 
 
 , 
 
 
 . 75.000 
 
 
 M I . 
 
 , 
 
 
 6o,CX30 
 
 
 K s 
 
 . 
 
 
 50,000 
 
 
 12 mos. 
 
 
 
 
 
 Hull and M. 
 
 
 
 30 
 
 
 RDC. No. \. av 
 
 . ea. 
 
 val. 3. 
 
 ^ days. Dev. Dkg. 
 
 
 Cont., caused by coll b©- 
 
 -nc et-. In event of 
 
 
 C. T. L. u/rs. 
 
 to 
 
 have 
 
 no claim on Freight 
 
 
 F. C. & S. piracy excepted 
 
 . neg. 
 
 9^£S- 
 
 
 
 
 
 150 R Elliott 
 
 3000. 
 
 R B. L. 
 
 
 
 
 1050 Baddeley 
 
 3000. 
 
 J. S. Toulmin p/ 
 
 r' 
 
 
 
 300 R C H P n/e » 
 
 5CXX3 
 
 B & F pr. 
 
 
 
 
 600 H W F H 
 
 3CXX). 
 
 J. S. M. 
 
 
 
 
 750 C A H 29/3 
 
 1000. 
 
 A H 1000 28/3 
 
 
 
 
 800 A A &c 29/3 
 
 2000 
 
 J. C. S. 
 
 
 
 
 300 C Hy 29/3 p.r 
 
 3000 
 
 T. & M. 
 
 
 
 
 1650 TU n/e 
 
 2000 
 
 L. & P. 
 
 
 
 
 150/ 
 
 750 
 
 J. i>. W 29/3 
 
 
 
 
 600 L pr 
 
 750 
 
 M. 29/3 
 
 
 
 
 450 Rouse T 
 
 1000 
 
 Glover B. 
 
 
 
 
 750 J. F. A 29/3 
 
 3000 
 
 Marten p.r. 
 
 
 
 
 500 P. S. prorata 
 
 900 
 
 B29/3 
 
 
 
 
 2000 E. II. 
 
 2000 
 
 Tyser 29/3 
 
 
 
 
 600 E C M 29/3 
 
 600 f5« 
 
 Vai/.ey 29/3 4 
 
 
 
 
 300 Chance n/e 
 
 750 
 
 V. & H. 
 
 
 
 
 500 Pitman & C 29/3 
 
 600 
 
 Reiss 29/3 
 
 • P/r, pro no*. 
 
 
 
 
 450 G S C 29/3 
 * N/e, not entered.
 
 3i8 
 
 MARINE INSURANCE 
 
 600 Sands 29/3 
 
 200 
 
 300 Ciodwin 29/3 
 
 300 
 
 3CX) E N P"; 29/3 
 
 100 aee 
 
 1 500 Smiths &c n/e 
 
 600 
 
 400 Jupe 30/3 
 
 200 
 
 ^°°/w 30/3 
 
 200/ ^ '^ 
 
 200 
 300 
 
 300 W. E. B. 30/3 
 
 600 feei 
 
 1000 Canton \ ^z. 
 1000 Triton J ' 
 
 200 
 
 200 
 
 1500 B M 
 
 (OO 
 
 300 G H D 4/4 
 
 200 
 
 400 R.W.S. 
 
 500 
 
 300 Crocker & S 
 
 100 Angove 4/3 
 
 1500 
 
 400 W A S 2 4/4 
 
 1500 
 
 400 Anderson 44 
 
 ICX) 
 
 p.r. 
 
 
 A W. Y. Y. R/e 4/4 
 
 Denny 4/4 
 
 Round K 4/4 
 Nixon 
 Riley C 4/4 
 A J P 
 Catelin. 
 
 Foster 21/8 
 E. F. S. & M 4/4 
 Archer C 
 A H G 4/4 
 W W n/e 
 
 T. K. ^- 
 
 4 
 N. Zealand 
 W. S. 
 Harris H & Oo
 
 APPENDIX B 
 
 Extract from Martin's History of Lloyd's and of Marine Insuranct 
 in Great Britain, pp. 46-48. Original, Tanner MS. No. 74, 
 fo. 32, Bodleian Library, Oxford. 
 
 " In the name of God. Amen. Be it knowne vnto all men by 
 these presents that Morris .A.bbott and Devereux Wogan of London 
 merchants, doe make assurance and cause themselues and euerye 
 of them to be assured Lost or not Lost from London to Zante 
 Petrasse & Saphalonia or any of them vpon woollen & Lynnen 
 cloth Leade Kersies Iron & any other goods and merchandize 
 heretofore Laden aboard the good Shipp called the Tiger ^ of 
 London of the burthen of 200 touns or therabouts whereof is 
 master vnder god in this presente voyadge Thomas Crowder, 
 or whosoever ells shall goe for master in the said shipp or by 
 whatsoever other name or names the said shipp or the master 
 thereof is or shalbe named or called. And it shall & may be 
 Lawfull for the said shipp to touch & stay at any ports & 
 places on this side Zante as well on the Barhary as the Christian 
 shoare, & ther discharge relade & take in any goods mer- 
 chandize & mony at the discretion of the master & (factors 
 vppon the aduenture of the Assurers without preiudizc to this 
 assurance : And if in case any part of the said goods shalbe 
 discharged out of the said ship at any port or places before 
 mentioned the assurers shall take noe bennefitt or aduantadg 
 therby in case of Losse or aueradge vppon the rest of y" said 
 goods. But the assurers shall still beare their whole adventures if 
 ther be so much goods remayning aboard y« said shippe as shalbe 
 assured y« assureds aduenture of 10 per C°. deducted in as full & 
 ample manner, as if noe parte of y» said goods had becne dis- 
 charged out of y« saide shippe before hir cominge to hir last porte 
 of discharge any order custome or vsadge or any thing in this 
 pollacie mentioned to the Contrary notwithstandinge. Beginning 
 the Aduenture from the day & howre of the Lading of the said 
 
 1 Cf. Shakespeare. Macbeth L 3, 7 (written between 1603 and 1610) : 
 
 Her bushand'i to Aleppo tfone, mnster o' the Tigir 
 
 And see Clark and Wrijjhl's note in Clarendon Press .Series edition, citing 
 Sir Kenelm Digby's incniion in bis journal of 1628 of "ihe Tyeer 0/ Lon,toH 
 going for .'^candcrone," i.e. Alex.indretta. Hakluyt (y^yai^es) eives letters 
 and journals of a royage of the Tif;er 0/ London to Iripolis in 1583. 
 Shakespeare again mentions a ship called the Tiger in Ttufl/th Night, v. i, 65 : 
 
 And thlt U be that did tb« Tiftr boud.
 
 320 MARINE INSURANCE 
 
 cloth Lead Kersies Iron &c. aboard the same shipp at London 
 aforesaid, & soe shall continewe & endure vntill svich tyme as 
 the same shipp with the same Cloth Lead Kersies Iron i!v:c. shalbe 
 arrived at Zante I'elrasse & Saplialonia or any of them aforesaid 
 and the same ther discharged & laide on Land in good salfety. 
 Touching the Adventures & perills which wee the assurers here- 
 after named are contented to bcare, & doe faithfully promisse by 
 these presents to take vppon vs in this presente voyadge are of the 
 Seas, men of warr, fyer, enemyes pirratts rovers theeues, jettezons, 
 Lettres of marte & countermarte arests restraints, & deteynments 
 of Kings & princes and all other persons barrtary of the master 
 & mariners, & of all other perills Losses & misfortunes what- 
 soeuer they be or howsoever the same at any tyme before the date 
 hereof hath chaunced or heereafter shall happen or come to the 
 hurte detryment or damadge of the said cloth Lead Kersies Iron 
 &c. or any parte or parcell thereof. Allthough newes or knowledge 
 of any losse have already come or by the Computation of one 
 League or three English myles to one hower might have come to 
 London before the subscribinge hereof, any order cvstome or vsadge 
 heretofore had or made in Lumbard street or nowe within the 
 Royall exchange in London to the contrary notwithstandinge. 
 And that in case of any misfortune it shall & may be Lawfull to 
 the assureds ther factors servants & assignes or any of them to sue 
 Labor & travile for in and aboute the defence salfegard & 
 recouerie of the said Cloth Lead Kearsies Iron &c. or any parte or 
 parcell therof without any preiudice to this assurance. To the 
 charges wherof we the assurers shall contribute eachone accordinge 
 to the rate & quantety of his Some herein assured. Yt is to be 
 vnderstood that this presente writinge & assurance beinge made 
 and registered according to the Kings Majesties order & appoynt- 
 ment shalbe of as much force strength and effect as the best & 
 most suerest pollacie or writinge of assurance which hath binne euer 
 heretofore vsed to be made lost or not lost in the aforesaid streete 
 or Royall Exchange. And soe wee the assurers are contented & 
 doe promise and binde ourselues & euerye of vs our heyres 
 executors & goods by these presents to the assureds the executors 
 administrators & assignes for the true performance of the pre- 
 misses, Confessing ourselues fully satisfied contented & paid of 
 & for the consideracion due to vs for this assurance by these 
 presents at the hands of the said Morris Abbott & Deuereux 
 Wogan after the rate of fower pounds per C°. And in Testimonye 
 of the trueth wee the Assurers have hereonto seuerally subscribed 
 our names & somes of moneye assured yeoven in the office of 
 assurance within the Rovall exchange in London the ffyfteenth day 
 of ffebruary an°. 1613."^ 
 
 I The Tanner MS. No. 74 fo. 32, has been most carefully collated for this 
 reprint. I am informed that it contains no names of insurers or amounts 
 insured. The absence of these is a matter for regret. — G.
 
 APPENDIX 32« 
 
 Extract from Marsden's " Admiralty Cases, 1648- 1840" pp. 267 
 and 268.1 
 
 Policy of Insuratue 
 
 The following policy of insurance on the cargo of the Maria^ dated 
 29th June 1692, is taken from the Admiralty Assignation Book 
 labelled 337 :— 
 In the name of God. Amen. Peter Joy of London, merchant, 
 as well in his own name as for and in the name and names of all 
 and every other person or persons to whom the same doth may or 
 shall appertain in part or in all doth make assurance and causeth 
 himself and them and every of them to be insured lost or not 
 lost from Stockholm to London, upon any kind of goods and 
 merchandizes whatsoever loaden or to be loaden aboard the good 
 ship called the Maria, burden . . . tuns or thereabouts, whereof 
 ... is master under God for this present voyage Bary master or 
 whosoever else shall go for master in the said ship, or by what- 
 soever other name or names the said ship or the master thereof is or 
 shall be named or called : beginning the adventure ujwn the said 
 goods and merchandizes from and immediately following the lading 
 thereof aboard the said ship at Stockholme, and so shall continue 
 and endure untill the said ship with the said goods and merchandizes 
 whatsoever shall be arrived at London and the same there safely 
 landed. And it shall be lawfull for the said ship in this voyage 
 to stop and stay at any ports and places between Stockholme and 
 London, without prejudice to this insurance. The said goods and 
 merchandizes by agreement are and shall be valued at . . . sterling 
 without farther accompt to be given by the Assureds for the same. 
 Touching the adventures and perils which the Assurers are contented 
 to bear and do take upon us in this voyage they are of the seas, 
 men-of-war, fire, enemies, pirats, rovers, thieves, jettesones, letters 
 of mart and countermart, surprizals, takeings at sea, arrests, 
 restraints and detainments of all kings, princes, and people of what 
 nation, condition or quality whatsoever, barratry of the master and 
 mariners, and of all ])crils, losses, and misfcjrlunes that have or 
 shall come to the hurt, detriment, or damage of the said goods 
 and merchandize or any part thereof; and in case of any loss or 
 misfortune it shall be lawful! to the assured . . . factors servants 
 and assigns to sue labour and travel for in and about the defence 
 safeguard and recovery of the saiil goods and merchandizes or any 
 part thereof without prejudice to this insurance, to the charges 
 
 ' KeproHuce<l with llic pennission of the puhlishers, Me^srj. Wm. Clowei 
 uid Sons, Ltd., I»ndon, E.C. 
 
 V
 
 32a MARINE INSURANCE 
 
 whereof we the assurers will contribute each one according to the 
 rate ami quantity of his sum herein assured. And it is ai^reed by 
 us the insurers that this writing or policy of assurance shall be of 
 as much force and effect as the surest writing or policy of assurance 
 heretofore made in Lombard Street or elsewhere in London. And 
 so we the assurers are contented and do hereby promise and bind 
 ourselves each one for his own part, our heirs, executors and goods 
 to the assured . . . executors, administrators, and assigns for the 
 true performance of the premises, confessing ourselves paid the 
 consideration due unto us for this assurance by Ditto Joy after the 
 rate of three pounds per cent. 
 
 In witness whereof, we the assurers have subscribed our names 
 and sums assured in London. 
 
 Memoraruium. — The assurers do hereby covenant, promise and 
 oblidge themselves, their heirs, executors, and goods in case of 
 loss hapjiening (which God forbid) to satisfie and pay their several! 
 sums of money herein assured, upon the abatement only of ten 
 pounds per cent and no more, provided always that they pay their 
 respective sums of money by them assured according to subscription 
 within one month after . . . otherwise no abatement whatsoever to 
 be made, but to pay their full sums according to each man's sub- 
 scriptions, any use or custom to the contrary notwithstanding. 
 Written the day above said : 
 
 (I, John Berry, am content with this assurance which God 
 preserve for one hundred pounds this 29th June, 1692, 
 praemio reed. 
 
 (Here follow eleven other signatures, for £^oo in all.)^ 
 
 1 Mr. Matsden has been so good as to inform me th.it in the records of the 
 Admiralty Court he has discovered .in English policy of 6 Deer. 1557 issued in 
 London, covering the hull and the cargo of the EU from Vclis Maligo to 
 Antwerp and twenty-four hours after arrival. Of the eleven names of under- 
 writers only two are foreign and those are Italian. He has also found a policy 
 in Italian, dated London, 20 Septr. 1547, the signatures and declarations of 
 acceptance of risk at the end being in English. The risk in this case is on the 
 ship Santa Maria de Venetia from the port or bay of Cadiz to London. A 
 French policy which he has found, dated London, 8 Jan. 1565, seems to cover 
 three French ships and cargoes from Havre to Sagres ; of these, two were 
 destroyed by the Portuguese and the remaining one was damaged by collision on 
 her return to Havre : to this policy there are thirty-six underwriters. As Mr. 
 Marsden is engaged in editing the records of the Admiralty Court for the 
 •Selden Society the texts of these policies will before long be accessible to the 
 public. Meanwhile it is worth mentioning that he considers the policy of 1557 
 to be the earliest policy in English contained in the Admiralty records. As far 
 as I am able to judge, that policy and the Italian one of 1547 are both based on 
 Italian forms of earlier date and simpler content than that prescribed ia th<; 
 Florentine Ordinance of 1523. — G.
 
 APPENDIX 323 
 
 Extract from " Select Pleas in the Court of Admiralty," edited 
 for the Selden Society by R. G. Marsden, vol. ii. p. 49.^ 
 
 De Salizar (or Salazar) c. Bkukman 
 
 A.D. 1555. File 29, No. 45. Policy of assurance; the libel, 
 ibidem, contains an allegation that the assurers are liable if they do 
 not within two years, or one year, of the ship sailing certify or bring 
 to the knowledge of the assured the goods assured. 
 
 In London the fyvthe of Aug ist 1555. 
 
 . . . Spanyard dwellinge in Ix)ndon dothe cause ... to be 
 assured in the name of Anthony de (Salizar oO Andwerp from any 
 porte of the Isles of Indea of Calicut unto Lixborne in the ship 
 called Sancta Crux whereof was capytayn and master Fernando and 
 Peter de Lovona (?) upon all kinde of merchaundies whiche shall be 
 laden in the same ship by the handes of Diego de Frias or Anthony 
 Ferrera or other for them apperteynenge to Anthony de Salizar and 
 Ventura de Fryas or to whom soever they shall appertayn. The 
 adventure begeynethe from the ower that the said merchaundies or 
 parte thereof shall begin to be laded in the said shippe untill the 
 sayd shipp shall be arryved savely in Lixborn. And we bynde us 
 to l>ere the adventure of the said merchaundies and the costes of the 
 assurances. And we will that he shall not be bounde to bringe any 
 billes of ladinge but onely the chardge of his othe. And so we are 
 contented to bear this adventure. And we will that this assurans 
 shall be so stronge and good as the most ample writinge of assurans 
 whiche is used to be maid in tlie strete of London or in the burse of 
 Andwerp or in any other forme that shulde have more force. And 
 yf godes will be that the said shippe shall not well procede we 
 promys to remyt yt to honest merchaunts and not to go to the lawe 
 maid as aforesaid. 
 
 I Lewes de Paz am contented to bere the adventure in this assur- 
 ance for the some of C" money of Englond . . . . C" 
 
 (In all 22 subscriptions, for sums varying from ;^ioo to ;^io. 
 The above and most of the others are crossed out. That of Black- 
 man, one of the defendants in De Salizar c. Blcukmati, is as 
 follows : — ) 
 
 We John Blackman and John Watkins ar content to"j 
 
 assure in maner and forme abovesaid the vjth of August J- XXV" 
 
 1555 J 
 
 1 Reproduced with the permission of the Couniil of the Selden Society and the 
 approval of Mr. R. G. Maiden. This is the earliest policy in English yet 
 discovered (1899).
 
 APPENDIX Ca 
 
 THE 
 
 MARINE INSURANCE COMPANY, LIMITED 
 
 Skip. 
 
 3 v V £ in 
 
 O • u = S 
 
 o 2 "J=! 
 
 i 
 
 S ui * This company provisionally insures on vouj 
 
 M ^ - 
 
 a — o J2 
 
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 •« ^ C Voyage 
 
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 22 o ,r ? <" 
 
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 5 3 2 "So Interest 
 
 o— {> S <u . 
 
 ^ o. ^ « ag ^; Amount and premium £ @ 
 
 ^« I i«3'B percent. 
 
 ■£ ■§ - "S ° "^ ^ On receipt of the necessary particulars a stamped 
 
 * a 2 ^ o"o.5 
 
 Otj " tw.-""^ policy will be issued, and this slip cancelled. 
 
 ' S « « o J! i! 
 
 •- ? P5 r' J; )J d .-r > ■ 
 
 ,0 •£ o- o Underwriter. 
 
 Conditions — No thirds off. Collision, Deviation and Docking 
 CUiu.es. F.G.A. Y/A.
 
 APPENDIX Cb 
 
 THE 
 MARINE INSURANCE COMPANY, LIMITED 
 
 Cargo and Freight, 
 
 I s.i ^9 
 
 = g S 
 
 4) O n 
 
 o o 3 
 
 T3 « 2 This company provisionally insures on your account 
 
 ? Vessel 
 
 c ^ 
 2>! ^ 
 
 1|| Voyage 
 
 V V o 
 V « 
 
 S-^ Interest 
 
 3 « 
 
 ° "S Amount and Premium /[, ^ per cent. 
 
 ^ I.W. On receipt of the necessary particulars a stamped policy 
 
 C..--C . will be issued, and this slip cancelled. 
 
 ^ §."5 Underwrtter. 
 
 Conjiitiom. — Av^race *J customary. Free of particular avtiaR"?, Dnlcu 
 •tntr.dcd, tuiilc, or burnt. K.G.A. and V'/A Rulei. Deviation Clauic
 
 APPENDIX D 
 
 THE 
 
 .„ MARINE INSURANCE 
 
 COMPANY, LIMITED 
 
 Liverpool, 19 
 
 Quotation 
 
 Subject to acceptance by 
 
 and no risk until confirmed by as. 
 
 Dear Sir— In reply to your inquiry of the 
 beg to inform you that our present rate on P«I 
 
 at and from 
 
 per cent. 
 
 (Usual clauses, including F.C. & S.) 
 I am, dear sir, yours faithfully, 
 
 Underwriter.
 
 APPENDIX E 
 
 TENDER OF ABANDONMENT* 
 
 To the underwriters of 
 
 the ship " " (or steamship " "). 
 
 Information having reached us that the has been 
 
 wrecked (or sunk, or burnt, or lost by stranding or collision, etc.), 
 at , we hereby abandon to you our interest in the above 
 
 vessel, and claim from you payment of total loss in respect of the 
 sum of £ insured with you. 
 
 To the underwriters of the cargo 
 
 {or freight) of the ship " " (or steamship " " ). 
 
 Informntion having reached us that the ship " " has 
 
 been wrecked (or sunk, or burnt, or lost by stranding, or collision, 
 etc.), at , we hereby abandon to you our interest in the 
 
 goods shipped in above vessel as noted below and insured with you, 
 and we claim from you payment of total loss in respect of ;^ 
 insured with you on these goods. 
 
 ' S«e also Owen's Notet and Clautts, pp. 196, 198, 231.
 
 2a8 
 
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 APPENDIX 329 
 
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 330 MARINE INSURANCE 
 
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 APPENDIX 331 
 
 
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 APPENDIX G 
 
 YORK- ANTWERP RULES 
 
 Association for the Reform and Codification of tkt 
 Law of Nations 
 
 Liverpool Conference, 1890 
 
 Rule I.—fettison of Deck Cargo 
 
 No jettison of deck cargo shall be made good as general average. 
 Every structure not built in with the frame of the vessel shall be 
 considered to be a part of the deck of the vessel. 
 
 Rule II. — Damage by fettison and Sacrifice for the Common Safety 
 
 Damage done to a ship and cargo, or either of them, by or in 
 consequence of a sacrifice made for the common safety, and by 
 water which goes down a ship's hatches opened or other opening 
 made for the purpose of making a jettison for the common safety, 
 shall be made good as general average. 
 
 Rule III. — Extinguishing Fire on Shipboard 
 
 Damage done to a ship and cargo, or either of them, by water or 
 otherwise, including damage by beaching or scuttling a burning 
 ship, in extinguishing a fire on board the ship, shall be made good 
 as general average ; except that no compensation shall be made for 
 damage to such portions of the ship and bulk cargo, or to such 
 separate packages of cargo, as have been on fire. 
 
 Rule IV. — Cutting away Wreck 
 
 Loss or damage caused by cutting away the wreck or remains of 
 spars, or of other things which have previously been carried away 
 by sea peril, shall not be made good as general average. 
 
 332
 
 APPENDIX 333 
 
 Rule V. — Voluntary Stranding 
 
 WTien a ship is intentionally run on shore, and the circumstances 
 are such that if that course were not adopted she would inevitably 
 sink, or drive on shore or on rocks, no loss or damage caused to the 
 ship, cargo, and freight, or any of them, by such intentional running 
 on shore shall be made good as general average. But in all other 
 cases where a ship is intentionally run on shore for the common 
 safety, the consequent loss or damage shall be allowed as general 
 average. 
 
 Rule VI. — Carrying Press of Sail — Damage to or Loss of Sails 
 
 Damage to or loss of sails and spars, or cither of them, caused 
 by forcing a ship otT the ground, or by dri\'ing her higher up the 
 ground, for the common safety, shall be made good as general 
 average ; but where a ship is afloat, no loss or damage caused to 
 the ship, cargo, and freight, or any of them, by carrying a press 
 of sail shall be made good as general average. 
 
 Rule VII. — Damage to Engines in Refloating a Ship 
 
 Damage caused to machinery and boilers of a ship, which is 
 ashore and in a position of peril, in endeavouring to refloat, shall 
 be allowed in general average, when shown to have arisen from an 
 actual intention to float the ship for the common safety at the risk 
 of such damage. 
 
 Rule VIII. — Expenses Lightening a Ship when Ashore, and 
 Consequent Damage 
 
 WTien a ship is ashore and, in order to float her, cargo, bunker 
 coals, and ship's stores, or any of them are discharged, the extra 
 cost of lightening, lighter hire, and reshipjiing (if incurred), and 
 the loss or damage sustained thereby, shall be admitted as general 
 average. 
 
 Rule IX. — Cargo, Ship's Materials, and Stores burnt for Fuel 
 
 Cargo, ship's materials, and stores, or any of them, necessarily 
 burnt for fuel for the common safety at a time of peril, shall be 
 admitted as general average, when and only when an ample supply 
 of fuel had been provided ; but the estim.ited cpiantity of coals that 
 would have been consumed, calculatcrl at the price current at the 
 ship's la;>t port of departure at the dale of her leaving, shall be 
 charged to the shipowner and credited to the general average.
 
 334 MARINE INSURANCE 
 
 Rule X. — Expenses at Port of Refuge, etc. 
 
 (a) When a ship shall have entered a port or place of refuge, or 
 shall have returned to her port or place of loading, in consequence 
 of accident, sacrifice, or other extraordinary circumstances, which 
 render that necessary for the common safety, the expenses of enter- 
 ing such port or place shall be admitted as general average ; and 
 when she shall have sailed thence with her original cargo, or a part 
 of it, the corresponding expenses of leaving such port or place, 
 consequent upon such entry or return, shall likewise be adnratted as 
 general average. 
 
 (b) The cost of discharging cargo from a ship, whether at a port 
 or place of loading, call, or refuge, shall be admitted as general 
 average, when the discharge was necessary for the common safety, 
 or to enable damage to the ship, caused by sacrifice or accident 
 during the voyage, to be repaired, if the repairs were necessary for 
 the safe prosecution of the voyage. 
 
 (c) Whenever the cost of discharging cargo from a ship is 
 admissible as general average, the cost ol reloading and stowing such 
 cargo on board the said ship, together with all storage charges on 
 such cargo, shall likewise be so admitted. But when the ship is 
 condemned or does not proceed on her original voyage, no storage 
 expenses incurred after the date of the ship's condemnation or of 
 the abandonment of the voyage shall be admitted as general 
 average. 
 
 ((/J If a ship under average be in a port or place at which it is 
 practicable to repair her, so as to enable her to carry on the whole 
 cargo, and if, in order to save expenses, either she is towed thence 
 to some other port or place of repair or to her destination, or the 
 cargo or a portion of it is transhipped by another ship, or otherwise 
 forwarded, then the extra cost of such towage, transhipment, and 
 forwarding, or any of them (up to the amount of the extra expense 
 saved), shall be payable by the several parties to the adventure in 
 proportion to the extraordinary expense saved. 
 
 Rule XI. — Wages and Maintenance of Crew in Port of Refuge, etc. 
 
 When a ship shall have entered or been detained in any port or 
 place under the circumstances, or for the purposes of the repairs, 
 mentioned in Rule X., the wages payable to the master, officers, 
 and crew, together with the cost of maintenance of the same, during 
 the extra period of detention in such port or place until the ship 
 shall or should have been made ready to proceed upon her voyage, 
 shall be admitted as general average. P.ut when the ship is con- 
 demned or does not proceed on her original voyage, the wages and 
 maintenance of the master, officers, and crew, incurred after the 
 date of the ship's condemnation or of the abandonment of the 
 voyage, shall not be admitted as general average.
 
 APPENDIX 
 
 ?35 
 
 Rule XII. — Damage to Cargo in Discharging, etc. 
 
 Damage done to or loss of cargo necessarily caused in the act of 
 discharging, storing, reloading, and stowing, shall be made good as 
 general average, when and only when the cost of those measures 
 respectively is admitted as general average. 
 
 Rule XIII. — Deductions from Cost of Repairs 
 
 In adjusting claims for general average, repairs to be allowed in 
 general average shall be subject to the following deductions in 
 respect of " new for old," viz. — 
 
 In the case of iron or steel ships, from date of original register 
 to the date of accident : 
 
 Up to 
 
 I year old 
 
 (A) 
 
 Between 
 
 I & 3 years 
 
 (B) 
 
 Between 
 
 3 & 6 years 
 
 (C) 
 
 Betwpen 
 
 6 & lO years 
 
 (D) 
 
 Between 
 lO & 1 5 years 
 
 (!■:) 
 
 Over 
 
 15 years 
 
 (F) 
 
 All repairs to be allowed in fiill, e>:cept painting 
 or coating of bottom, from v.hich one-third is to l>e 
 deducted. 
 
 One-third to be deducted off repairs to and renewal 
 
 of woodwork of hull, masts, and spars, furniture, 
 
 upholstery, crockery, metal and glass ware, also 
 
 sails, rigging, ropes, sheets, and hawsers (other than 
 
 -j wire and chain), awnings, covers, and painting. 
 
 One-sixth to be deducted off wire rigging, wiie 
 
 ropes, and wire hawsers, chain cables and chains, 
 
 donkey engines, steam winches and connections, 
 
 L steam cranes and connections ; other repairs in full. 
 
 Deductions as above under clause B, except that 
 one-sixth be deducted off ironwork of masts and 
 spars and machinery (inclusive of boilers and their 
 L mountings). 
 
 Deductions as above under clause C, except that 
 one-third be deducted off ironwork of masts and 
 spars, repairs to and renewal of all machinery 
 (inclusive of boilers and their mountings), and all 
 hawsers, ropes, sheets, and rigging. 
 
 One-third to be deducted off all repairs and 
 renewals, except ironwork of hull and cementing 
 and chain cal)les, from which one -sixth to be 
 .deducted. Anchors to be allowed in full. 
 
 One- third to l)e derlucted off all repairs and 
 renewals. Anchors to he allowed in full. One- 
 I sixth to be deducted off chain cables. 
 
 f
 
 336 MARINE INSURANCE 
 
 Tlie deductions (except as to provisions and stores, 
 
 machinery, and boilers) to be regulated by the age 
 
 of the ship, and not the age of the particular part 
 
 of her to which tht.'y apply. No painting bottom 
 
 Generally J to be allowed if the bottom has not been jiainted 
 
 (G) I within six months previous to the date of accident. 
 
 No deduction to be made in respect of old material 
 
 which is repaired without being replaced by new, 
 
 and provisions and stores which have not been in 
 
 ^use. 
 
 In the case of wooden or composite ships : — 
 
 When a ship is under one year old from date of original register 
 at the time of accident no deduction new for old shall be 
 made. After that period a deduction of one-third shall be 
 made, wi-th the following exceptions : — 
 
 Anchors shall be allowed in full. Chain cables shall be subject 
 to a deduction of one-sixth only. 
 
 No deduction shall be made in respect of provisions and stores 
 which had not been in use. 
 
 Metal sheathing shall be dealt with by allowing in full the cost 
 of a weight equal to the gross weight of metal sheathing 
 stripped off, minus the proceeds of the old metal. Nails, 
 felt, and labour metalling are subject to a deduction of 
 one-third. 
 In the case of ships generally : — 
 
 In the case of all ships, the expense of straightening bent iron- 
 work, including labour of taking out and replacing it, shall 
 be allowed in full. 
 
 Graving-dock dues, including expenses of removals, cartages, 
 use of shears, stages, and graving-dock materials, shall be 
 allowed in full. 
 
 Rule XIV. — Temporary Repairs 
 
 No deductions "new for old " shall be made from the cost of 
 temporary repairs of damage allowable as general average. 
 
 Rule XV.— Loss of Freight 
 
 Loss of freight arising from damage to or loss of cargo shall be 
 made good as general average, either when caused by a general 
 average act, or when the damage to or loss of cargo is so made 
 good. 
 
 Rule XVI. — Amount to be made good for Cargo lost or damaged 
 
 by Sacrifice 
 
 The amount to be made good as general average for damage or 
 loss of goods sacrificed shall be the loss which the owner of the
 
 APPENDIX 
 
 337 
 
 goods has sustained thereby, based on the market values at the date 
 of the arrival of the vessel or at the termination of the adventure. 
 
 Rule XVII.—Contribularv Values 
 
 The contribution to a general average shall be made upon the 
 actual values of the projierty at the termination of the adventure, 
 to which shall be added the amount made good as general average 
 for property sacrificed ; deduction being made from the shipowner's 
 freight and passage-money at risk, of such port charges and crew's 
 wages as would not have been incurred had the ship and cargo been 
 totally lost at the date of the general average act or sacrifice, and 
 have not been allowed as general average ; deduction being also 
 made from the value of the property of all charges incurred in 
 respect thereof subsequently to the general average act, except such 
 charges as are allowed in general average. 
 
 Passengers' luggage and personal effects not shipped under bill of 
 lading shall not contribute to general average. 
 
 Rule X VI n.— Adjust me/ii 
 
 Except as provided in the foregoing rules, the adjustment shal. 
 be drawn up in accordance with the law and practice that would 
 have governed the adjustment had the contract of affreightment not 
 contained a clause to pay general average according to these rules.
 
 APPENDIX H 
 
 THE FOLLOWING ARE THE RULES OF PRACTICE 
 
 Adopted by the Association of Average 
 Adjusters up to May 1915 
 
 Note. — Some of the under-mentioned rules are, as indicated, 
 "Customs of Lloyd's," now by resolution of the Association incor- 
 porated amongst the Rules of Practice. The history of the collection 
 of the '* Customs of Lloyd's " by a Special Committee of the As- 
 sociation, and of their final incorporation as stated, appears in the 
 Annual Reports of the Association. The following is an Index of 
 the references to the " Customs" in the said Reports, viz.: — 
 
 THE "CUSTOMS OF LLOYD'S" 
 
 Appointment of a Committee to collect . . 1873, p. 20 
 
 Report of Committee, considered . . . 1874, p. 23 
 
 Do. further considered . . 1875, p. 22 
 
 and 
 1876, p. 12 
 
 Resolution — "That the Report on the ' Cu.stoms of 
 Lloyd's' as now amended be adopted, 
 and reprinted for the use of the Associa- 
 tion " 1876, p. 21 
 
 The preamble to the Customs was — 
 
 " Nothing can be called a ' Custom of 
 Lloyd's' which is determined by a de- 
 rision of the superior Courts ; for what- 
 ever is thus sanctioned rests on a ground 
 surer than Custom. A ' Custom of 
 Lloyd's ' then must relate to a point on 
 which the law is doubtful, or not yet 
 defined, but as to which, for practical 
 convenience, it is necessary that there 
 sliould be some uniform rule. By the 
 term is here understood the Customs of 
 
 338
 
 APPENDIX 339 
 
 English Adjusting, whether as affecting 
 General or Particular Average." 
 
 Resolution— "That the 'Customs of Lloyd's,' after 
 having been sanctioned by a two- thirds 
 vote of the Association, shall be deemed 
 to have the same force as a Rule of the 
 
 Association " 1877, p. 79 
 
 and 
 1878, p. iS 
 
 Resolution — " That the ' Customs of Lloyd's,' as col- 
 lected by this Association, be now con- 
 firmed " 1879, p. 21 
 
 Proposed — "That it be left to the Gsmmittee of 
 Management to consider the ' Customs 
 of Lloyd's ' as adopted by the Association 
 as Rules of Practice, and to delete such 
 rules, or parts of rules, as have been 
 affected by legal decisions, and to report 
 to the next General Meeting" . . 1889, p. 49 
 
 Report of the Committee accepted . . . 1890, p. 33 
 
 Adoption of alterations recommended by Com- 
 mittee 1S90, p. 35 
 
 and 
 1 891, pp. 32-34 
 
 I. Adjustments *' For the Consideration of Underwriters'* 
 (Proposed and Accepted 1894, p. 3a. Confirmed 1895, p. 25) 
 
 That any adjustment prepared for the consideration of under- 
 writers shall include a statement of the reasons of the average 
 adjuster for making such adjustment, and, when submitted in con- 
 junction with a claim for which underwriters are liable, shall be 
 contained in an entirely separate document. To such adjustments 
 the following note shall be appended, viz. : — 
 
 "This adjustment has been prepared bv request, to enable the 
 assured to submit the case to underwriters.' 
 
 Vidt " Rules Rescinded," p. 356 in/ra. 
 
 2, Interest ami Commission for Advancing Funds 
 (Propoicd and Accepted 1906, p. ai. Confirmed 1907, p. 60) 
 That, in practice, interest and commission for advancing funds 
 are only allowable in average when, proper and necessary steps 
 having been taken to make a collection on account, an out-of-pocket 
 expense for interest and /or commission for advancing funds » 
 reasonably incurred. 
 
 l^itie " Rules Itescindod," p. 356 i>^^rm.
 
 540 MARINE INSURANCE 
 
 3. Agency Commission and Afpcttey 
 (Proposed and Accepted 1906, p. ai. Confirmed 1907, p. 60) 
 That, in practice, neither commission (excepting bank commission) 
 nor any charge by way of agency or remuneration for trouble is 
 allowed to the shipowner in average, except in respect of services 
 rendered on behalf of cargo when such services are not involved in 
 the contract of aiTieighluient. 
 
 Viae " Kules RescLaded," p. 356 iti/ra. 
 
 4. Duty of Adjusters in respect of Cost of Repairs 
 
 (Proposed and Accepted 1879, p. 24. Confirmed 1880, p. ai) 
 
 That in adjusting particular average on ship or general average 
 which includes repairs, it is the duty of the adjuster to satisfy himself 
 that such reasonable and usual precautions have been taken to keep 
 down the cost of repairs as a prudent shipowner would have taken if 
 uninsured. 
 
 5. Claims for Damage to Shifs Machinery 
 
 (Proposed and Accepted 1880, p. 31. Confirmed 1881, p. 37) 
 
 That no claim for damage to ship's machinery shall be admitted 
 into an adjustment unless a survey has been held upon such 
 machinery by competent and disinterested engineers as soon as 
 practicable after the occurrence of the casualty giving rise to the 
 claim ; a certificate of such survey, reporting as to the nature and 
 cause of the damage, to be furnished to the adjuster : or unless 
 clear proof be given to the adjuster that the holding of such survey 
 or the obtaining of such certificate is impracticable, which proof is 
 to be set forth on the face of the adjustment. 
 
 6. Claims on Ship's Machitury 
 
 (Proposed and Accepted i8go, p. 32. Confirmed 1891, p. 31) 
 
 That in all claims on ship's machinery for repairs, no claim for a 
 new propeller or new shaft shall be admitted into an adjustment, 
 unless the adjuster shall obtain and insert into his statement evi- 
 dence showing what has become of the old propeller or shaft. 
 
 7. Water Casks {Custom of Lloyd's, 1876) 
 
 Water casks or tanks carried on a ship's deck are not paid for by 
 underwriters as general or particular average ; nor arc warps or 
 other articles when improperly carried on deck. 
 
 General Average — 
 
 8. Basis of Adjustment 
 
 (Proposed and Accepted 1889, p. 60. Confirmed 1890, p. 33) 
 (Addition proposed and accepted, 1899, p. 29. Confirmed 1900, p. 20) 
 
 That in any adjustment of general average not made in accord-
 
 APPENDIX 34» 
 
 ance with British law, it shall be prefaced on what principle oi 
 according to what law the adjustment has been made, and the reason 
 for so adjusting the claim shall be set forth. 
 
 In all cases the adjuster shall give particulars in a prominent 
 position in the average statement of the clause or clauses contained 
 in the charter-party and/or bills of lading with reference to the 
 adjustment of general average. 
 
 9. Deckload Jettison {^Custom of Lloyd's, Amended 1S90-91) 
 
 The jettison of a deckload carried according to the usage of trade, 
 and not in violation of the contracts of affreightment, is general 
 average. 
 
 There is an exception to this rule in the case of cargoes of cotton, 
 tallow, acids, and some other goods. 
 
 In lieu of— {Custom of Lloyds, 1876) 
 
 The gemral rule of law tioiv is, that tke Jettison of a deckload, 
 carried by consent of the shipper, is general average, as between 
 the parties who have assented to this mode of stowage. The 
 exceptions are, those trades in which tliere is a custom that 
 the jettison shall be at the risk of the shipper or owner of the 
 deckload. 
 
 Such customs may, perhaps, though not very correctly, be called 
 " Customs of Lloyd's.'^ 
 
 This cu<.tom exists with cargoes of cotton, tallow, acids, and somt 
 other goods, 
 
 10. Damage by Water used to extinguish Fire 
 
 (Proposed and Accepted 1873, p. ao. Confirmed 1874, p. 18) 
 
 Tliat damage done by water poured down a ship's hold to ex- 
 tinguish a fire be treated as general average. 
 
 II. Damage caused by Water thrown upon Burning Goods 
 
 (Proposed and Accepted 1874, p. 23. Confirmed 1875, p. 21) 
 
 That goods in a ship which i.i on fire, or the cargo of which is on 
 fire, affected by water voluntarily used to extinguish such fire, shall 
 not be the subject of general average if the packages so affected l)e 
 themselves on fire at the time the water was thrown upon them. 
 
 12. Voluntary Stranding {Custom of Lloyd's, 1876) 
 
 The Custom of Lloyd's excludes from general average all damage 
 to ship or cargo resulting from a voluntary stranding.
 
 342 MARINE INSURANCE 
 
 This rule does not necessarily exclude such damage as is done by 
 beaching or scuttling a burning vessel to extinguish the fire. 
 
 13. Expenses lis^htening a Ship when Ashore {Custom of Lloyd's 
 
 as amende i 1890-91) 
 
 ^^^^en a ship is ashore, and, in order to float her, cargo is put 
 into lighters and is then at once re-shipped, the whole cost of lighter- 
 ing, including lighter hire and re-shipping, is general average. 
 
 In lieu oj the following, formerly succeeding Section (/) in 
 " Expenses at Port of Refuge " 
 
 The above rules do not apply to the cost of light ening a ship when 
 ashore, in case the cargo is put into lighters in order to float 
 the ship, and is then at once re- shipped. In such cases, the 
 whole cost of lightening, including that of re-shipping, is 
 general average. 
 
 14. Sails set to force a Ship off the Ground {Custom of Lloyd'' s, 1876) 
 
 Sails damaged by being set, or kept set, to force a ship off" the 
 ground, or to drive her higher up the ground for the common safety, 
 are general average. 
 
 15. Stranded Vessels. Damage to Engines in getting off 
 
 (Proposed and Accepted 1890, p. 64. Confirmed 1891, p. 35) 
 (Amended 1906, p. 15. Confirmed 1907, p. 46) 
 
 That damage caused to machinery and boilers of a stranded 
 vessel, in endeavouring to refloat for the common safety, when the 
 interests are in peril, be allowed in general average. 
 
 16. Claims arising out of Deficiency of Fuel 
 (Proposed and Accepted 1899, p. 50. Confirmed 1900, p. 25) 
 
 That in adjusting yjeneral average arising out of deficiency of 
 fuel, the facts on which the general average is based shall be set 
 forth in the adjustment, including the material dates and distances, 
 and particulars of fuel supplies and consumption. 
 
 17. Resort to Port of Refuge for General Average Repairs: 
 Treatment of the Charges incurred 
 
 (Proposed and Accepted i883, p. 45. Confirmed 1889, p. 48) 
 That when a ship puts into a port of refuge in consequence ol
 
 APPENDIX 343 
 
 damage which is itself the subject of general average, and sails 
 thence with her original cargo, or a part of it, the outward as well 
 as the inward port charges shall be treated as general average ; and 
 when cargo is discharged for the purpose of repairing such damage, 
 the warehouse rent and reloading of the same shall, as well as the 
 discharge, be treated as general average. (See Attwoodv. Sellar.) 
 
 l8. Resort to Port of Refuge on (ucmint of Particular Average 
 Repairs: Treatment of the Charges incurred 
 
 (Proposed and Accepted i833, p. 47. Confirmed 1889, p. 49) 
 
 That when a ship puts into a port of refuge in consequence of 
 damage which is itsi^lf the subject of particular average (or not of 
 general average), and when the cargo has been discharged in conse- 
 quence of such damage, the inward port charges and the cost of 
 discharging the cargo shall be general average, the warehouse rent 
 of cargo shall be a particular charge on cargo, and the cost of 
 reloading and outward port charges shall be a particular charge on 
 freight. (See Svendsen v, Wallace.) 
 
 19. Treatment of Costs of Storage and Reloculing at Port of Refuge 
 (Proposed and Accepted 1886, p. 37. Confirmed 1887, p. 36) 
 
 That when the cargo is discharged for the purpose of repairing, 
 re-conditioning, or diminishing damage to ship or cargo which is 
 itself the subject of general average, the cost of storage on it and of 
 reloading it shall be treated as general average, equally with the 
 cost of discharging it. 
 
 20. Expenses at a Port of Refuge ( Custom of Lloyd^s, Atiienued 
 
 1890-91) 
 
 WTien a ship puts into a port of refuge on account of accident, 
 and not in consequence of damage which is itself the subject of 
 general average, then, on the assumption that the ship was sea- 
 worthy at the commencement of the voyage, the custom of Lloyd's 
 is as follows : — 
 
 (a) All cost of towage, pilotage, harbour dues, and other extra- 
 
 1876 ordinary expenses incurred in order to bring the ship and 
 
 cargo into a place of safely, are general average. Under the 
 
 term "extraordinary expenses" are not included wages or 
 
 victuals of crew, coals, or engine stores, or demurrage. 
 
 (^) The cost of discharging the cargo, whether for the common 
 1876 safety, or to repair the ship, together with the cost of convey 
 ing it to the warehouse, is general average.
 
 344 
 
 MARINE INSURANCE 
 
 The cost of discliar^'incj the cargo on account of damage to 
 it resulting from its own vice propre, is chargeable to the 
 owners of the cargo. 
 
 (r) The warehouse rent, or other expenses which take the 
 1S76 place of warehouse rent, of the cargo when so discharged, 
 is, except as under, a special charge on the cargo. 
 
 {d) The cost of reloading the cargo, and the outward port 
 1876 charges incurred through leaviiii; the port of refuge, are, 
 when the discharge of cargo falls in general average, a 
 special charge on freight. 
 
 {<;) The expenses referred to in clause (rf) are charged to the party 
 
 1S76 who runs the risk of freight ; that is, wholly to the charterer, 
 
 if the whole freight has been prepaid ; and if part only, then 
 
 in the proportion which the part prepaid bears to the whole 
 
 freight. 
 
 (/) When the cargo, instead of being sent ashore, is placed on 
 board hulk or lighters during the ship's stay in jxjrt, the 
 hulk-hire is divided between general average, cargo, and 
 freight, in such proportions as may place the several con- 
 tributing interests in nearly the same relative positions as if 
 the cargo had been landed and stored. 
 
 The amendment is in the preamble ^ which formerly read thus : — 
 When a ship puts into a port of refuge on account of accident or 
 sacrifice, then, on the assumption that the ship was seawoiihy 
 at ike commencemetit of the voyage, the custom of Lloyd's is as 
 follows : — 
 
 21. Treatment of Costs of Extraordinary Discharge 
 
 (Proposed and Accepted 1886, p. 37. Confirmed 1887, p. 36) 
 
 That no distinction be drawn in practice between discharging 
 cargo for the common safety of ship and cargo, and discharging it 
 for the purpose of effecting at an intermediate port or ports of refuge 
 repairs necessary for the prosecution of the voyage. 
 
 22. Towage from a Port of Refuge 
 
 (Proposed and Accepted 1876, p. 26. Confirmed 1877, p. 54) 
 
 That if a ship be in a port of refuge at which it is practicable to 
 repair her, and if, in order to save expense, she be towed thence tc 
 some other port ; then the extra cost of such towage shall be 
 divided in proportion to the saving of expense thereby occasioned to 
 the several parties to the adventure.
 
 APPENDIX 345 
 
 23. Cargo forwarded from a Port of Refuge 
 
 (Proposed and Accepted 1S76, p. 26. Confirmed 1877, p. 34) 
 
 That if a ship be in a port of refuge at which it is practicable to 
 repair her so as to enable her to carry on the whole cargo, but, in 
 order to save expense, the cargo, or a portion of it, be transhipped 
 by another vessel, or otherwise forwarded ; then the cost of such 
 transhipment (up to the amount of expense saved) shall be divided 
 in proportion to the saving of expense thereby occasioned to the 
 several parties to the adventure. 
 
 24. Cargo sold at a Port of Refuge 
 
 (Proposed and Accepted 1902, p. 34. Confirmed 1903, p. 18) 
 
 That if a ship be in a port of refuge at which it is practicable to 
 repair her so as to enable her to carry on the whole cargo, or such 
 portion of it as is fit to be carried on, but, in order to save expense, 
 the cargo, or a portion of it, be, with the consent of the owners of 
 such cargo, sold at the port of refuge, then the loss by sale, including 
 loss of freight on cargo so sold (up to the amount of expense saved), 
 shall be divided in proportion to the saving of expense thereby 
 occasioned to the several parties to the adventure : provided always 
 that the amount so divided shall in no case exceed the cost of 
 transhipment and/or forwarding referred to in the preceding rule of 
 the Association. 
 
 25. Interpretation of the Rule respecting Substituted Expenses 
 (Proposed and Accepted 1877, p. 63. Confirmed 1878, p. 18) 
 
 That for the purpose of avoiding any misinterpretation of the 
 resolution relating to the apportionment of substituted expenses, it 
 is declared that the saving of expense therein mentioned is limited 
 to a saving or reduction of the actual outlay, including the crew's 
 wages and provisions, if any, which would have been incurred at 
 the port of refuge, if the vessel had been repaired there, and does 
 not include supposed losses or expenses, such as interest, loss ol 
 market, demurrage, or assumed damage by discharging. 
 
 26. Damage caused to Cargo during Forced Discharge 
 
 (Proposed and Accepted 1883, p. 58. Confirmed 1884, p. 37) 
 
 That whenever the cost of discharging cargo is general average, 
 all loss or damage necessarily arising to cargo therefronn shall be 
 allowed in general average. 
 
 KiJ:* " Eules Rescinded," p. 356 i«/V«-
 
 346 
 
 MARINE INSURANCE 
 
 27. Treatment of Damage to Carina caused by Discharge, Storing, 
 
 and Reloading 
 
 (Proposed and Accepted 1886, p. 37. Confirmed 1887, p. 36) 
 
 The damage necessarily done to car};o by discharging, storing, 
 and reloading it, be treated as general average when, and only 
 when, the cost of those measures respectively is so treated. 
 
 28. Deductions from Cost of Repairs to Iron Vessels in adjusting 
 Gemral Average 
 
 (Proposed and Accepted 1887, p. 36. Confirmed 1888, p. 38) 
 
 {Re/erred to Special Committee, 1884, p. 45 — Reports, Prov., 1885, p. 19, 
 Final, 18S6, p. i6) 
 
 That in adjusting claims for general average, repairs to iron 
 vessels shall be subject to the following deductions in respect of 
 " new for old," viz : — 
 
 From Date of Origincd Register, 
 
 Up to { All repairs to be allowed in full, except painting 
 I year old -! or coaling of bottom, from which one-third is to be 
 (A) [deducted. 
 
 One-third to be deducted off repairs to and re- 
 newal of boilers and their mountings, woodwork 
 of hull, masts and spars, furniture, upholstery, 
 crockery, metal and j;lassware, also sails, rigging, 
 ropes, sheets, and hawsers (other than wire and 
 chain), awnings, covers, and painting. 
 
 One-sixth to be deducted off wire rigging, ropes, 
 and hawsers, chain cables and sheets, donkey 
 engines, steam winches, steam cranes and con- 
 ^nections ; other repairs in full. 
 
 Between f Deductions as above under Clause B, except 
 3 & 6 years \ that one sixlh.be deducted off ironwork of masts and 
 (C) [spars, and machinery other than boilers. 
 
 Deductions as above under Clause C, except that 
 one-third be deducted off ironwork of masts and 
 spars, repairs to and renewal of all machinery and 
 all hawsers, ropes, sheets and rigging ; one-sixth to 
 be deducted off chains and cables. 
 
 Between 
 
 I & 3 years 
 
 (B) 
 
 Between 
 
 6 & 10 years 
 
 (D) 
 
 After 
 ro years 
 
 (E) 
 
 (One-third to be deducted off all repairs and 
 renewals, except ironwork of hull and cementing. 
 Anchors to be allowed in full. 
 One-sixth to be deducted off chain cables.
 
 APPENDIX 347 
 
 Generally 
 
 The deductions (except as to provisions and 
 stores, machinery and boilers) to be regulated by the 
 age of the vessel, and not the age of the particular 
 part of her to which they apply. No painting 
 bottom to be allowed if the bottom has not been 
 painted within six months previous to the date of 
 accident. No deduction to be made in respect of 
 old material which is repaired without being re- 
 placed by new, and provisions and stores which 
 have not been in use. 
 
 S9. Freight SacriJUed: Amount to be made good in General Average 
 (Proposed and Accepted 1894, p. 56. Confirmed 1895, p. 29) 
 
 That the loss of freight to be made good in general average shall 
 be ascertained by deducting from the amount of gross fi-eight lost 
 the charges which the owner thereof would have incurred to earn 
 such freight, but has, in consequence of the sacrifice, not incurred. 
 
 30. Basis of Contribution to General Average 
 (Original Rule of Practice, 1873) 
 
 VTien property saved by a general average act is injured of 
 destroyed by subsequent accident, the contributing value of that 
 property to a general average which is less than the total con- 
 tributing value shall, when it does not reach the port of destination, 
 be its actual net proceeds ; when it does, it shall be its actual net 
 value at the port of destination, on its delivery there ; and in all 
 cases any values allowed in general average shall be added t^ and 
 form part of the contributing value as above. 
 
 The above rule shall not apply to adjustments made before the 
 adventure has terminated. 
 
 31. Contributory Value of Ship 
 (Proposed and Accepted 1899, p. 41. Confirmed 1900, p. 20) 
 
 That in any adjustment of general average there shall be set 
 forth the certificate on which the contributory value of the ship is 
 based, or if there be no such certificate, the information adopted in 
 lieu thereof, and any amount made good shall l>e specified. 
 
 32. Contributory Value of Freight 
 (Original Rule of Practice, 1873) 
 
 That freight at the risk of the shipowner shall contribute to 
 general average u[K-n its gross amount, deducting the whole of, and
 
 J48 MARINE INSURANCE 
 
 no more than, such port charges as the shipowner shall incur after 
 the diUe of the general average act, and such wages of the crew as 
 the shipowner shall become liable for after that date. 
 
 (Proposed and Accepted 1899, p. 48. Confirmed 1900, p. 24) 
 
 That in any adjustment of general average there shall be set 
 forth the amount of the gross freight and the freight advanced, if 
 any ; also the port charges and wages deducted, and any amount 
 made good. 
 
 33. Vessel in Ballast and under Charter : Contributing Interests 
 (Proposed and Accepted 1896, p. 63. Confirmed 1897, p. 34) 
 
 That when a vessel is in ballast and under charter, the interests 
 contributing to expenses or sacrifices incurred for the common 
 safety are, in practice, the ship and the freight she is earning under 
 the charier, computed as usual in the adjustment of general average, 
 unless the expenses are salvage expenses specifically charged by a 
 Court of Law or by arbitration to the vessel without any regard to 
 the freight. 
 
 34. Chartered Freight {ulterior) : Contribution to General Average 
 
 (Proposed and Accepted 1891, p. 35. Confirmed 1892, p. ay) 
 
 That when at the time of a general average act the vessel has on 
 board cargo shipped under charter-party or bills of lading, and is 
 also under a separate charter to load another cargo after the cargo 
 then in course of carriage has been discharged, the ulterior chartered 
 freight shall not contribute to the general average. 
 
 35. Deductions from Freight at Charterer's Risk 
 
 (Original Rule of Practice, 1873) 
 
 That freight at the risk of the charterer shall be subject to no 
 deduction for wages and port charges, except in the case of charters 
 in which the wages or port cliarges are payable by the charterer, 
 in which case such freight shall be governed by the same rule &£ 
 freight at the risk of the shipowner. 
 
 36. Forwarding Charges on Advanced Freight 
 
 (Original Rule of Practice, 1873) 
 
 That in case of wreck, the cargo being forwarded to its destina- 
 tion, the charterer, who has paid a lump sum on account of freight, 
 wliich is not to be returned in the event of the vessel being lost, 
 shall not be liable f(ir any portion of the forwarding freight and 
 charges, when the same are less than the balance of freight payable
 
 APPENDIX 349 
 
 to the shipowner at the port of destination under the original 
 charter-party. 
 
 37. Adjustment : Policies of Insurance and Names of Underwriters 
 
 (Proposed and Accepted 1889, p. 60. Confirmed iSqo, p. 33) 
 
 That no statement shall be drawn up showing the amount of 
 payments by or to the underwriters, excluding statements of par- 
 ticular average on ship now dealt with by rule of the Association, 
 unless the policies, or copies of policies of insurance, or certificates 
 of insurance, for which the statement is required, be produced to 
 the adjusters ; and that such statement shall give the names of the 
 underwriting firms and companies interested, and the amounts due 
 on the respective policies produced. 
 
 38. Sacrifice for the Common Safety : Direct Liability of 
 Underwriters 
 
 (Proposed and Accepted 1890, p. 43. Confirmed 1891, p. 34) 
 
 That in case of general average sacrifice there is, under ordinary 
 policies of insurance, a direct liability of an underwriter on ship for 
 loss of or damage to ship's materials, and of an underwriter on 
 goods or freight, for loss of or damage to goods or loss of freight so 
 sacrificed as a general average loss ; that such loss, not being par- 
 ticular average, is not taken into account in computing the memo- 
 randum percentages, and that the direct liability of an untlerwriter 
 for such loss is consequently unaffected by the memorandum or any 
 other warranty respecting particular average. 
 
 39. Enforcement of General Average Lien by Shipowners 
 
 (Proposed and Accepted 1890, p. 56. Confirmed 1891, p. 34) 
 
 That in ail cases where general average damage to ship is claime^l 
 direct from the underwriters on that interest, the average adjusters 
 shall ascertain whether the shipowners have taken the necessary 
 steps to enforce their lien for general average on the cargo, and 
 shall insert in the average statement a note giving the result of 
 their inquiries. 
 
 40. Underwriter's Liability {Custom of Lloyd's, 1S76) 
 
 If the ship or cargo l^e insured for more than its contributory 
 value, the underwriter pays what is assessed on the c<)ntrii)utory 
 value. Hut where insured for less than the contributory v^luc, the 
 underwriter pays 011 the insured value ; and wh<n there h.-is been 
 a particular average for damage which forms a doductioa from the
 
 350 MARINE INSURANCE 
 
 contributory value of the ship, that must be deducted from the 
 insured value to find upon what the underwriter contributes. 
 
 This rule does not apply to foreign adjustments, when the basis 
 of contribution is something other than the net value of the thing 
 insured. 
 
 41. The Duty of Adjusters in Cases involving Refunds of General 
 Average Deposits or Apportionment of Salvage, Collision Re- 
 coveries, or other Funds 
 
 (Proposed and Accepted 1896, p. 50. Confirmed 1897, p. 34) 
 
 That in cases of general average where deposits have been col- 
 lected, and it is likely that repayments will have to be made, measures 
 be taken by the adjuster to ascertain the names of underwriters 
 who have reimbursed their assured in respect of such deposits ; that 
 the names of any such underwriters be set forth in the adjustment 
 as claimants of refund, if any, to which they are apparently entitled ; 
 and that on completion of the adjustment, notice be sent to all 
 underwriters whose names are so set forth as to any refund of which 
 they appear as claimants and as to the steps to be taken in order 
 to obtain payment of the same. 
 
 That in cases where the names of any underwriters are not to be 
 ascertamed on completion of the adjustment, notice be sent to the 
 Secretary of Lloyd's, to the Institute of London Underwriters, to 
 the Liverpool Underwriters' Association, and to the Association of 
 Underwriters of Glasgow, notifying such interests as have not been 
 appropriated to underwriters. 
 
 And that in cases of apportionment of salvage or other funds for 
 distribution, similar measures be taken by the adjuster to safeguard 
 the interests of any underwriters who may be entitled to benefit 
 under the apportionment. 
 
 42. " Memorandum " to Statements showing Refunds in respect of 
 General Average Deposits 
 
 (Proposed and Accepted 1904, p. 5a Confirmed 1905, p. 36) 
 
 That the following memorandum shall appear at the end of state- 
 ments which show refunds to be due in respect of general average 
 deposits, viz. : — 
 
 " Memorandum. — Refunds shown in this statement should only 
 be paid in exchange for the ' original ' deposit receipts ; or, 
 in the event of their non-production, adequate indemnities 
 must be obtained."
 
 APPENDIX 351 
 
 V'ork-Antwerp Rules — 
 
 43. Modifiration of York- Antwerp Rules in Contracts of 
 Affreightment : Liability of Underwriters 
 
 (Proposed and Accepted 1904, p. 44. Confirmed 1905, p. 32) 
 Referred to a Special Comtnittee, 1901, p. 67 
 
 That in all cases where the contract of affreightment provides 
 for the application of York-Antwerp Rules in any modified or 
 mutilated form, an 1 when the policies of insurance provide for the 
 application of York- Antwerp Rules, if in accordance with the con- 
 tract of affreightment, in applying the claim to such policies no 
 effect shall be given to York- Antwerp Rules. 
 
 44. Allowance to be made in General Average under York- Antwerp 
 Rules in respect of the Cost of Maintenance of Officers and Crew 
 
 (Proposed and Accepted 1896, p. 47. Confirmed 1897; p. 33) 
 Amended 1913, p. 27 
 
 That the amount to be allowed in general average under York- 
 AiUwerp Rules for the maintenance of officers and crew shall be 
 the actual cost of such maintenance where proved ; but where proof 
 of actual cost is not furnished to the adjuster, the allowance shall 
 be determined by the under-mentioned scale ; provided that where 
 evidence of cost is produced, but is not conclusive, the allowance 
 shall represent as nearly as possible the actual cost, but shall not 
 exceed the under-mentioned scale, viz. : — 
 
 OfficcrsI Crew 3 
 
 per man per day. per man per d.iy. 
 Passenger Steamers (Liners) . . 4s. ckI. is. 6d. 
 
 Passenger Sailing Vessels . . 3s. cxi. is. 6d. 
 
 Cargo Steamers and Sailing Vessels 2s. 6d. is. 6d. 
 
 except that the allowance for Lascars shall be gd. per man per 
 day, and in the case of other Asiatic (native) crews shall be deter- 
 mined by the circumstances of each case. 
 
 1 To include the master, deck officers, and engineers (in the case of a steamer), 
 also the doctor and purser (if carried). 
 
 ' To include the remainder of the ship's company. 
 
 Particular Average on Ship — 
 
 45. Statement of Particular Average on Ships 
 
 (Proposed and Accepted 1874, p. 23. Confirmed 1875, p. 19) 
 
 That claims for particular average on ships shall not be stated 
 unless the ptjlicics or copies of policies of insurance, for claiming on 
 which the statement is reriuired, be produccil to the adjusters.
 
 j5a MARINE INSURANCE 
 
 (Proposed and Accepted 1874, p. 23. Confirmed 1875, p. 19) 
 Thnt such statcmcnls shall p;ive the names of the underwriting 
 firms and companies interested, and the amounts payable on the 
 respective policies produced. 
 
 46. Apportionment of Costs in Collision Cases 
 
 (Proposed and Accepted 1889, p. 43. Confirmed 1890, p. 30) 
 {Re/erred to a S/>ecial Committee 1888, p. 38) 
 
 That when a vessel sustains and does damage by collision, and 
 litigation consequently results for the purpose of testing lialjility, 
 the technicality of the vessel having been plaintiff or defendant in 
 the litigation shall not necessarily govern the apportionment of the 
 costs of such litigation, which shall be apportioned between claim 
 and counterclaim in proportion to the amount which has been or 
 would have been allowed in respect of each in the event of the 
 claim or counterclaim being established ; provided that when a 
 alaim or counterclaim is made solely for the purpose of defence, 
 and is not allowed, the costs apportioned thereto shall be treated 
 as costs of defence. 
 
 47. Expenses of Removing a Vessel for Repair 
 
 (Proposed and Accepted 1896, p. 23. Confirmed 1897, P- 24) 
 
 Where a vessel is in need of repair at any port, and is removed 
 thence to some other port for the purpose of repairs, either because 
 the repairs cannot be effected, or cannot be effected prudently : — 
 
 (a) The necessary expenses incurred in moving the vessel to 
 the port of repair shall be allowed as part of the cost of 
 repair, and where the vessel after repairing forthwith 
 returns to the port from which she was removed, the 
 necessary expenses incurred in so returning shall also 
 be allowed. 
 
 {b) Where by moving the vessel to the port of repair any 
 new freight is earned, or any expenses are saved in 
 relation to the current voyage of the vessel, such net 
 earnings or savings shall be deducted from the expenses 
 of moving her, and where the vessel loads a new cargo 
 at the port of repair no expenses subsequent to the com- 
 pletion of repair shall be allowed. 
 
 The expenses of removal include the cost of temporary 
 repair, ballasting, wages and provisions of crew and/or 
 runners, pilotage, towage, extra marine insurance, port 
 charges, and, in case of a steamer, coal and engine-room 
 .■■ti res. 
 
 fr) This rule shall not admit any ordinary expenses incurred
 
 APPENDIX 353 
 
 in fulfilment of a contract of affreightment, though such 
 expenses are increased by the removal to a port of repair. 
 
 48. Coals and Stores used in Repair of Damage to the Hull 
 (Proposed and Accepted 1876, p. ?3. Confirmed 1877. p. 53) 
 
 That the cost of replacing coals and engine-room stores consumed 
 either in the repair of damage to a steamer, in working the engines 
 or winches to assist in the repairs of damage, or in moving her to 
 a place of repair within tlie limits of the port where she is lying, 
 shall be charged to the underwriters on ship as particular average. 
 
 49. Rig^ng Chafed {Custom of Lloyd's, 1876) 
 
 Rigging injured by straining or chafing is not charged to under- 
 writers, unless such injury is caused by blows of the sea, grounding, 
 or contact ; or by displacement, through sea peril, of the spars, 
 channels, bulwarks, or rails. 
 
 50. Sails split or blown away {Custom of Lloyd" s, 1 876) 
 
 Sails split by the wind, or blown away while set, unless occa- 
 sioned by the ship's grounding or coming into collision, or in con- 
 sequence of damage to the spars to which the sails are bent, are 
 not charged to underwriters. 
 
 51. Scraping and Painting 
 fProposed and Accepted 1900, p. 26. Confirmed 1901, p. 41) 
 
 That when in consequence of damage by a peril insured against, 
 a vessel's bottom has to be scraped and painted, the cost of such 
 scraping and painting shall be charged to underwriters on ship, 
 without any deduction on account of the vessel having become due 
 for ordinary painting at any time subsequent to the accident. 
 
 52. Dry Dock Expenses 
 
 That where repairs on owner's account which are immediately 
 necessary for the purpose of making the vessel seaworthy, and which 
 can only be effected in dry dock, are executed concurrently with 
 other repairs, for the cost of which the underwriters arc liable, and 
 which also can <Mily be cfTecfcd in dry dock, the cost of entering and 
 leaving the dry dock, in addition to so much of the dock dm* as is 
 common to both repairs, shall be divided equally between the ship- 
 owner and the underwriters. 
 
 2 A
 
 354 MARINE INSURANCE 
 
 53. Deduction of one-third {Custom 0/ Lloyd^s, amended 1890-91) 
 
 (1876) The deduction for new work in place of old is fixed by 
 custom at one-third, with the followinj; exceptions: — 
 
 Anchors are allowed in full. Chain cables are subject to 
 one-sixth only. 
 
 Metal sl'f-athing is dealt with, by allowing in full the cost 
 of a weight equal to the gross weight of metal sheath- 
 ing stripped off, minus the proceeds of the old metal. 
 Nails, felt, and labour metalling are subject to one- 
 third. 
 
 The rule applies to iron as well as to wooden ships, and 
 to labour as well as material. It does not apply to 
 the expense of straightening bent ironwork, and to 
 the labour of taking out and replacing it. 
 
 It does not apply to graving dock expenses and removals, 
 cartages, use of shears, stages, and graving dock 
 materials. 
 
 It does not apply to a ship's first voyage. 
 (1890-91) N. B. — Articles belonging to, or repairs done to, a ship, 
 other than an iron ship, allowed in general average, 
 are subject to similar deductions in respect to new 
 for old materials as are made in adjusting claims of 
 particular average on ship. 
 
 In lieu of note to Custom of Lloyd^s, 1876, viz, : — 
 
 N.B. — Articles belonging to, or repairs done to, a ship, 
 allowed in general average, are suhject to similar deductions 
 in respect to new for old materials as are made in adjust' 
 ing claims of particular average on ship. 
 
 Particular Average on Goods — 
 
 54. Adjustment on Bonded Prices (Custom of Llofd^s, 1S76) 
 
 In the following cases it is customary to adjust particular average 
 on a comparison of bonded instead of duty paid prices : — 
 
 In claims for damage to tea, tobacco, coffee, wine, and spirits 
 imported into this country. 
 
 55. Adjustment of Average on Goods sold in Bond 
 
 (Proposed and Accepted 1885, p. 64. Confirmed 1886, p. 34) 
 
 That in consequence of the facilities generally offered to bond 
 goods at their destination, on which terms they are often sold, the 
 term " Gross Proceeds " shall, for the purpose of adjustment, be 
 taken to mean the price at which the goods are sold to the con- 
 sumer, after payment of freight and landing charges, but exclusive
 
 APPENDIX 355 
 
 of Customs duty, in cases where it is the custom of the port to sell 
 or deal with the goods in bond. 
 
 56. Apportionment of Insured Value of Goods 
 
 (Proposed and Accepted 1885, p. 43. Confirmed 1886, p. 23) 
 
 That where different qualities or descriptions of cargo are valued 
 in the policy at a lump sum, such sum shall, for the purpose of 
 adjusting claims, be apportioned on the invoice values, where the 
 invoice distinguishes the separate values of the said difl'erent 
 quaUties or descriptions ; and over the net arrived sound values in 
 all other cases. 
 
 57. Under-insured Interest made good in General Average 
 
 (Proposed and Accepted 1882, p. 47. Confirmed 1883, p. 48) 
 
 That an underwriter who has paid for loss by jettison of the thing 
 insured is entitled, in the proportion that the sum insured bears to 
 the policy value, to whatever is recovered in general average in 
 respect to such loss, although the amount so recovered may exceed 
 the amount paid by him. 
 
 58. Allowance for Water in Picked Cotton {Custom of Lloyd's, 1876) 
 
 When i)ales of cotton are picked, and the pickings are sold wet, 
 the allowance for water in the pickings (where there are no means 
 of ascertaining it) is by custom fixed at one-third. 
 
 59. Allowance for Waier in Cut Tobacco {Custom of Lloyd's, 1876) 
 
 When damaged tobacco is cut off, the allowance for water in the 
 cuttings is one-fourth. 
 
 60. Allowance for Water in Wool {Custom of Lloyd's, 1876) 
 
 Damaged wool from Australia, New Zealand, and the Cape is 
 subject to a deduction of 3 per cent for wet, if the actual increase 
 cannot be ascertained. 
 
 61. Franchise Charges {Custom of Lloyd's, 1876) 
 
 The expenses of protest, survey, and other proofs of loss, includ- 
 ing the commission or other expenses of a sale by auction, are not 
 admitted to make up the percentage o( a claim ; and are only paid 
 by the underwriters in case the loss amounts to a claim without 
 them.
 
 J56 MARINE INSURANCE 
 
 62. Extra Charges {Custom of Lloyd's, 1876) 
 
 Extra charges payable by underwriters, when incurred at the 
 port of destination, are recovered in full ; but when charj^es of the 
 same nature are incurred at an intermediate port they are subjected 
 to the same treatment, in respect of insured and contributory values, 
 as general average charges. 
 
 63. Adjustment of Return of Premium {Custom of Lloyd's, 1876) 
 
 When the words " and arrival " follow the stipulation for a return 
 of premium on a policy on goods, the particular average, but not the 
 special charges, is deducted from the amount insured to arrive at the 
 amount on which the return is taken. 
 
 Rules Rescinded — 
 
 Underwriters' Liability in respect of Jettison 
 
 (Proposed and Accepted 1874, p. 30. Confirmed 1875, p. 90) 
 
 (Rescinded 10th May 1889) 
 
 That the direct liability of an underwriter on goods for the value 
 of goods insured by him which have been jettisoned or sacrificed for 
 the common safety, or of an underwriter on ship for ship's materials 
 sacrificed for the common safety, be treated as particular average. 
 
 Damage to Cargo in Discharging {Custom of Lloyd's) 
 (Rescinded 1890, p. 36 ; 1891, p. 33) 
 
 Damage done to cargo by discharging it at a port of refuge, in 
 the manner and under the circumstances customary at that port, is 
 not allowed as general average. 
 
 This rule does not apply to damage done in lightening a ship 
 which is ashore. 
 
 Adjustments "For the Consideration of Underwriters" 
 
 (Rescinded 1894, p. 32 ; 1895, p. 26) 
 
 That no adjustment "For consideration of the underwriters" 
 shall be made, unless it contain a statement of the reasons of the 
 average adjuster for making such adjustment. 
 
 Agency Fees chargeable by Shipownen 
 
 (Rescinded 1906, p. 21 ; 1307, p. 46) 
 
 That neither interest nor commission (excepting bank commission) 
 nor any other charge by way of agency oi' remuneration for trouble,
 
 APPENDIX 357 
 
 is allowed to the shipowner in general average or particular average 
 on ship, or as a special charge in respect of payments made or 
 services rendered at the port at which the managing owner for the 
 time being resides ; excepting that a commission or agency fee is 
 allowable in respect of payments made or services rendered on 
 behalf of cargo, when such payments or services are not involved in 
 the contract of aiireightment.
 
 INDEX TO RULES OF PRACTICE 
 
 1. Adjustments, " For the Consideration of Underwriters '■ . 339 
 
 2. Interest and Commission for advancing Funds , . . 339 
 
 3. Agency Commission and Agency ..... 340 
 
 4. Duty of Adjusters in respect of Cost of Repairs . . . 340 
 
 5. Claims for Damage to Ship's Machinery .... 340 
 
 6. Claims on Ship's Machinery 340 
 
 7. Water Casks (Custom of Lloyd's) 340 
 
 General Average — 
 
 8. Basis of Adjustment ....... 340 
 
 9. Deckload Jettison (Custom of Lloyd's) .... 341 
 
 10. Damage by Water used to extinguish P'ire . . . 341 
 
 11. Damage caused by Water thrown upon Burning Goods . 341 
 
 12. Voluntary Stranding (Custom of Lloyd's) .... 341 
 
 13. Expenses lightening a Ship when Ashore (Custom of 
 
 Lloyd's) 342 
 
 14. Sails set to force a Ship off the Ground (Custom of 
 
 Lloyd's) 342 
 
 15. Stranded Vessels. Damage to Engines in getting off . 342 
 
 16. Claims arising out of Deficiency of Fuel .... 342 
 
 17. Resort to Port of Refuge for General Average Repairs : 
 
 Treatment of the Charges incurred .... 342 
 i8. Resort to Port of Refuge on account of Particular Average 
 
 Repairs : Treatment of the Charges incurred . . . 343 
 
 19. Treatment of Costs of Storage and Reloading at Port of Refuge 343 
 
 20. Expenses at a Port of Refuge (Custom of Lloyd's) . . 343 
 
 21. Treatment of Costs of Extraordinary Discharge . . . 344 
 
 22. Towage from a Port of Refuge 344 
 
 23. Cargo forwarded from a Port of Refuge .... 345 
 
 24. Cargo sold at a Port of Refuge 345 
 
 25. Interpretation of the Rule respecting Substituted Expenses . 345 
 
 26. Damage caused to Cargo during Forced Discharge . . 345 
 
 27. Treatment of Damaj;e to Cargo caused by Discharge, 
 
 Storing, and Reloading ...... 346 
 
 28. Deductions from Cost of Repairs to Iron Vessels in adjusting 
 
 General Average. ....... 346 
 
 29. Freight Sacrificed : Amount to be made good in General 
 
 Average ......... 347 
 
 30. Basis of Contribution to General Average .... 34'? 
 
 33«
 
 APPENDIX 359 
 
 349 
 349 
 
 PAGB 
 
 31. Contributory Value of Ship 347 
 
 32. Contributory Value of Freight . .... 347 
 
 33. Vessel in Ballast and under Charter : Contributing Interests 348 
 
 34. Chartered Freight (ulterior) : Contribution to General 
 
 Average ......... 348 
 
 35. Deductions from Freight at Charterer's Risk . . . 348 
 
 36. Forwarding Charges on Advanced Freight . . . 348 
 
 37. Adjustment : Policies of Insurance and Names of Under- 
 
 writers 
 
 38. Sacrifice for the Common Safety : Direct Liability of 
 
 Underwriters ........ 
 
 39. Enforcement of General Average Lien by Shipowners . 349 
 
 40. Underwriter's Liability (Custom of Lloyd's) . . . 349 
 
 41. The Duty of Adjusters in Cases involving Refunds of General 
 
 Average Deposits or Apportionment of Salvage, Collision 
 Recoveries, or other Funds ...... 350 
 
 43. " Memorandum " to Statements showing Refunds in respect 
 
 of General Average Deposits ..... 350 
 
 York-Antwerp Rules — 
 
 43. Modification of York -Antwerp Rules in Contracts ot 
 
 Affreightment : Liability of Underwriters 
 
 44. Allowance to be made in General Average under York- 
 
 Antwerp Rules in respect of the Cost of Maintenance of 
 Officers and Crew ...... 
 
 Particular Average o.n Ship — 
 
 45. Statement of Particular Average on Ships . . , 
 
 46. Apportionment of Costs on Collision Cases . , 
 
 47. Expenses of Removing a Vessel for Repair 
 
 48. Coals and Stores used in Repair of Damage to the Hull 
 
 49. Rigging Chafed (Custom of Lloyd's) 
 
 50. Sails split or blown away (Custom of Lloyd's) . 
 
 51. Scraping and Painting ...... 
 
 52. Dry Dock Expenses . . . . • . 
 
 53. Deduction of one-third (Custom of Lloyd's) 
 
 Particular Average on Goods — 
 
 54. Adjustment on Bonded Prices (Custom of Lloyd's) 
 
 55. Adjustment of Average on Goods sold in Bond . 
 
 56. Apportionment of Insured Value of Goods 
 
 57. Under-insured Interest made good in General Average 
 
 58. Allowance for Water in Picked Cotton (Custom of Lloyd's) 
 
 59. Allowance for Water in Cut Tobacco (Custom of Lloyd's) 
 
 60. Allowance for Water in Wool (Custom of Lloyd's) 
 6i. Franchise Charges (Custom of Lloyd's) 
 
 62. Extra Charges (Custom of Lloyd's) .... 
 
 63. AdjiLsiment of Keturn of Premium (Custom of Lloyd's) 
 Rules Rescinded ........ 
 
 351 
 
 351 
 
 351 
 35a 
 352 
 353 
 353 
 353 
 35.-^ 
 353 
 354 
 
 354 
 354 
 355 
 355 
 355 
 355 
 355 
 
 356 
 356 
 356
 
 SUBJECT INDEX 
 TO RULES OF PRACTICE 
 
 {T/it figures refer to number of Rule) 
 
 Adjusters, duty of, as to cost of repairs, 4 
 
 duty of, re clauses in charter-parties and B/L, 8 
 
 duty of, in cases of refunds, 41 
 Adjustment, basis of, 8 
 
 policies of insurance and names of underwriters, 37 
 Adjustments, " for consideration," i 
 Agency, 3 
 Allowance for water in picked cotton, 58 
 
 in cut tobacco, 59 
 
 in wool, 60 
 Acportionment of costs in collision cases, 46 
 
 of insured value of goods, 56 
 
 Ballast (vessel in ballast and under charter : contributing interests). 33 
 Bank commission, 3 
 Basis of adjustment, 8 
 
 of contribution to general average, 30 
 Bills of lading, clausft in, duty of adjusters, 8 
 Bond, goods sold in, 55 
 . Bonded prices, adjustment on, 54 
 Burning goods, water thrown on, 11 
 
 Cargo, damage to, by forced discharge, 26 
 
 damage to, by discharge, reloading, etc. , 97 
 
 discharging, 17, 18, 19, zob, 21 
 
 forwarded from port of refuge, 23 
 
 (particular average on goods), 54-63 
 
 reloading, 17, 18, 19, zod 
 
 sold at poi t of refuge, 24 
 
 warehouse rent, 17, 18, 19, 20c 
 Casks (water), 7 
 
 360
 
 APPENDIX 361 
 
 Charges, extra, 62 
 
 (forwarding), on freight advanced, 36 
 
 franchise, 61 
 Charter, vessel in ballast and under : contributing interests, 33 
 Charter-party, clauses in, duty of adjusters, 8 
 Coals (at port of refuge), 20a 
 
 (removing vessels for repairs), 47 
 
 used in repair of damage to hull, 48 
 Coffee, 54 
 Collision cases, apportionment of costs in, 46 
 
 recoveries, duty of adjusters in cases of refund, 41 
 Commission, 2, 3 
 
 "Consideration," adjustments for, i 
 
 Contributing interests (vessel in ballast and chartered), 33 
 Contribution to general average, basis of, 30 
 Contributory value of freight, 32 
 
 and insured values (underwriter's liability), 40 
 
 value ot ship, 31 
 Cost of repairs, duty of adjusters, 4 
 Costs (collision), apportionment of, 46 
 Cotton (picked), allowance for water, 58 
 Crew, wages of, 20a, 25, 32 
 Customs duty, 55 
 
 Damage by discharging (assumed), 25 
 
 forced discharge, 26 
 Deckload jettison, 9 
 
 Deficiency of fuel, claims arising out of, 16 
 Demurrage, 20a 
 
 Discharge of cargo, 17, i8, 19, 20b, 21 
 Dry dock expenses, 52 
 Duty of adjusters re clauses in charter-parties and B/L, 8 
 
 re cost of repairs, 4 
 
 re refunds, 41 
 
 re statements showing refunds in respect of general average 
 deposits, 42 
 
 Enforcement of general average lien by shipowners, 39 
 
 Engines. See Machinery 
 
 Engine-room stores, 20a 
 
 Expenses, lightening ship whnn ashore, 13 
 
 removing a vessel for repair, 47 
 
 substituted, 22, 23, 24, 25 
 Extra charges, 60 
 
 Fire, damage by wa'cr to extinguish, 10, 11 
 Forced discharge, damage to cargo by, 26 
 Forwarding charges on freight advanced, 36 
 Franchise charges, 61
 
 36a MARINE INSURANCE 
 
 Freight advanced, forwarding charges on, 36 
 
 (charges on, at port of refuge), son', 2oe 
 
 contributory value of, 32 
 
 deductions from freight at charterer's risk, 35 
 
 loss of, by sale of cargo at port of refuge, 24 
 
 sacrificed, amount made good in general average, 29 
 
 ulterior chartered, 34 
 
 (vessel in ballast and under charter), 33 
 Fuel, claims arising out of deficiency of, 16 
 Full, allowances in — general average ; particular average, 38, 53 
 
 General average, 8-44 
 
 damage to ship, 38 
 
 lien, enforcement of, 39 
 
 repairs, treatment of, 28 
 
 deposits, duty of adjusters in cases of refunds, 41 
 
 deposits, "memorandum " to statements, 43 
 Goods, particular average on, 54-63 
 " Gross proceeds," 55 
 
 Hulk hire, vi'hen used as a place of storage, 39/ 
 
 Insured and contributory values, underwriter's liability, 40 
 
 value of goods, apportionment of, 56 
 Interest, 2, 25 
 Inward port charges, 17, i8 
 
 Jettison, deckload, 9 
 
 Liability of underwriters in case of general average sacrifice, 38 
 
 (insured and contributory values), 40 
 Lien, enforcement of general average by shipowners, 39 
 Lightening ship when ashore, expenses of, 13 
 Lighter hire, when ashore, 13 
 
 when used as a place of storage, 20/ 
 Loss by sale of cargo at port of refuge, 24 
 Loss of market, 25 
 
 Machinery, damage to, surveys to be held, etc., 5 
 
 propellers and shafts, 6 
 
 in refloating steamer, 15 
 Made good (to Le shown in contributory value of ship), 31 
 Market, loss of, 25 
 
 One-third, deduction of — general average ; particular average , 28, 53 
 Outward port charges, 17, i8, sod 
 
 Painting and scraping, 51 
 Farlicular average on goods- 54-63 
 on ship, 45-53
 
 APPENDIX 363 
 
 Policies of insurance and names of underwriters, 37 
 
 in statement of particular average on ships, 45 
 Port of refuge, cargo forwarded from, 23 
 
 cargo sold at, 24 
 
 towage from. 22 
 
 expenses (Custom of Lloyd's), 20 
 
 for general average repairs, treatment of charges, 17 
 
 for particular average repairs, treatment of charges, i8 
 Premium, return of, 63 
 Prices, adjustment on bonded, 54 
 Proceeds, gross, 55 
 Propellers, 6 
 Protest, 61 
 
 Recoveries, collision, duty of adjusters, 41 
 
 Refuge, port of See Port of refuge 
 
 Refunds, general average deposits, salvage, 41, 42 
 
 Reloading, 17, 18, 19, 2od 
 
 Removing a vessel for repair, expenses of, 47 
 
 Rent, warehouse, 17, 18, 19, ■zoc 
 
 Repair, expenses of removing a vessel for, 47 
 
 Repairs, coals and stores used in, 48 
 
 cost of, duty of adjusters, 4 
 
 treatment of general average repairs, 28 
 Re-shipping from lighters when ship is ashore, 13 
 Re-shipping. See Reloading 
 Return of premium, adjustment of, 63 
 Rigging, chafed, 49 
 
 Sacrifice for common safety, direct liability of underwriters, 36 
 
 Sails set to force ship off ground, 14 
 
 Sails split or blown away, 50 
 
 Salvage, duty of adjusters in cases of refund, 41 
 
 Scraping and painting, 51 
 
 Shafts, 6 
 
 Ship, contributory value of, 31 
 
 Shipowners, enforcement of general average lien by, 39 
 
 Spirits, 54 
 
 Statement of particular average on ships, 45 
 
 Statements showing refunds in respect of general average deposits, 4» 
 
 Stores, used in removal and repairs, 47, 48 
 
 Stranding, voluntary, 12 
 
 Stranderl vessels, damage to engines in refloating, 15 
 
 Substituted expenses, aa, 23, 24, 25 
 
 Surveys, 5, 61 
 
 Tanks, water, 7 
 Tea, 54
 
 364 MARINE INSURANCE 
 
 Thirds, deduction of one-third ; general average ; particular average, 
 
 28. 53 
 Tobacco, 54, 59 
 
 Towage from a jjort of refuge, 22 
 Transhipping and forwarding cargo from port of refuge, 23 
 
 Under-insured interest made good in general average, 57 
 Underwriters, direct liability of, for sacrifice, 38 
 
 liability (insured and contributory values), 40 
 
 names of, 37, 45 
 Underwriter's rights to amounts made good in general average, 57 
 
 Value of freight, contributory, 32 
 
 of ship, contributory, 31 
 Voluntary stranding, 12 
 
 Wages of crew, 20a, 25, 32 
 Warehouse rent, 17, 18, 19, 20 
 Water, allowance for, in cut tobacco, 59 
 in picked cotton, 58 
 in wool, 60 
 casks and tanks, 7 
 to extinguish fire, damage by, 10, 11 
 Wine, 54 
 Wool, allowance for water, 60 
 
 York-Antwerp Rules, modification of, in contracts of affreightment, 43 
 cost of maintenance of officers and crew, 44
 
 APPENDIX I 
 
 INSTITUTE VOYAGE CLAUSES, 191 7 
 
 HULLS 
 
 And it is further agreed that if the ship hereby insured shall 
 come into collision with any other ship or vessel, and the assured 
 shall in consequence thereof become liable to pay, and shall pay by 
 way of damages to any other person or persons any sum or sums 
 not exceeding in respect of any one such collision the value of the 
 ship hereby insured, this company will pay the assured such pro- 
 portion of three-fourths of such sum or sums so paid as its subscrip- 
 tion hereto bears to the value of the ship hereby insured ; and in 
 cases in which the liability of the ship has been contested, or pro- 
 ceedings have been taken to limit liability, with the consent in 
 writing of this company, the company will also pay a like proportion 
 of three-fourths of the costs which the assured shall thereby incur 
 or be compelled to pay ; but when both vessels are to blame, then 
 unless the liability of the owners of one or both of such vessels 
 becomes limited by law, claims under this clause shall be settled on 
 the principle of cross-liabilities as if the owners of each vessel had 
 been compelled to pay to the owners of the other of such vessels 
 such one-half or other proportion of the latter's damages as may 
 have been properly allowed in ascertaining the balance or sum pay- 
 able by or to the assured in consequence of such collision. 
 
 Pr<rvided always that this clause shall in no case extend to any 
 sum which the assured may become lialde to pay, or shall pay for 
 removal oj obstructions under statutory powers, for injury to 
 harbours, wharves, piers, stages, and similar structures, consequent 
 on such collision, or in respect of the cargo or engagements of the 
 insured vessel, or for loss of life or personal injury. 
 
 Should the vessel hereby insured come into collision with or 
 receive salvage services from another vessel l.elongiiig wholly or 
 in part to the same owners, or under the same management, the 
 assured shall have the same rights under this policy as they would 
 
 S6S
 
 366 MARINE INSURANCE 
 
 have were the other vessel entirely the property of owners not 
 interestetl in the vessel hereby insured ; hut in such cases the 
 liability for the collision, or the amount payable for the services 
 rendered, shall he referred to a sole arbitrator to be agreed upon 
 between the underwriters and the assured. 
 
 This insurance also specially to cover (subject to the free of average 
 warranty) loss of, or damaj:;e to hull or machinery directly caused by 
 accidents in loading, discharging, or handling cargo, or caused through 
 the negligence of master, mariners, engineers, or pilots, or through 
 explosions, bursting of boilers, breakage of shafts, or through any 
 latent defect in the machinery or hull, provided such loss or damage 
 has not resulted from want of due diligence by the owners of the 
 ship, or any of them, or by the manager. Masters, mates, engineers, 
 pilots, or crew, not to be considered as part owners within the 
 meaning of this clause, should they hold shares in the steamer. 
 
 General average and salvage to be adjusted according to the 
 law and practice obtaining at the place where the adventure ends 
 as if the contract of affreightment contained no special terms upon 
 the subject ; or, if the contract of affreightment so provides, accord- 
 ing to York-Antwerp rules, or, in the case of wood cargoes, York- 
 Antwerp rules omitting the first word of Rule I. ("No"), but, in 
 all matters not specifically referred to in York-Antwerp Rules I. to 
 XVII. inclusive, the adjustment shall be in accordance with the 
 law and practice obtaining at the place where the adventure ends 
 and as if the contract of affreightment contained no special terms 
 upon the subject. 
 
 Average payable on each valuation separately or on the whole 
 without deduction of thirds, new for old, whether the average be 
 particular or general. 
 
 Donkey boilers, winches, cranes, windlasses, steering gear, and 
 electric light apparatus shall be deemed to be part of the hull and 
 not part of the machinery. Refrigerating machinery and insulation 
 not covered unless expressly included in this policy. 
 
 Warranted free from particular average under 3 per cent, but 
 nevertheless when the vessel shall have been stranded, sunk, on 
 fire, or in collision with any other ship or vessel, underwriters shall 
 pay the damage occasioned thereby, and the expense of sighting 
 the bottom after stranding shall be paid if reasonably incurred, even 
 if no damage be found. 
 
 No claim shall in any case be allowed in respect of scraping or 
 painting the vessel's bottom. 
 
 Grounding in the Panama Canal, Suez Canal, or in the Manchester 
 Ship Canal or its connections, or in the l\iver Mersey above Rock 
 Ferry Slip, or in the River Plate (above Buenos Ayres) or its 
 tributaries, or in the Danube, Demerara, or Bilbao River, or on the 
 Yenikale or Bilbao Bar, shall not be deemed to be a stranding. 
 
 In aBcertaining whether the vessel is a constructive total loss 
 the insured value shall be taken as the repaired \alue, and
 
 APPENDIX 367 
 
 nothing in respect of the damaged or break-up value of the 
 vessel or wreck shall be taken into account. 
 
 In the event of total or constructive total loss, no claim to be 
 made by the underwriters for freight, whether notice of abandon- 
 ment has been given or not. 
 
 In the event of accident whereby loss or damage may result 
 in a claim under this policy, notice shall be given in writing to 
 the underwriters where practicable, and, if abroad, to the 
 nearest Lloyd's agent also, prior to survey, so that they may 
 appoint their own surveyor if they so desire ; and whenever 
 the extent of the damage is ascertainable, the underwriters may 
 take, or may require the assured to take, tenders for the repair 
 of such daunage. In cases where a tender is accepted by or 
 with the approval of underwriters, the underwriters will make 
 an allowance at the rate of £30 per cent per annum on the 
 insured value for the time actually lost in waiting for tenders. 
 In the event of the assuxed failing to comply with the conditions 
 of this clause, £15 per cent shall be deducted from the amount 
 of the ascertained claim. 
 
 Warranted free of capture, seizure, and detention, and the con- 
 sequences thereof, or any attempt thereat, piracy excepted, and also 
 from all consequences of hostilities, or warlike operations, whether 
 before or after declaration of war. 
 
 Warranted that (except as hereinafter mentioned) the amount 
 insured for account of assured and/or their managers on 
 premiums, freight, hire, profit, disbursements, commissions, 
 or other interests, policy proof of interest, full interest admitted, 
 or on excess or increased value of hull or machinery however 
 described, shall not exceed 15 per cent of the value of the hull 
 and machinery as stated herein, but this warranty shall not 
 restrict the assured's right to cover 
 
 (1) Premiums. — Any amount not in excess of actual premiums 
 for 12 months on all interests of whatsoever nature insured 
 (including estimated premium on any Club Insurances), but in 
 all cases reducing monthly by a proportionate amount of the 
 whole. 
 
 (2) Freight andjor Chartered Freight andjor Anticipated Freight 
 on hoard or not on Board, insured for 12 months or other time. — 
 Any amount not exceeding 26 per cent of the value of hull and 
 machinery as stated herein, but if the insurance be for less than 
 12 months, the 26 per cent to be proportionately reduced. If at 
 any time the gross freight and/or chartered freight at risk 
 exceeds the amount placed on freight and/or cliartered freight 
 for time, the owner to have the liberty to cover the excess 
 amount whilst at risk. 
 
 (3) /reiqh/ and I or Chartered l''ieii;ht for Voyage. — Any amount 
 not exceeding the actual gross freight and/or chartered freight
 
 368 MARINE INSURANCE 
 
 at risk, all freight covered on time policy under Clause 2 hereof 
 to be taken into account. 
 
 (4) Anticipated Freight. — If the vessel be in ballast suid un- 
 chartered, an amount reasonably estimated on the basis of 
 current freight at time of insurance for anticipated net freight 
 on the next cargo passage, all freight covered on time policy to 
 be taken into account. 
 
 (6) Titne Charter, Hire or Profit on Time Charter, or Charter for 
 Series of Voyages. — Any amount not exceeding the reasonably 
 estimated net profit, reducing as earned, on a period not exceed- 
 ing the length of the charter. Any amount insured under 
 Clause 2 to be taken into account, and only the excess of such 
 amount to be insured, reducing pro rata as earned. 
 
 Provided always that a breach of this warranty shall not 
 afford underwriters any defence to a claim by mortgagees or 
 other third parties who may have accepted this policy without 
 notice of such breach of warranty. 
 
 Held covered in case of deviation or change of voyage provided 
 notice be given and any additional premium required be agreed 
 immediately after receipt of advices. 
 
 With leave to sail \\ ith or without pilots, and to tow and assist 
 ves.sels or craft in all situations, and to be towed. 
 
 With leave to dock and undock and go into graving dock.
 
 APPENDIX Ka 
 
 INSTITUTE TIME CLAUSES, 1917 
 
 HULLS 
 
 And it is further agreed that if the ship hereby insured shall come 
 into collision with any other ship or vessel and the assured shall 
 in consequence thereof become liable to pay, and shall pay by way 
 of damages to any other person or persons any sum or sums not 
 exceeding in respect of any one such collision the value of the ship 
 hereby insured, this company will pay the assured such proportion 
 of three-fourths of such sum or sums so paid as its subscription 
 hereto bears to the value of the ship hereby insured, and in cases 
 in which the liability of the ship has been contested, or proceedings 
 have been taken to limit liability, with the consent in writing of 
 this company, the company will also pay a like proportion of three- 
 fourths of the costs which the assured shall thereby incur, or be 
 compelled to pay ; but when both vessels are to blame, then unless 
 the liability of the owners of one or both of such vessels becomes 
 limited by law, claims under this clause shall be settled on the 
 principle of cross-liabihiies as if the owners of each vessel had been 
 compelled to pay to the owners of the other of such vessels such 
 one-half or other proportion of the latter's damages as may have 
 been properly allowed in ascertaining the balance or sum jjayable 
 by or to the assured in consequence of such collision. 
 
 Provided always I hat this clause shall in tw case extend to any sum 
 which the assured may become liable to pay, or shall pay for removal 
 of obstructions under statutory pvivers, for injury to hariours, 
 whar-jes, piers, stages, and similar sti uctures, consequent on such 
 collision, or in respect to the cargo or engagements of the insured 
 vessel, or for loss of life or personal ittjury. 
 
 Should the vessel hereby insured come into collision with or 
 receive salvage services from another vessel belunging wholly or in 
 part to the same owners, or untier the same management, the 
 assured siiall have the same rights under this policy as they would 
 have were the other vessel entirely the property of owners not 
 interested in the vessel hereby insured ; but in such cases the 
 liability for the collision, or the amount payable for tlie sciviccs 
 2 B 369
 
 370 MARINE INSURANCE 
 
 rencTered, shall he referred to a sole arbitrator to be agreed upon 
 between the underwriters and the assured. 
 
 In port and at sea, in docks and graving docks, and on ways, 
 gridirons, and pontoons, at all times, in all places, and on all 
 occasions, services and trades whatsoever and wheresoever, under 
 steam or sail, with leave to sail with or without pilots, to tow and 
 assist vessels or craft in all situations, and to be towed and to go 
 on trial trips. 
 
 Should the vessel at the expiration of this policy be at sea, or in 
 distress, or at a port of refuge or of call, she shall, provided previous 
 notice be given to the underwriters, be held covered at a pro rata 
 monthly premium, to her port of destination. 
 
 Held covered in case of any breach of warranty as to cargo, 
 trade, locality, or date of sailing, provided notice be given, and any 
 additional premium required be agreed immediately after receipt of 
 advices. 
 
 Should the vessel be sold or transferred to new management, 
 then, unless the underwriters agree in writing to such sale or 
 transfer, this policy shall thereupon become cancelled from date of 
 sale or transfer, unless the vessel has cargo on board and has already 
 sailed from her loading port or is at sea in ballast, in either of 
 which cases such cancellation shall be suspended until arrival at 
 final port of discharge if with cai^o, or at port of destination if in 
 ballast. A pro rata daily return of premium shall be made. 
 
 This insurance also specially to cover (subject to the free of average 
 warranty) loss of, or damage to hull or machinery directly caused by 
 accidents in loading, discharging, or handling cargo, or caused through 
 the negligence of master, manners, engineers, or pilots, or through 
 explosions, bursting of boilers, breakage of shafts, or through any 
 latent defect in the machinery or hull, provided such loss or damage 
 has not resulted from want of diligence by the owners of the ship, 
 or any of them, or by the manager. Masters, mates, engineers, 
 pilots, or crew not to be considered as part owners within the 
 meaning of this clause should they hold shares in the steamer. 
 
 General average and salvage to be adjusted according to the law 
 and practice obtaining at the place where the adventure ends, as if 
 the contract of affreightment contained no special terms upon the 
 subject ; or if the contract of affreightment so provides, according to 
 York-Antwerp rules, or, in the case of wood cargoes, York-Antwerp 
 rules omitting the first word of Rule I. ("No "), but, in all matters 
 not specifically referred to in York-Antwerp Rules I. to XVII. 
 inclusive, the adjustment shall be in accordance with the law and 
 practice obtaining at the place where the adventure ends and as if 
 the contract of affreightment contained no special terms upon the 
 subject. 
 
 Average payable on each valuation separately or on the whole, 
 without deduction of thirds, new for old, whether the average be 
 particular or general. 
 
 Donkey boilers, winches, cranes, windlasses, steering gear, and
 
 APPENDIX 371 
 
 electric liglit apparatus shall be deemed to be part of the hull, and 
 not part of the machinery. Refrigerating machinery and insulation 
 not covered unless expressly included in this policy. 
 
 Warranted free from particular average under 3 per cent, but 
 nevertheless when the vessel shall have been stranded, sunk, on fire, 
 or in collision with any other ship or vessel, underwriters shall pay 
 the damage occasioned thereby, and the expense of sighting the 
 bottom after stranding shall be paid if reasonably incurred, even if 
 no damage be found. 
 
 No claim shall in any case be allowed in respect of scraping or 
 painting the vessel's bottom. 
 
 Grounding in the Panama Canal, Suez Canal, or in the Manchester 
 Ship Canal or its connections, or in the River Mersey above Rock 
 Ferry Slip, or in the River Plate (above Buenos Ayres) or its 
 tributaries, or in the Danube, Demerara, or Bilbao River, or on the 
 Yenikale or Bilbao Bar, shall not be deemed to be a stranding. 
 
 The warranty and conditions as to average under 3 per cent to 
 be applicable to each voyage as if separately insured, and a voyage 
 shall be deemed to commence at one of the following periods to be 
 selected by the assured when making up the claim, viz. : at any time 
 at which the vessel (i) begins to load cargo, or (2) sails in ballast to 
 a loading port. Such voyage shall be deemed to continue during 
 the ensuing period until either she has made one outward and one 
 homeward passage (including an intermediate ballast passage, if 
 made) or has carried and discharged two cargoes, whichever may 
 first happen, and further, in either case, until she begins to load a 
 subsequent cargo or sails in ballast for a loading port. When the 
 vessel sails in ballast to effect damage repair such sailing shall not 
 be deemed to be a sailing for a loading port although she loads at 
 the repairing port. In calculating the 3 per cent above referred to, 
 particular average occurring outside the period covered by this policy 
 may be added to particular average occurring within such period, 
 provided it occur upon the same voyage (as above defined), but only 
 that portion of the claim arising within such voyage shall be 
 recoverable hereon. The commencement of a voyage shall not be 
 so fixed as to overlap another voyage on which a claim is made on 
 this or the preceding policy. 
 
 In no case shall underwriters be liable for unrepaired damage in 
 addition to a subsequent total loss sustained during the term covered 
 by this policy. 
 
 In aacertaining whether the vessel is a constructive total 
 loss, the insured value shall be taken as the repaired value, and 
 nothing in respect of the damaged or break-up value of the 
 vessel or wreck shall be taken into account. 
 
 In the event of total or constructive total loss, no claim to be 
 made by the underwriters for freight, whether notice of abandonment 
 has been given or not.
 
 372 MARINE INSURANCE 
 
 In the event of accident whereby loss or damage may result 
 in a claim under this policy, notice shall be given in writing to 
 the underwriters, where practicable, and, if abroad, to the 
 nearest Lloyd's agent also, prior to survey, bo that they may 
 appoint their own surveyor if they bo desire ; and whenever the 
 extent of the damage is ascertainable, the underwriters may 
 take, or may require the assured to take, tenders for the repair 
 of such damage. In cases where a tender is accepted by or 
 with the approval of underwriters, the underwriters will make 
 an allowance at the rate of £30 per cent per annum on the 
 insured value for the time actually lost in waiting for tenders. 
 In the event of the assured failing to comply with the conditions 
 of this clause, £15 per cent shall be deducted from the amount 
 of the ascertained claim. 
 
 Warranted free of capture, seizure, arrest, restraint, or detain- 
 ment, and the consequences thereof, or of any attempt thereat (piracy 
 excepted), and also from all consequences of hostilities or warlike 
 operations whether before or after declaration of war. 
 
 Warranted that (except as hereinafter mentioned) the amount 
 insured for account of assured and/or their managers on 
 premiums, freight, hire, profit, disbursements, commissions, 
 or other interests, policy proof of interest, full interest admitted, 
 or on excess or increased value of hull or machinery however 
 described, shall not exceed 15 per cent of the value of the hull 
 and machinery as stated herein, but this warranty shall not 
 restrict the assured'a right to cover 
 
 (1) Premiums. — Any amount not in excess of actual premiums 
 for 12 months on all interests of whatsoever nature insured 
 (including estimated premium on any Club Insurances), but in 
 all cases reducing monthly by a proportionate amount of the 
 whole. 
 
 (2) Freight andjor Chartered Freight andjor Anticipated Freight 
 on Board or not on Board, Insured for 12 tnonths or other titne. — 
 Any amount not exceeding 26 per cent of the value of hull and 
 machinery as stated herein, but if the insurance be for less than 
 12 months, the 25 per cent to be proportionately reduced. If at 
 any time the gross freight and/or chartered freight at risk 
 exceeds the amount placed on freight and/or chartered freight 
 for time, the owner to have the liberty to cover the excess 
 amount whilst at risk. 
 
 (3) Freii^ht andjor Chartered Freight for Voyage. — Any amount 
 not exceeding the actual gross freight and/or chartered freight 
 at risk, all freight covered on time policy under Clause 2 hereof 
 to be taken into account. 
 
 (4) Anticipated Freight. — If the vessel be in ballast and un- 
 chartered, an amount reasonably estimated on the basis of 
 current freight at time of insurance for anticipated net freight
 
 APPENDIX 
 
 373 
 
 on the next cargo passage, all freight covered on time policy to 
 be taken into account. 
 
 (5) Time Charter, Hire or Profit on Time Charter, or Charter for 
 Series of Voyages. — Any amount not exceeding the reasonably 
 estimated net profit, reducing as earned, on a period not exceed- 
 ing the length of the charter. Any amount insured under 
 Clause 2 to be taken into account, and only the excess of Such 
 amount to be insured, reducing pro rata as earned. 
 
 Provided always that a breach of this warranty shall not 
 afford underwriters any defence to a claim by mortgagees or 
 other third parties who may have accepted this policy without 
 notice of such breach of warranty. 
 
 per cent for each uncommenced month" 
 if it be mutually agreed to cancel 
 this policy, 
 as follows for each consecutive 30 days the 
 vessel may be laid up in port, viz. : — 
 per cent if in the United Kingdom not 1 ^^^ 
 To return < under average. \ arrival 
 
 per cent under average, or if abroad. 
 
 Provided always that in no case shall a 
 return be allowed when the within-named 
 vessel is lying in a roadstead or in ex- 
 posed and unprotected waters.
 
 APPENDIX Kb 
 INSTITUTE TIME CLAUSES, 1916 
 
 HULLS— F.P.A. ABSOLUTELY 
 
 And it is further agreed that if the ship hereby insured shall come 
 into collision with any other ship or vessel, and the assured shall 
 in consequence thereof become liable to pay, and shall pay by way 
 of damages to any other person or persons any sum or sums not 
 exceeding in respect of any one such collision the value of the ship 
 hereby insured, this company will pay the assured such proportion 
 of three-fourths of such sum or sums so paid as its subscription 
 hereto bears to the value of the ship hereby insured, and in cases 
 in which the liability of the ship has been contested, or proceedings 
 have been taken to limit liability, with the consent in writing of 
 this company, the company will also pay a like proportion of three- 
 fourths of the costs which the assured shall thereby incur, or be 
 compelled to pay ; but when both vessels are to blame, then unless 
 the liability of the owners of one or both of such vessels becomes 
 limited by law, claims under this clause shall be settled on the 
 principle of cross-liabilities as if the owners of each vessel had been 
 compelled to pay to the owners of the other of such vessels such 
 one-half or other proportion of the lalter's damages as may have 
 been properly allowed in ascertaining the balance or sum payable 
 by or to the assured in consequence of such collision. 
 
 Provided always that this clause shall in nc case extend to any 
 sum which the assured may become liable to pay, or shall pay for 
 removal of obstructions under statutory powers, for injury to 
 harbours, wharves, piers, stages, and similar structures, consequent 
 on such collision, or in respect of the cargo or engagements of the 
 insured vessel, or for loss of life or personal injury. 
 
 Should the vessel hereby insured come into collision with or 
 receive salvage services from another vessel belonging wholly or in 
 part to the same owners, or under the same management, the 
 assured shall have the same rights under this policy as they would 
 have were the other vessel entirely the property of owners not 
 
 374
 
 APPENDIX 375 
 
 interested in the vessel hereby insured ; but in such cases the 
 liability for the collision, or the amount payable for the services 
 rendered, shall be referred to a sole arbitrator to be agreed upon 
 between the underwriters and the assured. 
 
 In port and at sea, in docks and graving docks, and on ways, 
 gridirons, and pontoons, at all times, in all places, and on all 
 occasions, services and trades whatsoever and wheresoever, under 
 steam or sail, with leave to sail with or without pilots, to tow and 
 assist vessels or craft in all situations, and to be towed and to go on 
 trial trips. 
 
 Should the vessel at the expiration of this policy be at sea, or in 
 distress, or at a port of refuge or of call, -she shall, provided pre- 
 vious notice be given to the underwriters, be held covered at a 
 pro rata monthly premium, to her port of destination. 
 
 Held covered in case of any breach of warranty as to cargo, 
 trade, locality, or date of sailing, provided notice be given, and any 
 additional premium required be agreed immediately after receipt 
 of advices. 
 
 Should the vessel be sold or transferred to new management, 
 then, unless the underwriters agree in writing to such sale or transfer, 
 this policy shall thereupon become cancelled from date of sale or 
 transfer, unless the vessel has cargo on board and has already sailed 
 from her loading port or is at sea in ballxst, in either of which cases 
 such cancellation shall be suspended until arrival at final port of 
 discharge if with cargo, or at port of destination if in ballast. A 
 pro rata daily return of premium shall be made. 
 
 This insurance also specially to cover loss of vessel directly caused 
 by accidents in loading, discharging, or handling cargo, or caused 
 through the negligence of master, mariners, engineers, or pilots, or 
 through explosions, bursting of boilers, breakageof shafts, or through 
 any latent defect in the machinery or hull, provided such loss has 
 not resulted from want of due diligence by the owners of the ship, 
 or any of them, or by the manager. Masters, mates, engineers, 
 pilots, or crew, not to be considered as part owners witliin the 
 meaning of ihi.s clause should they hold shares in the steamer. 
 
 General average and salvage to be adjusted according to the law 
 and practice obtaining at the place where the adventure ends, as if 
 the contract of affreightment contained no special terms upon the 
 subject ; or, if the contract of affreightment so provides, according 
 to York-Antwerp rules, or, in the case of wood cari^oes, York- 
 Antwerp rides omitting the first word of Rule I. ("No"), but, in 
 all matters not specitically referred to in York-Antwerp Rules 
 I. to XVII. inclusive, the adjustment shall be in accordance with 
 the law and jiractice obtaining at the pl.-ice where the adventure 
 ends and as if the contract of affreightment contained no si>cciai 
 terms upon the subject. 
 
 General average payable without deductions, new for old. 
 Refrigerating macliinery and insulation not covered unless ex- 
 pressly included in this policy.
 
 376 
 
 MARINE INSURANCE 
 
 Warranted free from particular average absolutely, and from 
 claims for general average damage to hull, but, notwithstanding 
 anything herein to the contrary, steamer s proportion of general 
 average shall be payable when same arises in respect of loss of or 
 damage to equipment, hawsepipes, machinery, boilers, donkey boilers, 
 winches, cranes, windlasses, steering gear {rudder excepted), ekitric 
 light installation, refrigerating machinery, insulation, masts, spars, 
 anchors, chains, ropes, sails, boats, and the connections of any of the 
 foregoing, also in respect of any damage to the steamer or her equip- 
 ment caused in extinguishing fire, or by contcut with other vessels 
 in salvage operations. 
 
 In ascertaining whether the vessel is a constructive total loss 
 the insured value shall be taken as the repaired value, and 
 nothing in respect of the damaged or break-up value of the 
 vessel or wreck shall be taken into account. 
 
 In the event of total or conslructive total loss, no claim to be 
 made by the underwriters for freight, whether notice of abandon- 
 ment has been given or not. 
 
 In the event of accident whereby loss or damage may result 
 in a claim under this policy, notice shall be given in writing to 
 the underwriters, where practicable, and, if abroad, to the 
 nearest Lloyd's agent also, prior to survey, so that they may 
 appoint their own surveyor if they so desire. 
 
 Warranted free of capture, seizure, arrest, restraint, or detain 
 ment, and the consequences thereof, or of any attempt thereat (piracy 
 excepted), and also from all consequences of hostilities or warlike 
 operations whether before or after declaration of war. 
 
 ' per cent for each uncommenced month 
 if it be mutually agreed to cancel 
 this policy, 
 per cent for each consecutive 30 days 
 To return { ''^^ vessel may be laid up in port. 
 
 
 Provided always that in no case shall a 
 return be allowed when the within-named 
 vessel is lying in a roadstead or in ex- 
 posed and unprotected waters. 
 
 and 
 arrival.
 
 APPENDIX Kc 
 INSTITUTE TIME CLAUSES, 1916 
 
 STEAMERS — FREE OF DAMAGE ABSOLUTELY 
 
 And it is further agreed that if the ship hereby insured shall 
 come into collision with any other ship or vessel, and the assured 
 shall in consequence thereof become liable to pay, and shall pay by 
 way of damages to any other person or persons any sum or sums 
 not exceeding in respect of any one such collision the value of the 
 ship hereby insured, this company will pay the assured such pro- 
 portion of three-fourths of such sum or sums so paid as its subscrip- 
 tion hereto bears to the value of the ship hereby insured, and in 
 cases in which the liability of the ship has been contested, or pro- 
 ceedings have been taken to limit liability, with the consent in 
 writing of this company, the company will also pay a like proportion 
 of three-fourths of the costs which the assured shall thereby incur, 
 or be compelled to pay ; but when both vesselb are to blame, then 
 unless the liability of the owners of one or both of such vessels 
 becomes limited by law, claims under this clause shall be settled on 
 the principle of cross-liabilities as if the owners of each vessel had 
 been compelled to pay to the owners of the other of such vessels 
 such one-half or other proportion of the latter's damages as may 
 have been properly allowed in ascertaining the balance or sum pay- 
 able by or to the assured in consequence of sucli collision. 
 
 Provided always that this clause shall in no case extend to any 
 sum which the assured may become liable to pay, or shall pay for 
 removal of obstructions under statutory powers, for injury to 
 harbours, wharves, piers, stages, and similar structures, consequent 
 on such co'lision, or in respect of the cargo or engagements of the 
 insured vessel, or for loss of life or personal injury. 
 
 Should the vessel hereby insured come into collision with or 
 receive salvage services from another vessel belongint; wholly or in 
 part to the same owners, or under the same management, the 
 assured shall have tlie same rights under this policy as they would 
 have were the other vessel entirely the property of owners not 
 
 377
 
 378 Mx\RINE INSURANCE 
 
 interested in the vessel hereby insured ; but in such cases the 
 HabiUly for the collision, or the amuunt payable for the services 
 rendered, shall be referred lo a sole arbitrator to be agreed upon 
 between the underwriters and the assured. 
 
 In port and at sea, in docks and graving docks, and on ways, 
 gridirons, and pontoons, at all times, in all places, and on all 
 occasions, services and trades whatsoever and wheresoever, und^r 
 steam or sail, with leave to sail with or without pilots, to tow and 
 assist vessels or craft in all situations, and to be towed and to go 
 on trial trips. 
 
 Should the vessel at the expiration of this policy be at sea, or in 
 distress, or at a port of refuge or of call, she shall, provided previous 
 notice be given to the underwriters, be held covered at a pro rata 
 monthly premium, to her port of destination. 
 
 Held covered in case of any breach of warranty as to cargo,, 
 trade, locality, or date of sailing, provided notice be given, and any 
 additional premium required be agreed immediately after receipt of 
 advices. 
 
 Should the vessel be sold or transferred to new management, 
 then, unless the underwriters agree in writing to such bale or 
 transfer, this policy shall thereupon become cancelled from date of 
 sale or transfer, unless the vessel has cargo on board and has 
 already sailed from her loading port or is at sea in ballast, in either 
 of which cases such cancellation shall be suspended until arrival at 
 final port of discharge if with cargo, or at port of destination if in 
 ballast. A fro rata daily return of premium shall be made. 
 
 This insurance also specially to cover (subject to the free of average 
 warranty) loss of, or damage to hull or machinery directly caused by 
 accidents in loading, discharging, or handling cargo, or caused through 
 the negligence of master, mariners, engineers, or pilots, or through 
 explosions, bursting of boilers, breakage of shafts, or through any 
 latent defect in the machinery or hull, provided such loss or damage 
 has not resulted from want of due diligence by the owners of the 
 ship, or any of them, or by the manager. Masters, mates, engineers, 
 pilots, or crew, not to be considered as part owners within the 
 meaning of this clause should they hold shares in the steamer. 
 
 Warranted free from all claim in respect of paxtial loss of 
 and/or damage to the property hereby insured. 
 
 To cover the risk of total loss absolute or constructive. 
 
 General average and salvage (including contribution on 
 amount made good) payable according to the law and practice 
 obtaining at the place where the adventure ends as if the 
 contract of affreightment contained no special terms upon the 
 subject, or if the contract of affreightment so provides, accord- 
 ing to York-Antwerp rules, or, in the case of wood cargoes, 
 York- Antwerp rules omitting the first word of Rule I. ("No"), 
 but excluding in every case all partial loss of and damage to
 
 APPENDIX 
 
 379 
 
 the property hereby insured, together with expenses incidental 
 thereto, whether included as general average or otherwise. 
 
 Refrigerating machinery and insulation not covered unless 
 expressly included in this policy. 
 
 In ascertaining whether the vessel is a constructive total 
 loss the insured value shall be taken as the repaired value, and 
 nothing in respect of the damaged or break-up value of the 
 vessel or wreck shall be taken into account. 
 
 In the event of total or constructive total loss, no claim to be 
 made by the underwriters for freight, whether notice of abandon- 
 ment has been given or not. 
 
 Warranted free of capture, seizure, restraint, or detainment, and 
 the consequences thereof, or any attempt thereat, piracy excepted, 
 and also from all consequences of hostilities, or warlike operations, 
 whether before or after declaration of war. 
 
 per cent for each uncommenced month 
 if it be mutually agreed to cancel 
 this policy. 
 
 per cent for each consecutive 30 days 
 To return ■( ^^^ vessel may be laid up in port. 
 
 Provided always that in no case shall a 
 return be allowed when the within-named 
 vessel ia lying in a roadstead or ia ex- 
 posed and unprotected waters. 
 
 and 
 arrival.
 
 APPENDIX Kd 
 INSTITUTE TIME CLAUSES, 1917 
 
 HULLS — EXCESS 3% P. A. 
 
 And it is further agreed that if the ship hereby insured shall 
 come into collision with any other ship or vessel, and the assured 
 shall in consequence thereof become liable to pay, and shall pay by 
 way of damages to any other person or persons any sum or sums 
 not exceeding in respect of any one such collision the value of the 
 ship hereby insured, this company will pay the assured such pro- 
 portion of three-fourths of such sum or sums so paid as its subscrip- 
 tion hereto bears to the value of the ship hereby insured, and in 
 cases in which the liability of the ship has been contested, or pro- 
 ceedings have been taken to limit liability with the consent in 
 writing of this company, the company will also pay a like proportion 
 of three-fourths of the costs which the assured shall thereby incur, 
 or be compelled to pay ; but when both vessels are to blame, then 
 unless the liability of the owners of one or both of such vessels 
 becomes limited by law, claims under this clause shall be settled on 
 the principle of cross-liabilities as if the owners of each vessel had 
 been compelled to pay to the owners of the other of such vessels 
 such one-half or other proportion of the latter's damages as may 
 have been properly allowed in ascertaining the balance or sum pay- 
 able by or to the assured in consequence of such collision. 
 
 Provided always that this clause shall in tto case extend to any 
 sum which the assured may become liable to pay, or shall pay for 
 removal of obstructions under statutory powers, for injury to harbours, 
 wharves, piers, stages, and similar structures consequent on suck 
 collision, or in respect to the cargo or engagements of the insured 
 vessel, or for loss of life or personal injury. 
 
 Should the vessel hereby insured come into collision with or 
 receive salvage services from another vessel belonging wholly or in 
 part to the some owners, or under the same management, the 
 assured shall iiave the same rights under this policy as they would 
 have were the other vessel entirely the property of owners not 
 interested in the vessel hereby insured ; but in such cases the 
 liability for the collision, or the amount payable for the services 
 
 380
 
 APPENDIX 381 
 
 rendered, shall be referred to a sole arbitrator to be agreed upon 
 between the underwriters and the assured. 
 
 In port and at sea, in docks and graving docks, and on ways, 
 gridirons and pontoons, at all times, in all places, and on all 
 occasions, services and trades whatsoever and wheresoever, under 
 steam or sail, with leave to sail with or without pilots, to tow and 
 assist vessels or craft in all situations, and to be towed and to go on 
 trial trips. 
 
 Should the vessel at the expiration of this policy be at sea, or in 
 distress, or at a port of refuge or of call, she shall, provided previous 
 notice be given to the underwriters, be held covered at a pro rata 
 monthly premium, to her port of destination. 
 
 Held covered in case of r\ny breach of warranty as to cargo, 
 trade, locality, or date of sailing, provided notice be given, and any 
 additional premium required be agreed immediately after receipt of 
 advices. 
 
 Should the vessel be sold or transferred to new management, 
 then, unless the underwriters agree in writing to such sale or 
 transfer, this policy shall thereupon become cancelled from date of 
 sale or transfer, unless the vessel has cargo on board and has 
 already sailed from her loading port or is at sea in ballast, in either 
 of which cases such cancellation shall be suspended until arrived at 
 final port of discharge if with cargo, or at port of destination if in 
 ballast. K pro rata daily return of premium shall be made. 
 
 This insurance also specially to cover (subject to the special free 
 of average warranty) loss of, or damage to hull or machinery directly 
 caused by accidents in loading, discharging, or handling cargo, or 
 caused through the negligence of master, mariners, engineers, or 
 pilots, or through explosions, bursting of boilers, breakage of shafts, 
 or through any latent defect in the machinery or hull, provided such 
 loss or damage has not resulted from want of due diligence by the 
 owners of the ship, or any of them, or by the manager. Masters, 
 mates, engineers, pilots, or crew not to be considered as part owners 
 within the meaning of this clause should they hold shares in the 
 steamer. 
 
 General average and salvage to be adjusted according to the law 
 and practice obtaining at the place where the adventure ends, as if 
 the contract of affreightment contained no special terms upon the 
 subject ; or if the contract of affreightment contained no special terms 
 upon the subject ; or if the contract so provides, according to York- 
 Antwerp Rules, or, in the case of wood cargoes, York- Antwerp Rules 
 omitting the first word of Rule I. ("No' ), but, in all matters not 
 specially referred to in York-Antwerp Rules I. to XVII. inclusive, 
 the adjustment shall be in accordance with the law and practice 
 obtaining at the place where the adventure ends and as 1/ the contract 
 of affreightment contained no special terms upon the subject. 
 
 Average payable on the whole, without deduction of thirds, 
 new for old, whether the average be particular or general.
 
 382 MARINE INSURANCE 
 
 Donkey boilers, winches, cranes, windlasses, steering ^ear, and 
 electric light apparatus shall be cleemcd to be part of the hull, and 
 not part of the machinery. Refrigerating machinery and insulation 
 not covered unless expressly included in this policy. 
 
 In the event of particular average the assurers only to be 
 liable for the excess of 3 per cent upon the entire value. 
 
 No claim shall in any case be allowed in respect of scraping or 
 painting the vessel's bottom. 
 
 The warranty and conditions as to particular average to be 
 applicable to each voyage as if separately insured, and a voyage 
 shall be deemed to commence at one of the following periods to 
 be selected by the assured when making up the claim, viz. : at any 
 time at which the vessel (l) begins to load cargo, or (2) sails in 
 ballast to a loading port. Such voyage shall be deemed to continue 
 the ensuing period until either she has made one outward and one 
 homeward passage (including an intermediate ballast passage, if 
 made) or has carried and discharged two cargoes, whichever may 
 first happen, and further, in either case, until she begins to load a 
 subsequent cargo or sails in ballast for a loading port. When the 
 vessel sails in ballast to effect damage repair such sailing shall not 
 be deemed to be a sailing for a loading port although she loads at 
 the repairing port. In calculating the excess of "i per cent referred to, 
 particular average occurring outside the period covered by this policy 
 may be added to particular average occurring within such period, 
 provided it occur upon the same voyage (as above defined), but only 
 that portion of the claim arising within such period shall be 
 recoverable hereon. The commencement of a voyage shall not be 
 so fixed as to overlap another voyage on which a claim is made on 
 this or the preceding policy. 
 
 In no case shall underwriters be liable for unrepaired damage 
 in addition to a subsequent total loss sustained during the period 
 covered by this policy. 
 
 In ascertaining whether the vessel is a constructive total lo.ss the 
 insured value shall be taken as the repaired value, and nothing in 
 respect of the damaged or break-up value of the vessel or wreck 
 shall be taken into account. 
 
 In the event of total or constructive total loss, no claim to be 
 made by the underwriters for freight, whether notice of abandon- 
 ment has been given or not. 
 
 In the event of accident whereby loss or damage may result 
 in a claim under this policy, notice shall be given in writing to 
 the underwriters, where practicable, and, if abroad, to the 
 nearest Lloyd's agent also, prior to survey, so that they may 
 appoint their own surveyor if they so desire ; and whenever the 
 extent of the damage is ascertainable, the underwriters may 
 take, or may require the assured to take, tenders for the repair 
 of such damage. In cases where a tender is accepted by or
 
 APPENDIX 383 
 
 with the approval of underwriters, the underwriters will make 
 an allowance at the rate of £30 per cent per annum on the 
 insured value for the time actually lost in waiting for tenders. 
 In the event of the assured failing to comply with the conditions 
 of this clause, £15 per cent shall be deducted from the amount 
 of the ascertained claim. 
 
 Warranted free of capture, seizure, arrest, restraint, or detain- 
 ment, and the consequences thereof, or of any attempt thereat 
 (piracy excepted), and also from all consequences of hostilities or 
 warlike operations whether before or after declaration of war. 
 
 Warranted that (except as hereinafter mentioned) the amount 
 insured for accoiuit of assured and/or their managers on pre- 
 miums, freight, hire, profit, disbursements, commissions, or 
 other interests, policy proof of interest, full interest admitted, 
 or on excess or increased value of hull or machinery however 
 described, shall not exceed 15 per cent of the value of the hull 
 and machinery as stated herein, but this warranty shall not 
 restrict the assured's right to cover 
 
 (1) Premiums. — Any amount not in excess of actual premiums 
 for twelve months on all interests of whatsoever nature insured 
 (including estimated premium on any club insurances), but in all 
 cases reducing monthly by a proportionate amount of the whole. 
 2) Freight andjor Chartered Freight andjor Anticipated Freight 
 oil Board or not on Board, Insured for 12 Months or other lime. — 
 Any amount not exceeding 25 per cent of the value of hull and 
 machinery as stated herein, but if the insiu-ance be for less than 
 12 months, the 25 per cent to be proportionately reduced. If at 
 any time the gross freight and/or chartered freight at risk 
 exceeds the amount placed on freight and/or chartered freight 
 for time, the owner to have the liberty to cover the excess 
 amount whilst at risk. 
 
 (3) Freight andjor Chartered Freight for Voyage. — Any amount 
 not exceeding the actual gross freight and/or chartered freight 
 at risk, all freight covered on time policy under Clause 2 hereof 
 to be taken into account. 
 
 (4) Anticipated Freight. — If the vessel be in ballast and un- 
 chartered, an amount reasonably estimated on the basis of 
 current freight at time of insurance for anticipated net freight 
 on the next cargo passage, all freight covered on time policy to 
 be taken into account. 
 
 (6) 7ime Charter, Hire or Profit on Time Charter, or Charter for 
 Series of Voyages. — Any amount not exceeding the reasonably 
 eatimated net profit, reducing as earned, on a period not exceed- 
 ing the length of the charter. Any amount insured under 
 Clause 2 to bo taken into account, and only the excess of such 
 amount to be insured, reducing pro rata aa earned. 
 
 Provided always that a breach of tliis warranty shall not 
 afford underwriters any defence to a claim by mortgagees or
 
 j84 
 
 MARINE INSURANCE 
 
 other third parties who may have accepted this policy without 
 notice of such breach Of warranty. 
 
 per cent for each uncommenced month"' 
 if it be mutually agreed to cancel 
 this policy, 
 as follows for each consecutive 30 days the 
 vessel may be laid up in port, viz. : — 
 per cent if in the United Kingdom not 
 To return^ under average. 
 
 per cent under average, or if abroad. 
 
 Provided always that in no case shall a 
 return be allowed when the within-named 
 vessel is lying in a roadstead or in ex- 
 posed and unprotected waters, 
 
 and 
 arrival
 
 APPENDIX Ke 
 
 INSTITUTE CLAUSES FOR BUILDERS' RISKS, 1916 
 Attached to policy per for £ dated 
 
 This insurance is also to cover all risks, including fire, while 
 nnder construction and/or fitting out, except in buildings or work- 
 shops, but including materials in yards and docks of the assured, or 
 on quays, pontoons, craft, etc., and all risk while in transit to and 
 from the works and/or the vessel wherever she may be lying, also 
 all risks of loss or damage through collapse of supports or ways from 
 any cause whatever, and all risks of launching and breakage of the 
 ways. 
 
 This insurance is also to cover all risks of trial trips, loaded or 
 otherwise, as often as required, and all risks whilst proceeding to 
 and returning from the trial course. 
 
 With leave to proceed to and from any wet or dry docks, harbours, 
 ways, cradles, and pontoons during the currency of this policy. 
 
 With leave to fire guns and torpedoes, but no claim to attach 
 hereto for loss of or damage to same or to ship or machinery 
 unless the accident results in the total loss of the vessel. 
 
 In case of failure of launch, underwriters to bear all subsequent 
 expenses incurred in completing launch. 
 
 Average payable irrespective of percentage, and without deduc- 
 tion of one-third, whether the average be particular or general. 
 
 General average and salvage charges as per foreign custom, pay- 
 able as per foreign statement, and/or per York-Antwerp rules, if 
 required ; and in the event of salvage, towage, or other assistance 
 being rendered to the vessel hereby insured by any vessel belonging 
 in part or in whole to the same owners, it is hereby agreed that the 
 value of such services (without regard to the common ownership of 
 the vessels) shall be ascertained by arbitration in the manner here- 
 inafter provided for under " Collision Clau.sc," an<l the amount so 
 awarded, so far as apjilicable to the interest hereby insure<l, shall 
 constitute a charge under this policy. 
 
 In event of deviation to be held covered at an additional premium 
 to be hereafter arranged. 
 
 To cover while building all damage to hull, machinery, apparel, 
 or furniture, caused by settling of the stocks, or failure or breakage 
 
 38s 2 C
 
 386 MARINE INSURANCE 
 
 of shores, blockinc;, or staginp;, or of hoisting or other gear, either 
 before or after launching, and while fating out. 
 
 With leave to increase value. 
 
 It is also agreed that any changes of interest in the steamer 
 hereby insured shall not affect the validity of this policy. 
 
 And it is expressly declared and agreed that no acts of the 
 insurer or insured, in recovering, saving, or preserving the property 
 insured, shall be considered as a waiver or acceptance of abandon- 
 ment. 
 
 This insurance also specially to cover loss of or damage to the 
 null or machinery, through negligence of master, mariners, engi- 
 neers, or pilots, or through explosions, bursting of boilers, breakage 
 of shafts, or through any latent defect in the machinery or hull, or 
 from other causes, arising either on shore or otherwise, causing loss 
 of or injury to the property hereby insured, provided such loss or 
 damage has not resulted from want of due diligence by the owners 
 of the ship, or any of them, or by the manager, and to cover all 
 risks incidental to steam navigation, or in graving docks. 
 
 Collision Clause 
 
 And it is further agreed that if the ship hereby insured shall come 
 into collision with any other ship or vessel, and the assured shall in 
 consequence thereof become liable to pay, and shall pay by way of 
 damages to any other person or persons any sum or sums not 
 exceeding in resjiect of any one such collision the value of the ship 
 hereby insured, we, the assurers, will pay the assured such propor- 
 tion of such sum or sums so paid as our subscriptions thereto bear 
 to the value of the ship hereViy insured. And in cases where the 
 liability of the ship has been contested, with the consent, in writing, 
 of a majority of the underwriters on the hull and/or machinery (in 
 amount), we will also pay a like proportion of the costs thereby 
 incurred or paid ; but when both vessels are to blame, then, unless 
 the liability of the owners of one or both of such vessels becomes 
 limited by law, claims under the Collision Clause shall be settled on 
 the principle of Cross Liabilities, as if the owners of each vessel 
 had been compelled to pay to the owners of the other of such vessels 
 such one-half or other proportion of the latter's damages as may 
 have been properly allowed in ascertaining the balance or sum pay- 
 able by or to the assured in consequence of such collision. 
 
 And it is further agreed that the principles involved in this clause 
 shall apply to the case where both vessels are the property, in part 
 or in whole, of the same owners, all questions of responsibility and 
 amount of liability as between the two ships being left to the 
 decision of a single arbitrator, if the parties can agree upon a single 
 arbitrator, or failing such agreement, to the decision of arbitrators,
 
 APPENDIX 387 
 
 one to be appointed by the managing owners of both vessels, and 
 one to be appointed by the majority in amount of underwriters 
 interested in each vessel ; the two arbitrators chosen to choose a 
 third arbitrator before entering upon the reference. The terms of 
 the Arbitration Act of 18S9 to apply to such reference, and the 
 decision of such single, or of any two of such three arbitrators, 
 appointed as above, to be final and binding. 
 
 This clause shall also extend to any sum which the assured may 
 beeonte liable to pay, or shall pay for removal of obstructions under 
 statutory powers, for injury to harbours, wMrves, piers, stages, atui 
 similar structures, or for loss of life or personal injury consequeni on 
 iUih collision. 
 
 Protection and Indemnity Clause 
 
 It is further agreed that if the assured shall by reason of his 
 interest in the insured ship become liable to pay and shall pay any 
 sum or sums in respect of any responsibility, claim, demand, 
 damages, and/or expenses arising from or occasioned by any of the 
 following matters or things during the currency of this policy, that 
 is to say : — 
 
 Loss of or damage to any other ship or boat or goods, merchandise, 
 
 freight, or other things or interests, whatsoever on board such 
 
 other sliip or boat caused proximately or otherwise by the ship 
 
 insured in so far as the same is not covered by the running down 
 
 clause set out above. 
 
 Loss of or damage to any goods, merchandise, freight, or other 
 
 things or interest whatsoever other than as aforesaid (not being 
 
 builders' gear or material or cargo on the insured ship), whether 
 
 on board the insured ship or not, which may arise from any 
 
 cause whatever. 
 
 Loss of or damage to any harbour, dock (graving or otherwise), 
 
 slipway, way, gridiron, pontoon, pier, quay, jetty, stage, buoy, 
 
 telegraph cable, or other fixed or moveable thing whatsoever, 
 
 or to any goods or property in or on the same, howsoever 
 
 caused. 
 
 Any attempted or actual raising, removal, or destruction of the 
 
 wreck of the insured ship or the cargo thereof, or any neglect 
 
 or failure to raise, remove, or destroy the same. 
 
 Any sum or sums for which the assured niay become liable or 
 
 incur from causes not hereinbefore specified, but which are 
 
 absolutely or conditionally recoverable from or undertaken by 
 
 the Liverpool and London .'Steamship Protection Association, 
 
 Limited, ami/or North of Kngland Protecting and Indemnity 
 
 A.ssociation, hut excluding loss of life and personal injury and 
 
 matters expressly excluded from any of the above clauses. 
 
 The undersigned will pay the assured such projiortion of such
 
 388 MARINE INSURANCE 
 
 sum or sums so paid, or, which may be required to indemnify the 
 assured for such Idss, as their respective subscriptions bear to the 
 poHcy vahie of the ship hereby insured, and where the babihty of 
 tlie assured has been contested with the consent in writing of a 
 majority (in amount) of the underwriters on the ship hereby insured, 
 the undersigned will also pay a like proportion of the costs which 
 the assured shall thereby incur or be compelled to pay. 
 Notwithstanding the foregoing, this policy is : — 
 
 (a) Warranted free from any claim arising directly or in- 
 directly under Workmen's Compensation or Employers' Liability 
 Acts, and any other Statutory or Common Law liability in 
 respect of accidents to workmen. 
 
 (/') Warranted free of capture, seizure, arrest, restraint, or 
 detainment, and the consequences thereof, or of any attempt 
 thereat (piracy excepted), and also from all consequences of 
 hostilities or warlike operations whether before or after 
 declaration of war. 
 
 (c) Warranted free of loss or damage caused by strikers, 
 locked out workmen, or persons taking part in labour dis- 
 turbances or riots or civil commobious.
 
 APPENDIX Kr 
 INSTITUTE TIME CLAUSES, 1916 
 
 FREIGHT 
 
 1. In port and at sea, in docks and graving docks, and on ways, 
 gridirons, and pontoons, at all times, in all places, and on all 
 occasions, services and trades whatsoever and wheresoever, under 
 steam or sail, with leave to sail with or without pilots, to tow and 
 assist vessels or craft in all situations, and to be towed and to go 
 on trial trips. 
 
 2. Including risk of craft and/or lighter to and from the shiji. 
 Each craft and/or lighter to be deemed a separate insurance if 
 desired by the assured. 
 
 3. General average and salvage to be adjusted according to the 
 law and practice obtaining at the place where the adventure ends, as 
 if the contract of affreightment contained no special terms upon the 
 subject; or, if the contract of affreightment so provides, according to 
 York- Antwerp rules, or, in the case of wood cargoes, York- Antwerp 
 rules omitting the first word of Rule I. ("No"), but, in all matters 
 not specifically referred to in York- Antwerp Rules I. to XVII. 
 inclusive, the adjustment shall be in accordance with the law and 
 practice obtaining at the place where the adventure ends and as if 
 the contract of affreightment contained no special terms upon the 
 suVjject. 
 
 4. Warranted free from particular average under 3 per cent unless 
 the ship be stranded, sunk, or on fire, underwriters notwithstanding 
 this warranty to pay for any damage or loss caused by fire or 
 collision with another ship or vessel. 
 
 5. In the event of the total loss, whether absolute or constructive, 
 of the steamer the amount underwritten by this policy shall be p.iid 
 in full, whether the steamer be fully or only partly loaded or in 
 ballast, chartered or unchartered. 
 
 6. In ascertaining whether the vessel is a conBtructivo total 
 losa the insured value in the policies on ship shall be taken as 
 the repaired value and nothing in respect of the damaged or 
 break ■ up value of the vessel or wreck shall bo taken into 
 account. 
 
 389
 
 390 
 
 MARINE INSURANCE 
 
 7. In calculating the amount due under this policy in respect of 
 any claim except umler Clauses 3 and 5, all insurances on freight 
 (includin<j honour policies on freij;iit) shall be taken into considera- 
 tion, and when the total of such insurances exceeds in amount the 
 gross freight actually at risk only a rateable proportion of the gross 
 freight lost shall be recoverable under this policy, notwithstanding 
 any valuation therein. 
 
 8. Warranted free from any claim consequent on loss of time, 
 whether arising from the peril of the sea or otherwise. 
 
 9. Should the vessel be sold or transferred to new management, 
 then, unless the underwriters agree in writing to such sale or transfer, 
 this policy shall thereupon become cancelled from date of sale or 
 transfer, unless the vessel has cargo on board and has already sailed 
 from her loading port or is at sea in ballast, in either of which cases 
 such cancellation shall be suspended until arrival at final port of 
 discharge if with cargo, or at port of destination if in ballast. A pro 
 rata daily return of premium shall be made. 
 
 10. It is further agreed that should the within-named vessel receive 
 salvage services from another vessel belonging wholly or in part to 
 the same owners, or under the same management, the assured shall 
 have the same rights under this policy as they would have were the 
 other vessel entirely the property of owners not interested in the 
 within-named vessel ; but in such cases the amount payable for the 
 services rendered shall be referred to a sole arbitrator to be agreed 
 upon between the underwriters and the insured. 
 
 11. Held covered in case of any breach of warranty as to cargo, 
 trade, locality, or date of sailing, provided notice be given, and any 
 additional premium required be agreed immediately after receipt of 
 advices. 
 
 12. Should the vessel at the expiration of this policy be at sea, or 
 in distress, or at a port of refuge or of call, the interest hereby insured 
 shall, provided previous notice be given to the underwriters, be held 
 covered at &pro rata monthly premium to her port of destination. 
 
 13. Warranted free of capture, seizure, arrest, restraint, or detain- 
 ment, and the consequences thereof, or of any attempt thereat (piracy 
 excepted), and also from all consequences of hostilities or warlike 
 
 whether before or after declaration of war. 
 
 operations 
 
 14. To 
 return 
 
 per cent for each uncommenced month 
 if it be mutually agreed to cancel 
 this policy. 
 
 per cent for each consecutive 30 days 
 the vessel may be laid up in port. 
 
 Provided always that' in no case shall a 
 return be allowed when the within-named 
 vessel is lying in a roadstead or in ex- 
 posed and unprotected waters. 
 
 and 
 arrival.
 
 APPENDIX Kg 
 
 INSTITUTE VOYAGE CLAUSES 
 
 FREIGHT 
 
 1. Including risk of craft and/or lighter to and from the ship. 
 Each craft and/or lighter to be deemed a separate insurance if desired 
 by the assured. 
 
 2. General average and salvage to be adjusted according to the 
 law and practice obtaining at the place where the adventure ends, as 
 if the contract of affreightment contained no special terms upon the 
 subject ; or, if the contract of affreightment so provides, according 
 to York-Antwerp rules, or, in the case of wood cargoes, Yoik- 
 Antwerp rules omitting the first word of Rule I. ("No"), but, in 
 all matters not specifically referred to in York-Antwerp Rules I. to 
 XVII. inclusive, the adjustment shall be in accordance with the law 
 and practice obtaining at the place where the adventure ends and 
 as if the contract of affreightment contained no special terms upon 
 the subject. 
 
 3. Warranted free from particular average under 3 per cent unless 
 the ship be stranded, sunk, or on fire, underwriters notwithstanding 
 this warranty to pay for any damage or loss caused by fire or collision 
 with another ship or vessel. 
 
 4. In the event of the total loss, whether absolute or constructive, 
 of the vessel, the amount underw ritten by this policy shall be paid 
 in full, whether the vessel be fully or only partly loaded or in 
 ballast, chartered or unchartered. 
 
 8. In ascertaining whether the vessel is a constructive total 
 I08B the insured value in the policies on ship shall be taken aa 
 the repaired value and nothing in respect of the damaged or 
 break-up value of the vessel or wreck shall be taken into 
 account. 
 
 6. In calculating the amount due under this policy in respect of 
 any claim except under Clauses 2 and 4, all insur.niiccs on freight 
 (including honour policies on freight) shall be taken into considcr.-i- 
 tion, and when the total of such insurances exceeds in amount the 
 gross freight actually at risk only a rateable proportion of the gross 
 
 39'
 
 392 MARINE INSURANCE 
 
 freight lost shall be recoverable under this policy, notwithstanding 
 any valuation therein. 
 
 7. Warranted free from any claim consequent on loss of time 
 wliethor arising from a peril of the sea or otiierwise. 
 
 8. It is further agreed that should the within-named vessel receive 
 salvage services from another vessel belonging wholly or in part to 
 the same owners, or under the same management, the assured shall 
 have the same riglits under this policy as they would have were the 
 other vessel entirely the property of owners not interested in the 
 within-named vessel ; but in such cases the amount payable for the 
 services rendered shall be referred to a sole arbitrator to be agreed 
 upon between the underwriters and the assured. 
 
 9. Warranted free of capture, seizure, arrest, restraint, or detain- 
 ment, and the consequences thereof, or of any attempt thereat (piracy 
 excepted), and also from all consequences of hostilities or warlike 
 operations whether before or after declaration of war. 
 
 10. Held covered in case of deviation or change of voyage, pro- 
 vided notice be given and any additional premium required be agreed 
 immediately after receipt of advices. 
 
 11. With leave to sail with or without pilots, and to tow and 
 assist vessels or craft in all situations, and to be towed. 
 
 12. With leave to dock and uadock and go into graving doclt.
 
 APPENDIX Kh 
 INSTITUTE CARGO CLAUSES (F.P.A.) 1916 
 
 1. Warranted free of capture, seizure, arrest, restraint, or detain- 
 ment, and the consequences thereof or any attempt thereat, piracy 
 excepted, and also from all consequences of hostilities or warlike 
 operations, whether before or after declaration of war. 
 
 2. Warranted free of loss or damage caused by strikers locked 
 out workmen or persons taking part in labour disturbances or riots 
 or civil commotions. 
 
 3. General Average and Salvage Charges payable according to 
 Foreign Statement or per York-Antwerp Rules if in accordance with 
 the contract of affreightment. 
 
 4. Held covered, at a premium to be arranged, in case of deviation 
 or change of voyage or of any omission or error in the description 
 of the interest, vessel, or voyat^e. 
 
 5. Including (subject to the terms of the Policy) all risks covered 
 by this Policy from shippers' or manufacturers' warehouse until on 
 board the vessel, during transhipment if any, and from the vessel 
 whilst on quays wharves or in sheds during the ordinary course of 
 transit until safely deposited in consignees' or other warehouse at 
 destination named in Policy. 
 
 6. Including risk of craft, raft, and /or lighter to and from the 
 vessel. Each craft, raft, and / or lighter to be deemed a separate 
 insurance. The /Vssured are not to be prejudiced by any agreement 
 exempting lightermen from liability. 
 
 7. Including all liberties as per contract of affreightment. The 
 Assured are not to l>e prejudiced by the presence of the negligence 
 clnuse and/or latent defect cLiuse in the Bills of Lading and /or 
 Charter Party. The seaworthiness of the vessel as between the 
 Assured and the A.ssurers is hereby admitted. 
 
 8. Warranted free from Particular Average unless the vessel or 
 craft be stranded sunk or burnt, but the .Assurers are to pay the 
 insured value of any packa;,'e or packages which may be totally lost in 
 loading transhipment or discharge, also any loss of or damage to the 
 interest insured which may reasonably be attributed to fire, collision 
 or contact of the vessel and / or craft and / or conveyance with any 
 external substance (ice included) other than waler, or to discharge 
 of cargo at a port of distress, also to pay landing warehousing for- 
 warding and special charges if incurred, 
 
 393 
 
 F C. & S. 
 clause. 
 
 Strikes, rioti 
 and civil 
 commotions 
 clause. 
 
 G / A clause. 
 
 Deviation 
 clause. 
 
 Warehouse 
 CO wort bouse 
 clause. 
 
 Craft, Ac , 
 clause. 
 
 Bill of Ud. 
 ing, &c., 
 clause. 
 
 F. P. A. 
 clause.
 
 APPENDIX Kl 
 
 INSTITUTE CARGO CLAUSES 
 (For Use in Policies " WUh Average") 
 
 F. C. & S. 
 clause. 
 
 Strikes, riots 
 and civil 
 commotions 
 clause. 
 
 G / A clause. 
 
 Deviation 
 clause. 
 
 Warehouse 
 to warehouse 
 clause. 
 
 Craft, &c., 
 clause. 
 
 Bill of Lad- 
 ing, &c., 
 clause. 
 
 1. Warranted free of capture, seizure, arrest, restraint, or detain- 
 ment, and the consequences thereof or any attempt thereat (piracy 
 excepted), and also from all consequences of hostilities or warlike 
 operations, whether before or after declaration of war. 
 
 2. Warranted free of loss or damage caused l^y strikers locked 
 out workmen or persons taking pan in labour disturbances or riots 
 or civil commotions. 
 
 3. General Average and Salvage Charges payable according to 
 Foreign Statement or per York-Antwerp Rules if in accordance with 
 the contract of affreightment. 
 
 4. Held covered, at a premium to be arranged, in case of deviation 
 or change of voyage or of any omission or error in the description of 
 the interest, vessel, or voyage. 
 
 5. Including (subject to the terms of the Policy) all risks covered 
 by this Policy from shippers' or manufacturers' warehouse until on 
 board the vessel, during transhipment if any, and from the vessel 
 whilst on quays wharves or in sheds during the ordinary course of 
 transit until safely deposited in consignee's or other warehouse at 
 destination named in Policy. 
 
 6. Including risk of craft, raft, and / or lighter to and from the 
 vessel. Each craft, raft, and /or lighter to be deemed a separate 
 insurance. The Assured are not to be prejudiced by any agreement 
 exempting lightermen from liability. 
 
 7. Including all liberties as ]ier contract of aflTreightment. The 
 Assured are not to be prejudiced by the presence of the negligence 
 clause and /or latent defect clause in the Bills of Lading and /or 
 Charter Party. The seaworthiness of the vessel as between the 
 Assured and the Assurers is hereby admitted. 
 
 394
 
 APPENDIX L 
 
 I. LIVERPOOL SLIP WARRANTIES 
 
 (1) Warranted no British North America. 
 
 (2) Warranted not to be in the Baltic or White Sta between isl 
 October and 31st March, both days inclusive. 
 
 (3) Warranted not to sail with over net register tonnage of grain 
 from any port in North America between ist October and 31st 
 March, both days inclusive. 
 
 (4) Warranted not to sail with over net register tonnage of ore, 
 iron, or phosphate, to or from any port in North America between 
 1st September and 31st March, both days inclusive. 
 
 (5) Warranted no East of Singapore, excepting Java, Bangkok, 
 or Saigon. 
 
 (6) Warranted no Bilbao. 
 
 (7) Warranted no Straits of Magellan. 
 
 2. TIME WARRANTIES IN USE IN LONDON IN 1S99 
 
 Warranted no British North America (ex Halifax for coaling). 
 
 Warranted no Baltic or White Sea, 1st October to ist April. 
 
 Warranted no East of Singapore ex Java, Australia, Saigon, 
 and Bangkok. 
 
 21/ additional to cancel above warranties ex British North 
 America, ist September to 1st April (in some cases, ex British North 
 America, absolutely). 
 
 In I lie case of fine highly valued steamers there are added after 
 the exceptions to the East of Singapore warraniy the words "and 
 out and home voyages to China and Japan." 
 
 395
 
 APPENDIX M 
 
 A Selection of Clauses in Ordinary Use in Policies on Interest 
 other than Hull ' 
 
 Arrowroot. — Each 20 barrels or 50 tins. Each 50 barrels. 
 
 Block Policy : Adjustment of Premium on Amounts over 01 
 under declared. — The premium charged under this policy 
 being based on an estimated value of £ of shii)ments 
 during the period insured, the assured warrant that at the end 
 of one year they will report to the company the actual value of 
 all shipments covered hereunder, and should such shipments 
 exceed the value oi £ , the assured hereby agree to pay to 
 the company additional jiremium at rate of per cent of 
 value in excess of such sum of ;^ , and the company shall 
 return premium at the same rate upon the deficiency if the 
 aggregate amount of such shipments be less than £ 
 
 Blue Cloths — (Fondickerry). — Kach bale. 
 
 Bottled Goods (or Label Clause). — Warranted free from 
 all claim arising' from loss of or damage to labels, unless 
 the vessel be stranded, sunk, or burnt. 
 
 Bottomry Bond. — To pay such proportion of the £ , as may 
 not be recovered in consequence of the surety being destroyed 
 or diminished in value by reason of the perils insured against, 
 or of any subsequent bond or bonds. 
 
 Camels' Wool.— Each 5 bales. Each 10 bales. 
 
 Cattle. — [a) Against all risks, including mortality and jettison 
 arising from any cause whatsoever. Animals walking 
 ashore, or, when slung from the vessel, walking after being 
 taken out of the slings, to be deemed arrived, and no claim 
 to attach to this policy on such animals. Each animal to 
 be deemed a separate insurance. 
 {d) Warranted free from mortality, unless caused by the 
 
 1 Compiled from MS. collections, telegraph codes, office clauses, policies, etc., 
 and compared with Mr. Douglas Owen's Marine Insurance Notes and Clauses, 
 3rd ed., 1890 ; and Mr. Richard Lowndes's Law o/ Marine Insurance, and ed., 
 1885, Appendix'D, Customary Average Clauses. 
 
 J96
 
 APPENDIX 397 
 
 stranding, sinking, or burning of the ship, or by collision 
 with another ship or vessel. 
 (c) Liable only in case of total loss of vessel and of animals, oi 
 for payment of general average levied on all interests. 
 Cigars. — Each case. 
 
 Cochineal. — Each Package or 5 packages. 
 Cocoa-nut Oil. — i per cent for ordinary leakage, computed 
 on the original net weight, to be deducted in case of claim. 
 
 To pay average if damage amount to 3 per cent on each 
 
 series of 5 pipes, 10 puncheons, or 20 hogsheads original 
 
 numbers. 
 
 COFFEK. — Every 10 hogsheads, tierces, or casks. Each 20 barrels 
 
 and 50 bags running landing numbers. 
 
 Skimming Claitse.—lrv case of damage, to pay the cost oJ 
 
 skimming and depreciation on skimmed portion without 
 
 reference to percentage, series or insured value. 
 
 Coi-voti— East Indies.— B\Ack leaf clause.— It is agreed that 
 
 damage from black leaf discoloration shall not be claimed for 
 
 under this policy, except when caused by the bale so affected 
 
 having been in actual contact with sea water or fire, and that 
 
 no allowance shall be made for black leaf in damaged bales 
 
 when the sound portion of the same mark contains black leaf. 
 
 EiO'plian.—'E.2ic\\ 10 bales running landing numbers, and on 
 
 pickings without reference to series or percentage. 
 American.— Ave:X3.ge recoverable on each lO bales running 
 landing numbers, or on the whole ; and on pickings without 
 reference to series or percentage. Sea-damage pickings sub- 
 ject to deduction from weight of one-third for water ; country- 
 damage, one-siKth. 
 
 With liljerty to stop and stay at ports and places to tran- 
 ship, to compress, and to lighter. 
 
 It is understood and agreed that this insurance attaches as 
 Boon as the cotton becomes the property of the assured, or is 
 at their risk, and covers said cotton in jiresses, yards, rail- 
 ro.-id depots, or wherever it may be, and continues so to 
 attach until safely landed at the port of destination. This 
 policy also covers cotton intended for interior points in 
 Europe until its delivery at the mills, if with customary 
 dispatch and when so siiecificd in the certificate of insurance. 
 Including risk of craft to and from the vessel. Each 
 lighter or craft to be considered as if separately insured. 
 
 Held covered in event of deviation, provided the same be 
 communicated to assurers as soon as known to the assured, 
 and an additional premium pai<l if required. 
 
 Warranted by the assured free from any liability for 
 merchandise in the possession of any carrier or other bailee, 
 who may be lial)le for any loss or damage thereto ; arid for 
 merchandise shipped under a bill of lading containing a
 
 39S MARINE INSURANCE 
 
 stipulation that the carrier may have the benefit of any 
 insurance thereon. 
 
 It is by the assured expressly stipulated in respect to land 
 carriers, that no right of subrogation is, or is to be abrogated 
 or impaired by or through any agreement intended to relieve 
 a carrier from duties or obligations imposed or recognised by 
 the common law or otherwise. 
 
 The insurance on cotton hereunder shall in all cases be 
 null and void to the extent of any insurance with any fire 
 insurance companies, directly or inciirectly covering upon the 
 same property, whether prior or subsequent hereto in date. 
 
 In case of loss prior to issue of certificate or policy, and 
 negotiation of exchange for purchase of cotton, the liability 
 under this insurance is not to exceed the cost of the cotton 
 and charges added ; except in cases where the assured is 
 compelled by his contract to replace the cotton destroyed ; 
 in which cases the actual cost of the new cotton, and of 
 placing it where the old cotton was lost, shall be the 'imit of 
 claim, provided it does not exceed the sum insured. 
 
 Deck Cargo. — See Goons on Deck. 
 
 Destination Clause. — Warranted free of all average, but to 
 pay a total loss on such portion as does not reach its destina- 
 tion. 
 Warranted free of all average, but to pay a total loss on such 
 portion as does not reach its destination in the vessel named 
 in the policy. 
 
 Detention Clause. — See Freight. 
 
 Disbursements. — Warranted free of all average. 
 
 No claim to attach hereto unless the vessel be at total loss 
 constructive or absolute. 
 
 Fluids Clause. — Subject to particular average, including 
 leakage caused by sea perils if amounting to 3 % each barrel 
 separately insured. 
 
 Freight — Deteniion clause. — Warranted free from any claim, 
 consequent on loss of time, whether arising from a peril of 
 the sea or otherwise. 
 Diminishing clause. — It is agreed that the amount at risk shall 
 be reduced by one-twelfth for each expired month. 
 
 Freight Contingency. — On increased value on arrival by pay- 
 ment of freight and/or charges : being against the risk of 
 depreciation by perils insured against only. Total loss and/or 
 loss of part to be deemed on arrival : but to include all risks 
 of craft and/or raft, etc., at destination, and the risk of loss 
 of the whole or pjart after the freight may have become due. 
 
 Fruit Clause. — Free of particular average unless vessel be 
 stranded, sunk, burned or in collision, in any, all, or several 
 of which events the insurers are liable for such loss by decay, 
 injury, or damage to the fruit as is occasioned thereby or
 
 APPENDIX 399 
 
 occurs during or in consequence of delay resulting therefrom, 
 or from the breakage of shaft, loss of blades from propeller, 
 or delay in consequence of derangement or breakage of 
 machinery, rudder and/or stern-post, and the loss amounts 
 to lO% after deducting the ordinary loss of 5% in all cases. 
 
 Gu^ss AND China Ware. — Warranted free from any claim, 
 general average excepted, unless caused by the vessel being 
 stranded, sunk, or burnt, or by collision with another ship or 
 vessel. 
 
 Goods on Deck. — Warranted free from claim for jettison or 
 washing overboard. 
 
 In and over all. Deck load to be considered as if separately 
 insured. 
 Shipcm net's Risk. — To cover only shipowner's liability for total 
 loss, risk of jettison and washing overboard in consequence 
 of being carried on deck. 
 Shipowtur's Liability. — This insurance is only against all risks 
 to which shipowners may become liable in consequence of the 
 goods being carried on deck. 
 
 Grain. — Including all risks of craft to and from the vessel, 
 especially from the vessel when discharging in the river, or in 
 any dock on the Liverpool side of the river to the grain ware- 
 houses : each lighter or craft to be consitiered a separate risk. 
 
 Hides. — Each 1000 hides if amounting to 10 per cent. 
 
 Increased Value. — (a) In the event of any claim arising for 
 general average, this policy to pay only its proportion of any 
 excess that may not be recoverable under the original policies; 
 and in event of the contributory value of the cargo being 
 greater than the total amount insured (including the policies 
 on increased value), this policy to pay only in proportion to 
 the said amount insured, as the amount insured may bear to 
 the contributory value. 
 {b) Without benefit of salvage, and to pay only such proportion 
 of general average (if any) as shall not be recoverable under 
 the original policy or policies. (A " wager" policy.) 
 
 Increased Value by Payment of Freight. — See Freight 
 Contingency. 
 
 Indigo. — Each package. 
 
 Jute — {Calcutta to Dundee). — To pay average if amounting to 
 5 per cent on each 250 bales. 
 
 Label Clause. — Sec Boiilkk Goods. 
 
 Loss OF Weight Clause on Cargoes of .Sugar. — See Sugar. 
 
 MachINKKY. — In case of loss or injury to any part of a machine 
 consisting when complete, for sale or use, of several parts, 
 this company shall only be liable for the insured value of the 
 part lost or damagid. 
 Machinf.ry, Small, F.P.A. — (Motor cars, sewing machin.-s, 
 etc.). In the event of breach of the P'.P.A. \\ irranty and
 
 400 MARINE INSURANCE 
 
 claim for loss or injury to machinery (body or equipment), 
 underwriters to be liable only for the cost of repairing or 
 replacing the parts lost or injured, including all charges 
 incidental thereto. 
 
 Mykahoiams. — Each 500 bags. Each ;^i(X) value if amounting 
 to 5 per cent. 
 
 OuvE Oil. — Each 10 casks or 5 tuns running landing numbers. 
 
 Opium. — Each package. 
 
 Palm Oil. — Each 3 tuns or 5 casks running landing numbers. 
 
 Passage Money. — Against all costs, charges, and liabilities, the 
 master's penalties excepted, to which the owners or charterers 
 of the ship may be subjected, under the 50th and 52nd 
 sections of the i8th and 19th Victoria, Cap. 119, entituled 
 The Passengers Act 1855 ; and under the 14th, 15th, and 
 l6th sections of the 26ih and 27th Victoria, Cap. 51, 
 entituled the Passengers Act Amendment Act 1863, in- 
 cluding the replenishing of the provisions and stores, 
 required by the Act on putting into a port in the United 
 Kingdom ; also the maintenance of the passengers according 
 to the dietary of the Act while the vessel is detained after 
 putting into a foreign port. But it is understood that the 
 company's liability shall not exceed a total loss from any one 
 casualty, and that they shall not be liable for the expense of 
 replenishing the provisions and stores or maintenance as 
 aforesaid, except the putting into port be caused by accident 
 or damage to the ship and not by contrary winds alone. 
 
 Pepper. — Each 50 bags. 
 
 Petroleum. — Not liable for leakage unless the vessel be 
 stranded or in collision, or there be a forced discharge of 
 cargo at any intermediate port of distress, and it amount to 
 over 3 per cent on the whole. 
 
 Profit or Commission. — (a) Warranted free from all average, 
 but to pay a total loss on such packages as do not reach their 
 destination by any conveyance. 
 [d) Sugar. — Warranted free from all average, but to pay a total 
 loss of commission on such part of the sugar as may not 
 reach its destination ; but no claim to be made in respect of 
 wasted or em^Hy bags unless caused by the stranding, sink- 
 ing, or burning of the vessel. 
 
 Registered Post.— Including all risks till delivered to the 
 addressees. 
 
 Risk to commence from the time receipt for the package 
 is given by the postal authorities to the assured, their bankers, 
 or authorised agents, and to continue until delivered by the 
 postal authorities to the addressees or their representative. 
 
 IklCK— [From Calcutta and Rice Ports, etc.). — On each 50 bags, 
 100 bags, or 200 bags, according to arrangement. 
 [Rangoon to W.C.S. America). — Each 2000 bags.
 
 APPENDIX 401 
 
 Silk. — Each bale. 
 
 Skins. — Every 3 bales. Each bale, or each /ico value. 
 
 Specie, Shipowner's Liability for Shipments of.— (a) Against ship- 
 owner's liability in connection with carriage of specie herein 
 named, no claim to attach for anything excepted in the Bill 
 of Lading or recoverable by shippers and/or consignees 
 under ordinary form of policy on specie without recourse 
 against shipowners. It is understood and ^reed that in case 
 any claim is made against shipowners the same shall not be 
 admitted by the assured until after consultation with and 
 approval of underwriters. 
 
 {d) This insurance is against all liabilities which the assured 
 may incur as shipowners in respect of shipment, carriage, or 
 delivery of ;^ . . . specie, shipped on board the s.s. 
 .... under a bill of lading dated . . . , however such 
 liabilities may arise, and altliough caused or contributed to 
 by want of fitness or seaworthiness of the ship or her crew 
 or equipment (as to which no warranty is to be implied), 
 or by criminal or other misconduct of any person, though 
 employed by the assured, and although the ship may in any 
 way deviate from or change her voyage. 
 
 This insurance also covers any loss of contributions by 
 the said cargo to sacrifices, losses, or expenses incurred by 
 the assured which they may be unable to recover in con- 
 sequence of some neglect or default of the assured or their 
 servants. 
 
 Sugar.— Each 20 baskets or 50 bags. Each 25 baskets or 
 300 bags. 
 Refinei^: Clause.— To pay the whole of any claim If amount- 
 ing to $700 on the whole interest, or to pay average if 
 amounting to 7 per cent on each 80 baskets or 240 bags. 
 Refiner's C/awj^.— Subject to particular aver.age if amounting to 
 $ . . ., and in case of particular average, underwriters to pay 
 for such damage as is found to be attained to the refiner, as 
 shown and determined by the s.-unples of the refiners and 
 those of the assured, jirovided the same amounts to $ . . .' 
 Loss of Weii^ht Clause (on cargoes of sugar). — Warranted by 
 the assured free from claim lor damages, but this in.surance 
 is to pay for actual loss in weight caused by perils insured 
 against if amounting in insured value to §500. In deter- 
 mining the loss in weight on the portion thai has been in 
 actual contact with sea-water, 2 per cent is hereby fixed as 
 the increased weight by absorption of moisture, and is to 
 
 • Refiner I CAjwir — Franchise «ub»equcnt to 1905. Ciiba MiRar $750, Java 
 nigar S700, or, in b«lh c-iscs, sev<:n per cent p«r liKluer loail. 
 
 " Sugar Tru»t" rraiiLhiiet : Wrsi In(li.-»n shipnicnU. lo U.S.A. fiso, 
 ,, ,, ,, Soiilli American „ „ •»'«! 
 
 J'va , .. ••./•. *""*. 
 
 For other account!! : Cuba iliipincni*. franchise* varyint ftoni fijo 10 #300. 
 
 Z D
 
 402 MARINE INSURANCE 
 
 be deducted from the net weight delivered of the said sea- 
 damaged portion. 
 
 (In and after 1905 the franchise was sometimes reduced to 
 
 $250-) 
 Tali.OW.— Particular average payable if amounting to 3 per 
 cent upon each package, tierce, or barrel, but claims for 
 leakage and for underweight to be paid only if occasionec 
 by the vessel being stranded, sunk, burnt, or in collision. 
 Tea — China. — To pay average on each 10 chests, 20 half chests, 
 or 40 quarter chests, following landing numbers, but no claim 
 to attach for wet or damp in respect of any package unless 
 the tea therein shall have been in actual contact with sea 
 water. 
 India. — Including risk from tea gardens. Clause as above with 
 the addition, "or river water." 
 Telegraph Cable. — Warranted free from all claim (general 
 average excepted) unless the same be occasioned by the loss, 
 burning, or stranding of the vessel, and to pay only on that 
 portion of the interest which may remain on board at the 
 time of the accident. 
 Tin Plates. — Each 100 boxes. Each 50 boxes. 
 Tobacco. — Average payable on each 10 hogsheads, 10 boxes, 
 50 bags, or 10 tierces. 
 (American). — In case of particular average to pay the excess of 
 5 per cent on the value of each 10 hogsheads, following 
 landing numbers. 
 Wood Goons.— In and over all. Including risk of craft •"''/o, 
 raft to and from the vessel. Each craft »'"i/o, raft ""^/^r deck 
 load to be deemed a separate insurance. 
 Wool — (Mediterranean and Black Sea). — Each 5 bales. 
 (Cape). — Each bale. 
 (River Plate). — Each 5 bales. 
 
 (East Indian). — Each 10 bales, running landing numbers. 
 (W.C.S. America).— Each bale. 
 {Australia and New Zealand). — Each bale.
 
 APPENDIX N 
 
 d SehiiioH of Clauses in Occasional Use in Policies on Intertxt 
 
 of all Kinds 
 
 Average Only. — Being only to cover the risks excepted in 
 the clause "warranted free from particular average unless 
 the ship or craft be stranded, sunk, or burnt, etc.," but no 
 
 claim to attach hereto unless it amount to per cent on the 
 
 whole interest. 
 
 Bonded Prices — (adjustment). — In case of claim for particular 
 average bonded prices are to be taken as the basis of settle- 
 ment (especially in the case of tea, tobacco, coffee, wine, and 
 spirits imported into this country). See Rules of Practice of 
 Average Adjusters' Associaiion. 
 
 Craft Clause — In all policies on cargo. — Including risk of craft 
 to and from the vessel. 
 
 Each craft or lighter to be deemed a separate insurance. 
 
 Grounding — {a) Suez Canal.— Gio\ix\<\'mg in the Suez Canal 
 not to Ix; deemed a strand, but underwriters to pay any loss 
 or damage which may be proved to have directly resulted 
 therefrom. 
 
 (b) River Plate. — Grounding in the River Plate (at or above 
 La Plata) or its tributaries shall not be deemed a strand. 
 
 (c) Manchester Ship Cami/.— Grounding in the Manchester 
 Ship Canal or its connections, or in the River Mersey above 
 Rock Ferry Slip, if occurring on a voyage to or from a point 
 on the Manchester Ship Canal, shall not be deemed to be a 
 strand. 
 
 (d) River Plate and Manchester Ship Cawa/.— Grounding in the 
 River Plate (at or aVxjve I.a Plata) or its tributaries shall not 
 be deemed a strand ; nor shall grounding in the .Manchester 
 Ship Canal or its connections, nor in the River Mersey above 
 Rock Ferry Slip, if occurring on a voyage to or from a point 
 on the Manchester .Ship Canal. 
 
 (e) Suez Canal, River Plate, and Manchester Ship Canal.— 
 Grounding in the Sue* Canal or River Plate (at or above La 
 Plataj or its tributaries shall not be deemed a strand ; nor shall 
 grounding in the Manchester Ship Canal or its connections or 
 in the River Mersey above Kix:k Ferry .Slip, if occurring on 
 a voyage to or from a point on the Manchester .Ship CanaL 
 
 403*
 
 404 MARINE INSURANCE 
 
 " Inchmarf.k Clause."— See p. 119. 
 
 Inland Risk — Outward. — Including all risks of inland convey' 
 ance to place of shipment and of fire in transit, and whilst 
 awaiting shipment in docks, warehouses, or elsewhere. 
 Inward. — Including risks per inland conveyances from port 
 
 of discharge to destination. 
 Manchester outward. — Including the risk from Manchester to 
 place of shipment by railway "'''/or other conveyance, and of 
 fire in transit, and whilst waiting in docks, warehouses, or 
 elsewhere. 
 
 Loss BEFORE DECLARATION. — In event of loss prior to declara- 
 tion to l)e valued at invoice cost, adding charges and per 
 
 cent. 
 
 Machinkry Negligence Clause. — See Inchmaree Clause, 
 p. 119. 
 
 Negligence Clause. — It is agreed that the assured shall not 
 be prejudiced by the insertion in the bill of lading of the 
 following clause : — 
 
 The act of God, perils of the sea, fire, barratry of the 
 master and crew, enemies, pirates, thieves, arrest and restraint 
 of princes, rulers, and people, collisions, stranding, and other 
 accidents of navigation excepted, even when occasioned by 
 the negligence, default, or error in judgment of the pilot, 
 master, mariners, or other servants of the shipowner. 
 
 Same Ownership or "4^ 
 
 Sister Ship Clause. /^^^ P- ^53- 
 
 Total Loss only — (See also Disbursements). — Being only 
 against the risk of total loss. 
 
 Being only against the risk of total loss of the vessel. 
 
 Warranted free of all average, but to pay a total lo§s on 
 such portion of the interest as does not reach its destination. 
 
 Warranted free of all average, but to pay a total loss on 
 such portion as does not reach its destination in the vessel 
 named in the policy. 
 Trading Clause. — Outward cargo to be deemed homeward in- 
 terest twenty-four hoursafter arrival at first port or place of trade. 
 War Risk (American Clause). — It is agreed that this insurance 
 covers the risk of capture, seizure, destruction, or damage by 
 men-of-war, by letters of mart, by takings at sea, arrests, re- 
 straints, detainments and acts of kings, princes, and people, 
 authorised by and in prosecution of hostilities between belli- 
 gerent nations ; also warranted not to abandon in case of 
 seizure, capture, or detention until after condemnation of the 
 property insured ; nor until ninety days after notice of the said 
 condemnation is given to this company. Also warranted not 
 to abandon in case of blockade and free of claim for loss 
 or expense in consequence thereof or of any attempt to evade 
 blockade, but in event of blockade to be at liberty to proceed 
 to an open port and there end voyage.
 
 APPENDIX O 
 
 MARINE INSURANCE ACT, 1906 
 6 Edw. VII. Chapter 41 
 
 An Act to codify the Law relating to Marine Insurance. 
 
 [21st December 1906.] 
 
 Bb it enacted by the King's most Excellent Majesty, by and with 
 the advice and consent of the Lords Spiritual and Temporal, and 
 Commons, in this present Parliament assembled, and by the 
 authority of the same, as follows : — 
 
 Marine Insurance 
 
 1. Marine Insurance defined. — A contract of marine insurance 
 is a contract whereby the insurer undertakes to indemnify the 
 jissured, in manner and to the extent thereby agreed, against marine 
 losses, that is to say, the losses incident to marine adventure. 
 
 2. Mixed Sea and Land Risks. — (i) A contract of marine 
 insurance may, by its express terms, or by usage of trade, be 
 extended so as to i>rotect the assured against losses on inland waters 
 or on any land risk which may be incidental to any sea voyage. 
 
 (2) Where a ship in course of buildirig, c^r the launch of a ship, 
 or any adventure analogous to a marine adventure, is covered by a 
 policy in the form of a marine policy, the provisions of this Act, in 
 so far as applicable, shall apply thereto ; but, exce|:>t as by this 
 section prfjvidcd, nothing in this Act shall alter or atfcct any rule 
 of law a[>plicable to any contract of msurance other than a contract 
 of marine insurance as by this Act delined. 
 
 3 Marine Adventure and Maritime Perils defined. — (l) Subject 
 to the provisions of this Act, every lawful marine adventure may be 
 the sul)ject of a contract of marine insurance. 
 
 (2) In particular there is a marine adventure where — 
 (a) Any ship goods or other moveables arc exposed to maritime 
 perils. .Such property is in this Act referred to as 
 " insurable property " : 
 403
 
 406 MARINE INSURANCE 
 
 (d) The earning or acquisition of any freight, passage money, 
 commission, profit, or other pecuniary benefit, or the 
 security for any advances, loan, or disbursements, is 
 endant^ered by the exposure of insurable property to 
 maritime perils ; 
 (c) Any liability to a third party may be incurred by the owner 
 of, or other person interested in or responsible for, 
 insurable property, by reason of maritime perils. 
 " Maritime perils " means the perils consequent on, or incidental 
 to, the navigation of the sea, that is to say, perils of the seas, fire, 
 war perils, pirates, rovers, thieves, captures, seisures, restraints, 
 and detainments of princes and peoples, jettisons, barratry, and any 
 other perils, either of the like kind or which may be designated by 
 the policy. 
 
 Insurable Interest 
 
 4. Avoidance of Wagering or Gaming Contracts. — (i) Every 
 contract of marine insurance by way of gaming or wagering is void. 
 
 (2) A contract of marine insurance is deemed to be a gaming or 
 wagering contract — 
 
 (o) Where the assured has not an insurable interest as defined 
 by this Act, and the contract is entered into with no 
 expectation of acquiring such an interest ; or 
 (b) Where the policy is made " interest or no interest," or 
 *' without further proof of interest than the policy itself," 
 or " without benefit of salvage to the insurer," or subject 
 to any other like term : 
 Provided that, where there is no possibility of salvage, a policy 
 may be effected without benefit of salvage to the insurer. 
 
 5. Insurable Interest defitted.—{\) Subject to the provisions of 
 this Act, every person has an insurable interest who is interested in 
 a marine adventure. 
 
 (2) In particular, a person is interested in a marine adventure 
 where he stands in any legal or equitable relation to the adventure 
 or to any insurable property at risk therein, in consequence of which 
 he may benefit by the safety or due arrival of insurable property, or 
 may be prejudiced by its loss, or by damage thereto, or by the 
 detention thereof, or may incur Uability in respect thereof. 
 
 6. When Interest must attach. — {\) The assured must be 
 interested in the subject-matter insured at the time of the loss 
 though he need not be interested when the insurance is effected : 
 
 Provided that where the subject-matter is insured "lost or not 
 lost," the assured may recover although he may not have acquired 
 his interest until after the loss, unless at the time of effecting the 
 contract of insurance the assured was aware of the loss, and the 
 insurer was not. 
 
 (2) Where the assured has no interest at the time of the loss, he
 
 APPENDIX 407 
 
 cannot acquire interest by any act or election after he is aware of 
 the loss. 
 
 7. Defeasible or Contingent Interest. — (i) A defeasible interest 
 is insurable, as also is a contingent interest, 
 
 (2) In particular, where the buyer of goods has insured them, he 
 has an insurable interest, notwithstanding that he might, at his 
 election, have rejected the goods, or have treated them as at the 
 seller's risk, by reason of the latter's delay in making delivery or 
 otherwise. 
 
 8. Partial Interest. — A partial interest of any nature is insurable. 
 
 9. Re-insurance. — (i) The insurer under a contract of marine 
 insurance has an insurable interest in his risk, and may re-insure in 
 respect of it. 
 
 (2) Unless the policy otherwise provides, the original assured 
 has no right or interest in respect of such re-insurance. 
 
 10. Bottomry. — The lender of money on bottomry or respondentia 
 has an insurable interest in respect of the loan. 
 
 H. Master's and Seamey^s Wages. — The master or any member 
 of the crew of a ship has an insurable interest in respect of his 
 wages. 
 
 12. Advance Freight. — In the case of advance freight, the person 
 advancing the freight has an insurable interest, in so far as such 
 freight is not repayable in case of loss. 
 
 13. Charges 0/ Insurance. — The assured has an insurable interest 
 in the charges of any insurance which he may effect. 
 
 14. Quantum 0/ Interest. — (l) Where the subject-matter insured 
 is mortgaged, the mortgagor has an insurable interest in the full 
 value thereof, and the mortgagee has an insurable interest in respect 
 of any sum due or to become due under the mortgage. 
 
 (2) A mortgagee, consignee, or other person having an interest 
 in the subject-matter insured may insure on behalf and for the 
 benefit of other persons interested as well as for his own benefit. 
 
 (3) The owner of insurable property has an insurable interest in 
 respect of the full value thereof, notwithstanding that some third 
 person may have agreed, oj be liable, to indenmify liim in case 
 of loss. 
 
 15. Assignment 0/ Interest. — Where the assured assii^ns or other- 
 wise parts with his interest in the subject-matter insured, lie does 
 not thereby transfer to the assignee his rights under (he contract of 
 insurance, unless there be an express or implied agreement with the 
 assignee to that effect. 
 
 Hut the {)rovisions of this section do not affect a transmission 0/ 
 interest by operation of law.
 
 4o8 MARINE INSURANCE 
 
 Insurable Value 
 
 l6. Measure of Insiirahh Value. — Subject to any express pro- 
 vision or valuation in the policy, the insurable value of the subject- 
 matter insured must be ascertained as follows : — 
 
 (i) In insurance on ship, the insurable value is the value, at 
 the commencement of the risk, of the ship, including her 
 outfit, provisions and stores for the officers and crew, 
 money advanced for seamen's wages, and other disburse- 
 ments (if any) incurred to make the ship fit for the 
 voyage or adventure contemplated by the policy, plus the 
 charges of insurance upon the whole : 
 
 The insurable value, in the case of a steamship, 
 includes also the machinery, boilers, and coals and 
 engine stores if owned by the assured, and, in the case 
 of a ship engaged in special trade, the ordinary fittings 
 requisite for that trade : 
 
 (2) In insurance on freight, whether paid in advance or other- 
 
 wise, the insurable value is the gross amount of the 
 freight at the risk of the assured, plus the charges of 
 insurance : 
 
 (3) In insurance on goods or merchandise, the insurable value 
 
 is the prime cost of the property insured, plus the 
 expenses of and incidental to shipping and the charges 
 of insurance upon the whole : 
 
 (4) In insurance on any other subject-matter, the insurable 
 
 value is the amount at the risk of the assured when the 
 policy attaches, plus the charges of insurance. 
 
 Disclosure and Representations 
 
 17. Insurance is Uberrimae Fidei. — A contract of marine 
 insurance is a contract based upon the utmost good faith, and, if 
 the utmost good faith be not observed by either party, the contract 
 may be avoided by the other party. 
 
 18. Disclosure by Assured. — (i) Subject to the provisions of this 
 section, the assured must disclose to the insurer, before the contract 
 is concluded, every material circumstance which is known to the 
 assured, and the assured is deemed to know every circumstance 
 which, in the ordinary course of business, ought to be known by 
 him. If the assured fails to make such disclosure, the insurer may 
 avoid the contract. 
 
 (2) Every circumstance is material which would influence the 
 judgment of a prudent insurer in fixing the premium, or determining 
 whether he will take the risk. 
 
 (3) In the absence of inquiry, the following circumstances need 
 not be disclosed, namely : — 
 
 (a) Any circumstance which diminishes the risk \
 
 APPENDIX 409 
 
 {i) Any circumstance which is known or presumed to be 
 known to the insurer. The insurer is presumed to know 
 matters of common notoriety or knowledge, and matters 
 which an insurer in the ordinary course of his business, 
 as such, ought to know ; 
 
 (c) Any circumstance as to which information is waived by the 
 insurer ; 
 
 {d) Any circumstance which it is superfluous to disclose by 
 reason of any express or implied warranty. 
 
 (4) Whether any particular circumstance, which is not disclosed, 
 be material or not is, in each case, a question of fact. 
 
 (5) The term " circumstance " includes any communication made 
 to, or information received by, the assured. 
 
 19. Disclosure by Agent effecting Insurance. — Subject to the 
 provisions of the preceding section as to circumstances which need 
 not be disclosed, where an insurance is effected for the assured by 
 an agent, the agent must disclose to the insurer — 
 
 (a) Every material circumstance which is known to himself, 
 and an agent to insure is deemed to know every 
 circumstance which in the ordinary course of business 
 ought to be known by, or to have been communicated 
 to, him ; and 
 
 {jb) Every material circumstance which the assured is Iwund 
 to disclose, unless it come to his knowledge too late to 
 communicate it to the agent. 
 
 20. Representations pending Negotiation of Contract. — ( I ) Eveiy 
 material representation made by the assured or his agent to the 
 insurer during the negotiations for the contract, and before the 
 contract is concluded, must be true. If it be untrue, the insurer 
 may avoid the contract. 
 
 (2) A representation is material which would influence the 
 judgment of a prudent insurer in fixing the premium, or determining 
 whether he will take the risk. 
 
 (3) A representation may be either a representation as to a 
 matter of fact, or as to a matter of expectation or belief. 
 
 (4) A representation as to a matter of fact is true, if it be 
 substantially correct, that is to say, if the dilTerence between what 
 is represented and what is actually correct would not be considered 
 material by a prudent insurer. 
 
 (5) A representation as to a matter of expectation or belief is 
 true if it be made in go(jd fniih. 
 
 (6) .\ representation may l<e withdrawn or corrected before the 
 contract is concludcil. 
 
 (7) Whether a particular representation be material or not is, in 
 each ca.se, a question (jf fatt. 
 
 21. When Contract is deemed lo be concluded. — A contract of 
 marine insurance is deemed to be concluded when the pro])osal of 
 the assured is accepted by the insurer, whether the [Kjlicy be then
 
 4IO MARINE INSURANCE 
 
 issued or not ; and for the purpose of showing when the proposal 
 was accepted, reference may be made to the slip or covering note 
 or other customary memorandum of the contract, although it be 
 unstamped. 
 
 The Policy 
 
 22. Contract tnust be embodied in Policy. — Subject to the pro- 
 visions of any statute, a contract of inarine insurance is inadmissible 
 in evidence unless it is embodied in a marine policy in accordance 
 with this Act. The policy may be executed and issued either at 
 the time when the contract is concluded, or afterwards. 
 
 23. IVhat Policy must specify. — A marine policy must specify — 
 (i) The name of the assured, or of some person who effects the 
 
 insurance on his behalf : 
 
 (2) The subjec^matler insured and the risk insured against : 
 
 (3) The voyage, or period of lime, or both, as the case may be, 
 
 covered by the insurance : 
 
 (4) The sum or sums insured : 
 
 (5) The name or names of the insurers. 
 
 24. Signature of Insurer. — (l) A marine policy must be signed 
 by or on behalf of the insurer, provided that in the case of a 
 corporation the corporate seal may be sufficient, but nothing in this 
 section shall be construed as requiring the subscription of a corpora- 
 tion to be under seal. 
 
 (2) Where a policy is subscribed by or on behalf of two or more 
 insurers, each subscription, unless the contrary be expressed, 
 constitutes a distinct contract with the assured. 
 
 25. Voyage and lime Policies.— {\) Where the contract is to 
 insure the subject-matter at and from, or from one place to another 
 or others, the policy is called a '* voyage policy,' and where the 
 contract is to insure the subject-matter for a definite period of time, 
 the policy is called a "time policy." A contract for both voyage 
 and time may be included in the same policy. 
 
 / Edw. VII. c. 7. — (2) Subject to the provisions of section 
 eleven of the Finance Act, 1901, a time pohcy which is made for 
 any time exceeding twelve months is invalid. 
 
 26. Designation of Subject-matter. — (i) The subject-matter 
 insured must be designated in a marine policy with reasonable 
 certainty. 
 
 (2) The nature and extent of the interest of the assured in the 
 subject-matter insured neeii not be specified in llie policy. 
 
 (3) Where the policy designates the subject-matter insured in 
 general terms, it shall be construed to apply to the interest intended 
 by the assured to be covered. 
 
 (4) In the application of this section regard shall be had to any 
 usage regulating the designation of tlie subject-matter insured. 
 
 27. Valued Policy. — (i) A policy may be either valued or 
 unvalued.
 
 APPENDIX 411 
 
 (2) A valued policy is a policy which specifies the agreed value 
 of the subject-matter insured. 
 
 (3) Subject to the provisions of this Act, and in the absence of 
 fraud, the value fixed by the policy is, as between the insurer and 
 assured, conclusive of the insurable value of the subject intended to 
 be insured, whether the loss be total or partial. 
 
 (4) Unless the policy otherwise provides, the value fixed by the 
 policy is not conclusive for the purpose of determining whether there 
 has been a constructive total loss. 
 
 28. Unvalued Policy. — An unvalued policy is a policy which 
 does not specify the value of the subject-matter insured, but, subject 
 to the limit of the sum insured, leaves the insurable value to be 
 subsequently ascertained, in the manner hereinbefore specified. 
 
 29. Floating Policy by Ship or Ships. — (i) A floating policy is a 
 policy which describes the insurance in general terms, and leaves 
 the name of the ship or ships and other particulars to be defined by 
 subsequent declaration. 
 
 (2) The subsequent declaration or declarations may be made by 
 indorsement on the policy, or in other customary manner. 
 
 (3) Unless the policy otherwise provides, the declarations must 
 be made in the order of dispatch or shipment. They must, in the 
 case of goods, comprise all consignments within the terms of the 
 policy, and the value of the goods or other property must be 
 honestly stated, but an omission or erroneous declaration may 
 be rectified even after loss or arrival, provided the omission or 
 declaration was made in good faith. 
 
 (4) Unless the policy otherwise provides, where a declaration of 
 value is not made until after notice of loss or arrival, the policy 
 must be treated as an unvalued policy as regards the subject-matter 
 of that declaration. 
 
 30. Construction of Terms in Policy. ~{i) A policy may be in 
 the form in the First Schedule to this Act. 
 
 (2) Subject to the provisions of this Act, and unless the context 
 of the policy otherwise requires, the terms and expressions mentioned 
 in the First Schedule to this Act shall be construed as having the 
 scope and meaning in that schedule assigned to them. 
 
 3X. Premium to be arranged. — (l) Where an insurance is 
 effected at a premium to be arranged, and no arrangement is made, 
 a reasonable premium is payable. 
 
 (2) Where an in.iurance is eflfccted on the terms that an additional 
 premium is to he arranged in a given event, and that event happens 
 but no arrangement is made, then a reasonable additional i)remium 
 is payable. 
 
 Double Insurance 
 
 32. Double Insurance. — (i) Where two or more policies are 
 effected by or on behalf of the a.Mired on the snnie adventure and 
 interest or anv [>:ut thereof, and the sums insured exceed the
 
 412 MARINE INSURANCE 
 
 indemnity allowed by this Act, the assured is said to be over-insured 
 by double insurance. 
 
 (2) Where the assured is over-insured by double insurance — 
 (a) The assured, unless the policy ulhcrwise provides, may 
 claim payment from the insurers in such order as he 
 may ihink fit, provided that he is not entitled to 
 receive any sum in excess of the indemnity allowed 
 by this Act ; 
 {6) Where the policy under which the assured claims is a 
 valued policy, the assured must give credit as against the 
 valuation for any sum received by him under any other 
 policy without regard to the actual value of the subject- 
 matter insured ; 
 
 (c) Where the policy under which the assured claims is an 
 
 unvalued policy, he must give credit, as against the full 
 insurable value, for any sum received by him under any 
 other policy ; 
 
 (d) Where the assured receives any sum in excess of the 
 
 indemnity allowed by this Act, he is deemed to hold 
 such sum in trust for the insurers, according to their 
 right of contribution among themselves. 
 
 Warranties, etc. 
 
 33. Naiiire of Wartanty. — (i) A warranty, in the following 
 sections relating to warranties, means a promissory warranty, that 
 is to say, a warranty by which the assured undertakes that some 
 particular thing shall or shall not be done, or that some condition 
 shall be fulfilled, or whereby he afTirms or negatives the existence of 
 a particular state of facts. 
 
 (2) A warranty may be express or implied. 
 
 (3) A warranty, as above defined, is a condition which must be 
 exactly complied with, whether it be material to the risk or not. 
 If it be not so complied with, then, subject to any express provision 
 in the policy, the insurer is discharged from liability as from the 
 date of the breach of warranty, but without prejudice to any liability 
 incurred by him before that date. 
 
 34. When Breach of Warranty excused. — (i) Non-compliance 
 with a warranty is excused when, by reason of a change of circum- 
 stances, the warranty ceases to be applicable to the circumstances 
 of the contract, or when compliance with the warranty is rendered 
 unlawful by any subsequent law. 
 
 (2) Where a warranty is broken, the assured cannot avail himself 
 of the defence that the breach has been remedied, and the warranty 
 complied with, before loss. 
 
 (3) A breach of warranty may be waived by the insurer. 
 
 35. Express Warranties. — (i) An express warranty may be in 
 any form of words from which the intention to warrant is to be 
 inferred.
 
 APPENDIX 413 
 
 (2) An express warranty must be included in, or written upon, 
 the policy, or must be contained in some document incorporated by 
 reference into the policy. 
 
 (3) An express warranty does not exclude an implied warranty, 
 unless it be inconsistent therewith. 
 
 36. IVarranty of Neutrality. — (l) Where insurable property, 
 whether ship or goods, is expressly warranted neutral, there is an 
 implied condition that the property shall have a neutral character at 
 the commencement of the risk, and that, so far as the assured can 
 control the matter, its neutral character shall be preserved during 
 the risk. 
 
 (2) Where a ship is expressly warranted " neutral," there is also 
 an impUed condition that, so far as the assured can control the 
 matter, she shall be properly documented, that is to say, that she 
 shall carry the necessary papers to establish her neutrality, and that 
 she shall not falsify or suppress her papers, or use simulated papers. 
 If any loss occurs through breach of this condition, the insurer may 
 avoid the contract. 
 
 37. No implied Warranty of Nationality. — There is no implied 
 warranty as to the nationality of a ship, or that her nationality shall 
 not be changed during the risk. 
 
 38. Warranty of Good Safety. —Where the subject-matter insured 
 is waiTanted "well" or "in good safety" on a particular day, it is 
 sufficient if it be safe at any time during that day. 
 
 39. Warranty of Seaworthiness of Ship.— [i) In a voyage policy 
 there is an implied warranty that at the commencement of the 
 voyage the ship shall be.seaworthy for the purpose of the particular 
 adventure insured. 
 
 (2) Where the policy attaches while the ship is in port, there is 
 also an implied warranty that she shall, at the commencement of 
 the risk, be reasonably fit to encounter the ordinary perils of the 
 port. 
 
 (3) Where the policy relates to a voyage which is performed in 
 different stages, during which the ship requires dilTerent kinds of or 
 further preparation or equipment, there is an implied warranty that 
 at the commencement of each stage the ship is seawoithy in respect 
 of such preparation or equipment for the purposes of that stage. 
 
 {4) A ship is deemed to be seaworthy when she is rcasonal)ly fit 
 in all respects to encounter the ordinary perils of the seas of the 
 advtrnture insured. 
 
 (5) In a time policy there is no implied warranty that the ship 
 shall be seaworthy at any .st.nge of the adventure, but where, 
 with the privity of the assured, the ship is sent to sea in an uiisea- 
 worthy state, the insurer is not liable for any loss attributable to 
 unseaworthiness. 
 
 40. No implied Warranty that Goods are Seaworthy. — (l) In a 
 policy on goods or other moveables there is no implied warranty 
 that the goods or moveables are seaworthy.
 
 414 MARINE INSURANCE 
 
 (2) In a voyage policy on floods or other moveables there is an 
 implied warranty tliat at the commencement of the voyage the ship 
 is not only seaworthy as a ship, but also that she is reasonably fit to 
 carry the goods or other moveables to the destination contemplated 
 by the policy. 
 
 41. Warranty of Legality. — There is an implied warranty that 
 the adventure insured is a lawful one, and that, so far as the assured 
 can control the matter, the adventure shall be carried out in a lawful 
 manner. 
 
 The Voyage 
 
 42. Implied Condition as to Commencement of Risk. — (i) Where 
 the subject-matter is insured by a voyage policy " at and from" or 
 "from" a particular place, it is not necessary that the ship should 
 be at that place when the contract is concluded, but there is an 
 implied condition that the adventure shall be commenced within a 
 reasonable time, and that if the adventure be not so commenced 
 the insurer may avoid the contract. 
 
 (2) The implied condition may be negatived by showing that 
 the delay was caused by circumstances known to the insurer before 
 the contract was concluded, or by showing that he waived the 
 condition. 
 
 43. Alteration of Port of Departure. — Where the place of 
 departure is specified by the policy, and the ship instead of sailing 
 from that place sails from any other place, the risk does not 
 attach. 
 
 44. Sailing for different Destination. — Where the destination is 
 specified in the policy, and the ship, instead of sailing for that 
 destination, sails for any other destination, the risk does not attach. 
 
 45. Change of Voyage. — (i) Where, after the commencement of 
 the risk, the destination of the ship is voluntarily ciianged from the 
 destination contemplated by the policy, there is said to be a change 
 of voyage. 
 
 (2) Unless the policy otherwise provides, where there is a 
 change of voyage, the insurer is discharged from liability as from 
 the time of change, that is to say, as from the time when the 
 determination to change it is manifested ; and it is immaterial that 
 the ship may not in fact have left the course of voyage contemplated 
 by the policy when the loss occurs. 
 
 46. Deviation. — (i) Where a ship, without lawful excuse, 
 deviates from the voyage contemplated by the policy, the insurer 
 is discharged firom liability as from the time of deviation, and it is 
 immaterial that the ship may have regained her route before any 
 loss occurs. 
 
 (2) There is a deviation from the voyage contemplated by the 
 policy — 
 
 (a) Where the course of the voyage is specifically designated 
 by the policy, and that course is departed from ; or
 
 APPENDIX 415 
 
 (b) VMiere the course of the voyage is not specifically 
 
 designated by the policy, but the usual and customary 
 
 course is departed from. 
 
 (3) The intention to deviate is immaterial ; there must be a 
 
 deviation in fact to discharge the insurer from his liability under the 
 
 contract. 
 
 47. Several Ports of Discharge. — (i) WTiere several pxirts of 
 discharge are specified by the policy, the ship may proceed to all 
 or any of them, but, in the absence of any usage or sufficient cause 
 to the contrary, slie must proceed to them, or such of them as she 
 goes to, in the order designated by the policy. If she does not 
 there is a deviation. 
 
 (2) Where the policy is to " ports of discharge," within a given 
 area, which are not named, the ship must, in the absence of any 
 usage or sufficient cause to the contrary, proceed to them, or such 
 of them as she goes to, in their geographical order. If she does 
 not, there is a deviation. 
 
 48. Delay in Vo^'age. — In the case of a voyage policy, the 
 adventure insured must be prosecuted throughout its course with 
 reasonable despatch, and, if without lawful excuse it is not so 
 prosecuted, the insurer is discharged from liability as from the lime 
 when the delay became unreasonable. 
 
 49. Excuses for Deviation or Delay. — (i) Deviation or delay in 
 prosecuting the voyage contemplated by the policy is excused — 
 
 (a) Where authorised by any special term in the policy ; or 
 \b') Where caused by circumstances beyond the control of the 
 
 master and his employer ; or 
 (f) Where reasonably necessary in order to comply with an 
 
 express or implied warranty ; or 
 id) Where reasonably necessary for the safety of the ship or 
 
 subject-matter insured ; or 
 {e) For the purpose of saving human life, or aiding a ship in 
 
 distress where human life may be in danger ; or 
 (/) Where reasonably necessary for the purpose of obtaining 
 
 medical or surgical aid for any person on board the 
 
 ship ; or 
 {g) Where caused by the barratrous conduct of the master or 
 
 crew, if barratry be one of the perils insured against. 
 (2) When the cause excusing the deviation or del.iy ceases to 
 operate, the ship must resume her course, and prosecute her voyage, 
 with reasonable despatch. 
 
 Assignment of Pomcy 
 
 50. When and how Polity is assignable.— {\) A marine p')licy 
 is assignable unless it contains terms expressly prohibiting assign- 
 ment. It may be assigned either before or after loss. 
 
 (2) Where a marine policy has been assigned so as to pass the 
 beneficial interest in such policy, the a-iiMiec of the policy is
 
 4i6 MARINE INSURANCE 
 
 entitled to sue thereon in his own name ; and the defendant is 
 entitled to make any defence arisintj out of the contract which he 
 would have been entitled to make if the action had been brought in 
 the name of tiie person by or on behalf of whom the policy was 
 effected. 
 
 (3) A marine policy may be assigned by indorsement thereon 
 or in other customary manner. 
 
 51. Assured who has no Intetest cannot assign. — Where the 
 a5sured has parted with or lost his interest in the subject-matter 
 insured, and has not, before or at the time of so doing, expressly 
 or impliedly agreed to assign the policy, any subsequent assignment 
 of the policy is inoperative : 
 
 Provided that nothing in this section affects the assignment of a 
 policy after loss. 
 
 The Premium 
 
 52. When Premium payable. — Unless otherwise agreed, the 
 duly of the assured or his agent to pay the premium, and the duty 
 of the insurer to issue the policy to the assured or his agent, are 
 concurrent conditions, and the insurer is not bound to issue the 
 policy until payment or tender of the premium. 
 
 53. Policy effected th rough Broker. — ( i ) U nless otherwise agreed, 
 where a marine policy is effected on behalf of the assured by a 
 broker, the broker is directly responsible to the insurer for the 
 premium, and the insurer is directly responsible to the assured for 
 the amount which may be payable in respect of losses, or in respect 
 of returnable premium. 
 
 (2) Unless otherwise agreed, the broker has, as against the 
 assured, a lien upon the policy for the amount of the premium and 
 his charges in respect of effecting the policy ; and, where he has 
 dealt with the person who employs him as a principal, he has also 
 a lien on the policy in respect of any balance on any insurance 
 account which may be due to him from such person, unless when 
 the debt was incurred he had reason to believe that such person 
 was only an agent. 
 
 54. Effect of Receipt on Policy. — Where a marine policy effected 
 on behalf of the assured by a broker acknowledges the receipt of 
 the premium, such acknowledgment is, in the absence of fraud, 
 conclusive as between the insurer and the assuied, but not as 
 between the insurer and broker. 
 
 Loss AND Abandonment 
 
 55. Included and Excluded Losses. — ( i ) Subject to the provisions 
 of this Act, and unless the policy otherwise provides, the insurer 
 is liable for any loss proximately caused by a peril insured against, 
 but, subject as aforesaid, he is not liable for any loss which is not 
 proximately caused by a peril insured against.
 
 APPENDIX 41; 
 
 (2) In particular, — 
 
 (a) The insurer is not liable for any loss attributable to the 
 wilful misconduct of the assured, but, unless the policy 
 otherwise provides, he is liable for any loss proximately 
 caused by a peril insured against, even though the loss 
 would not have happened but for the misconduct or 
 negligence of the master or crew ; 
 
 (i) Unless the policy otherwise provides, the insurer on ship 
 or goods is not liable for any loss proximately caused by 
 djelay, although the delay be caused by a peril insured 
 against ; 
 
 (c) Unless the policy otherwise provides, the insurer is not 
 liable for ordinary wear and tear, ordinary leakage and 
 breakage, inherent vice or nature of the subject-matter 
 insured, or for any loss proximately caused by rats or 
 vermin, or for any injury to machinery not proximately 
 caused by maritime perils. 
 
 56. Partial and Total Loss. — (l) A loss may be either total or 
 partial. Any loss other than a total loss, as hereinafter defined, is 
 a partial loss. 
 
 (2) A total loss may be either an actual total loss, or a con- 
 structive total loss. 
 
 (3) Unless a different intention appears from the terms of the 
 policy, an insurance against total loss includes a constructive, as 
 well as an actual, total loss. 
 
 (4) Where the assured brings an action for a total loss and the 
 evidence proves only a partial loss, he may, unless the policy 
 otherwise provides, recover for a partial loss. 
 
 (5) Where goods reach their destination in specie, but by rea.son 
 of obliteration of marks, or otherwise, they are incipable of 
 identification, the loss, if any, is partial, and not total. 
 
 57. Actual Total Loss. — (i) Where the subject-matter insured 
 is destroyed, or so damaged as to cease to be a thing of the kind 
 insured, or where the assured is irrelrievably deprived thereof, 
 there is an actual total loss. 
 
 (2) In the case of an actual total loss no notice of abandonment 
 need be given. 
 
 58. Missing Ship. — Where the ship concerned in the adventure 
 is missing, antl after the lai>se of a reasonalde time no news of her 
 has h)een received, an actual total loss may be presumed. 
 
 59. Effect of Tramhipment, etc. - Where, by a peril insured 
 against, the voyage is interrupted at an intermediate port or |)lacc, 
 under such circumstances as, apart from any speci.il stipulation in 
 the contract of affreightment, to justify the ma.stcr in landing and 
 re-ship|)ing the gfKxls or other moveables, or in transhipping them, 
 and sending them on to their d'-stination, the lialiility of the insurci 
 continues, notwithstanding the landing or transhipment. 
 
 60. Constructive Total Ijoss defined. — (i) Subject to an^ 
 
 2 t:
 
 4i8 MARINE INSURANCE 
 
 express provision in the policy, there is a constructive total loss 
 where the subject-matter insured is reasonably abandoned on 
 account of its actual total loss appearing to be unavoidable, or 
 because it could not be preserved from actual total loss without an 
 expenditure which would exceed its value when the expenditure 
 hail been incurred. 
 
 (2) In particular, there is a constructive total loss — 
 
 (i.) Where the assured is deprived of the possession of his ship 
 
 or goods by a peril insured against, and (a) it is unlikely 
 
 that he can recover the ship or goods, as the case may 
 
 be, or (6) the cost of recovering the ship or goods, as the 
 
 case may be, would exceed their value when recovered ; or 
 
 (ii.) In the case of damage to a ship, where she is so damaged 
 
 by a peril insured against that the cost of repairing the 
 
 damage would exceed the value of the ship when repaired. 
 
 In estimating the cost of repairs, no deduction is to 
 
 be made in respect of general average contributions to 
 
 those repairs payable by other interests, but account is 
 
 to be taken of the expense of future salvage operations 
 
 and of any future general average contributions to 
 
 which the ship would be liable if repaired ; or 
 
 (iii.) In the case of damage to goods, where the cost of repairing 
 
 the damage and forwarding the goods to their destination 
 
 would exceed their value on arrival. 
 
 61. Efect of ConstrucUve Total Loss. — Where there is a con- 
 structive total loss, the assured may either treat the loss as a partial 
 loss, or abandon the subject-matter insured to the insurer and treat 
 the loss as if it were an actual total loss. 
 
 62. Notice of Abandonment. — (i) Subject to the provisions of 
 this section, where the assured elects to abandon the subject-matter 
 insured to the Insurer, he must give notice of abandonment. If he 
 fails to do so, the loss can only be treated as a partial loss. 
 
 (2) Notice of abandonment may be given in writing, or by word 
 of mouth, or partly in writing and partly by word of mouth, and 
 may be given in any terms which indicate the intention of the assured 
 to abandon his insured interest in the subject-matter insured un- 
 conditionally to the insurer. 
 
 (3) Notice of abandonment must be given with reasonable 
 diligence after the receipt of reliable information of the loss, but 
 where the information is of a doubtful character, the assured is 
 entitled to a reasonable time to make inquiry. 
 
 (4) Where notice of abandonment is properly given, the rights 
 of the assured are not prejudiced by the fact that the insurer refuses 
 to accept the abandonment. 
 
 (5) The acceptance of an abandonment may be either express or 
 implied from the conduct of the insurer. The mere silence of the 
 insurer after notice is not an acceptance. 
 
 (6) Where notice of abandonment is accepted, the abandonment
 
 APPENDIX 
 
 419 
 
 is irrevocable. The acceptance of the notice conclusively admits 
 liability for the loss and the sufficiency of the notice. 
 
 (7) Notice of abandonment is unneces>ary where, at the time 
 when the assured receives information of the loss, there would be 
 no possibility of benefit to the insurer if notice were given to him. 
 
 (8) Notice of abandonment may be waived by the insurer. 
 
 (9) Where an insurer has re -insured his risk, no notice of 
 abandonment need be given by him. 
 
 63. Effect of Abandonment. — (i) Where there is a valid abandon- 
 ment the insurer is entitled to take over the interest of the assured 
 in whatever may remain of the subject-matter insured, and all 
 proprietary rights incidental thereto. 
 
 (2) Upon the abandonment of a ship, the insurer thereof is 
 entitled to any freight in course of being earned, and which is earned 
 by her subsequent to the casualty catising the loss, less the expenses 
 of earning it incurred after the casualty ; and, where the ship is 
 carrying the owner's goods, the insurer is entitled to a reasonable 
 remuneration for the carriage of them subsequent to the casualty 
 causing the loss. 
 
 Partial Losses (incldding Salvage and General 
 Average and Particular Charges) 
 
 64. Particular Average Loss. — (i) A particular average loss is 
 a partial loss of the subject-matter insured, caused by a peril insured 
 against, and which is not a general average loss. 
 
 (2) Expenses incurred by or on behalf of the assured for the 
 safety or preservation of the subject -matter insured, other than 
 general average and salvage charges, are called particular charges. 
 Particular charges are not included in particular average. 
 
 65. Salvage Charges. — (1) Subject to any express provision in 
 the policy, salvage charges incurred in preventing a loss by perils 
 insured against may be recovered as a loss by those jierils. 
 
 (2) "Salvage charges" means the charges recoverable undei 
 maritime law by a salvor independently of contract. They do not 
 include the expenses of services in the nature of salvage rendered 
 by the assured or his agents, or any person employed for hire by 
 them, for the purpose of averting a peril insured against. Such 
 expenses, where properly incurred, may be recovered as particular 
 charges or as a general average loss, according to the circumstances 
 under which they were incurred. 
 
 66. General Average I j)ss. — (l) A genera! average loss is a loss 
 caused by or directly consequential on a general average act. It 
 includes a general average expenditure as well as a general average 
 sacrifice. 
 
 (2) There is a general average act where any extraordinary 
 sacrifice or ex|)enditure is vr)luntarily and reasonably made or 
 incurred in time of peril for the purpose of preserving the property 
 imperilled in the common adventure.
 
 420 MARINE INSURANCE 
 
 (3) WTiere there is a general average loss, the party on whom i». 
 falls is entitled, subject to the conditions imposed by maritime law, 
 to a rateable contribution from the other parties interested, and 
 such contribution is called a general average contribution. 
 
 (4) Subject to any express provision in the policy, where the 
 assured has incurred a general average expenditure, he may recover 
 from the insurer in respect of the proportion of the loss which falls 
 upon him , and, in the case of a general average sacrifice, he may 
 recover from the insurer in respect of the whole loss without having 
 enforced his right of contribution from the other parties liable to 
 contribute. 
 
 (5) Subject to any express provision in the policy, where the 
 assured has paid, or is liable to pay, a general average contribution 
 in respect of the subject insured, he may recover therefor from the 
 insurer. 
 
 (6) In the absence of express stipulation, the insurer is not liable 
 for any general average loss or contribution where the loss was not 
 incurred for the purpose of avoiding, or in connexion with the 
 avoidance of, a peril insured against. 
 
 (7) Where ship, freight, and cargo, or any two of those interests, 
 are owned by the same assured, the liability of the insurer in respect 
 of general average losses or contributions is to be determined as if 
 those subjects were owned by different persons. 
 
 Measure of Indemnity 
 
 67. Extent of Liability of Insurer for Loss. — (i) The sum which 
 the assured can recover in respect of a loss on a policy by wtiich he 
 is insured, in the case of an unvalued policy to the full extent of the 
 insurable value, or, in the case of a valued policy to the full extent 
 of the value fixed by the policy, is called the measure of indemnity. 
 
 (2) Where there is a loss recoverable under the policy, the 
 insurer, or each insurer if there be more than one, is liable for 
 such proportion of the measure of indemnity as the amount of his 
 subscription bears to the value fixed by the policy in the case of 
 a valued policy, or to the insurable value in the case of an unvalued 
 policy. 
 
 68. Total Loss. — Subject to the provisions of this Act and to any 
 express provision in the policy, where there is a total loss of the 
 subject-matter insured, — 
 
 (i) If the policy be a valued policy, the measure of indemnity 
 
 is the sum fixed by the policy : 
 (2) If the policy be an unvalued policy, the measure of 
 
 indemnity is the insurable value of the subject-matter 
 
 insured. 
 
 69. Partial Loss of Ship. — Where a ship is damaged, but is not 
 totally lost, the measure of indemnity, subject to any express pro- 
 vision in the policy, is as follows : —
 
 APPENDIX 421 
 
 (1) Where the ship has been repaired, the assured is entitled to 
 
 the reasonable cost of the repairs, less the customary 
 deductions, but not exceeding the sum insured in respect 
 of any one casualty : 
 
 (2) WTiere the ship has been only partially repaired, the assured 
 
 is entitled to the reasonable cost of such repairs, com- 
 puted as above, and also to be indemnified for the 
 reasonable depreciation, if any, arising from the unre- 
 paired damage, provided that the aggregate amount shall 
 not exceed the cost of repairing the whole damage, 
 computed as above : 
 
 (3) Where the ship has not been repaired, and has not been 
 
 sold in her damaged state during the risk, the assured 
 is entitled to be indemnified for the reasonable deprecia- 
 tion arising from the unrepaired damage, but not exceed- 
 ing the reasonable cost of repairing such damage, 
 computed as above. 
 
 70. Partial Loss of Freight. — Subject to any express provision in 
 the policy, where there is a partial loss of freight, the measure of 
 indemnity is such proportion of the sum fixed by the policy in the 
 case of a valued policy, or of the insurable value in the case of an 
 unvalued policy, as the proportion of freight lost by the assured 
 bears to the whole freight at the risk of the assured under the 
 policy. 
 
 71. Partial Loss of Goods, Merchandise^ Ss'c. — Where there is a 
 partial loss of goods, merchandise, or other moveables, the measure 
 of indemnity, subject to any express provision in the policy, is as 
 follows : — 
 
 (l) Where part of the goods, merchandise, or other moveables 
 insured by a valued policy is totally lost, the measure of 
 indemnity is such proportion of the sum fixed by the 
 policy as the insurable value of the part lost bears to 
 the insurable value of the whole, ascertained as in the 
 case of an unvalued policy : 
 
 {2) Where part of the goods, merchandise, or other moveables 
 insured by an unvalued policy is totally lost, the measure 
 of indemnity is the insurable value of the part lost, 
 ascertained as in case of total loss : 
 
 (3) Where the whole or any part of the goods or merchandise 
 
 insured has been delivered damaged at its destination, 
 the measure of indemnity is such proportion of the sum 
 fixed by the policy in the case of a valued policy, or of 
 the insurable value in the case of an unvalued policy, u 
 the diflerencc between the gross sound and damaged 
 values at the place of arrival bears to the gross sound 
 value : 
 
 (4) "(irobs value" means the wholesale price or, if there l>e 
 
 no such price, the estimated vahie, with, in riiher case.
 
 422 MARINE INSURANCE 
 
 freight, landing charges, and duty paid beforehand ; 
 provided that, in the case of goods or merchandise 
 customarily sold in bond, the bonded price is deemed 
 to be the gross value. "Gross proceeds" means the 
 actual price obtained at a sale where all charges on sale 
 are paid by the sellers. 
 
 72. Afpartionment of Valuation. — (i) Where different species of 
 property are insured under a single valuation, the valuation must be 
 apportioned over the different species in proportion to their respective 
 insurable values, as in the case of an unvalued policy. The insured 
 value of any part of a species is such proportion of the total insured 
 value of the same as the insurable value of the part bears to the 
 insurable value of the whole, ascertained in both cases as provided 
 by this Act. 
 
 (2) Where a valuation has to be apportioned, and particulars of 
 the prime cost of each separate species, quality, or description of 
 goods cannot be ascertained, the division of the valuation may be 
 made over the net arrived sound values of the different species, 
 qualities, or descriptions of goods. 
 
 73. General Average Contributions and Salvage Charges. — (i) 
 Subject to any express provision in the policy, where the assured 
 has paid, or is liable for, any general average contribution, the 
 measure of indemnity is the full amount of such contribution, if the 
 subject-matter Uable to contribution is insured for its full contributory 
 value ; but, if such subject-matter be not insured for its full con- 
 tributory value, or if only part of it be insured, the indemnity payable 
 by the insurer must be reduced in proportion to the under insurance, 
 and where there has been a particular average loss which constitutes 
 a deduction from the contributory value, and for which the insurer 
 is liable, that amount must be deducted from the insured value in 
 order to ascertain what the insurer is liable to contribute. 
 
 (2) Where the insurer is liable for salvage charges, the extent of 
 his liability must be determined on the like principle. 
 
 74. Liabilities to Third Parties. — Where the assured has effected 
 an insurance in express terms against any liability to a third party, 
 the measure of indemnity, subject to any express provision in the 
 policy, is the amount paid or payable by him to such third party in 
 respect of such liability. 
 
 75. General Provisions as to Measure of Indemnity. — (i) Where 
 there has been a loss in respect of any subject-matter not expressly 
 provided for in the foregoing provisions of this Act, the measure of 
 indemnity shall be ascertained, as nearly as may be, in accordance 
 with those provisions, in so far as applicable to the particular case. 
 
 (2) Nothing in the provisions of this Act relating to the measure 
 of indemnity shall affect the rules relating to double insurance, or 
 prohibit the insurer from disproving interest wholly or in jiart, or 
 from showing that at the time of the loss the whole or any part oi 
 the subject-matter insured was not at risk under the policy.
 
 APPENDIX 423 
 
 76. Particular Average Warranties. — (i) Where the subject- 
 matter insured is warranted free from pai ticular average, the assured 
 cannot recover for a loss of part, other than a loss incurred by a 
 general average sacrifice, unless the contract contained in the policy 
 be apportionable ; but, if the contract be apportionable, the assured 
 may recorer for a total loss of any apportionable part. 
 
 (2) Where the subject-matter insured is warranted free from 
 particular average, either wholly or under a certain percentage, the 
 insurer is nevertheless liable for salvage charges, and for particular 
 charges and other expenses properly incurred pursuant to the pro- 
 visions of the suing and labouring clause in order to avert a loss 
 insured against. 
 
 (3) Unless the policy otherwise provides, where the subject- 
 matter insured is warranted firce from particular average under a 
 specified percentage, a general average loss cannot be added to a 
 particular average loss to make up the specified percentage. 
 
 (4) For the purpose of ascertaining whether the specified per- 
 centage has been reached, regard shall be had only to the actual 
 loss suffered by the subject-matter insured. Particular charges and 
 the expenses of and incidental to ascertaining and proving the loss 
 must be excluded. 
 
 77. Successive Losses.— {i) Unless the policy otherwise provides, 
 and subject to the provisions of this Act, the insurer is liable for 
 successive losses, even though the total amount of such losses may 
 exceed the sum insured. 
 
 (2) Where, under the same policy, a partial loss, which has not 
 been repaired or otherwise made good, is followed by a total loss, 
 the assured can only recover in respect of the total loss J _ _ 
 
 Pjovided that nothing in this section shall affect the liability of 
 the insurer under the suing and labouring clause. 
 
 78. Suing and Labouring Clause. — (l) Where the policy contains 
 a suing and labouring clause, the engagement thereby entered into 
 is deemed to be supplementary to the contract of insurance, and the 
 assured may recover from the insurer any expenses properly incurred 
 pursuant to the clause, notwithstanding that the insurer may have 
 paid for a total loss, or that the subject-matter may have been 
 warranted free from particular average, either wholly or under a 
 certain percentage. 
 
 (2) General average looses and contributions and salvage charges, 
 as defined by this Act, are not recoverable under the suing and 
 labouring clause. 
 
 (3) Expenses incurred for the purpose of averting or diminishing 
 any loss not covered by the policy are not recoverable under the 
 suing and labouring clause. 
 
 (4) It is the duty of the assured and his agents, in all cases, to 
 take such m':.-uiurcs .as maybe reasonable for the purpose of averting 
 or minimising a loss.
 
 424 MARINE INSURANCE 
 
 Rights of Insurer on Paymknt 
 
 79. Right of Subrogation. — ( 1 ) Where the insurer pays for a total 
 loss, either of the whole, or in the case of goods of any apportionable 
 part, of the subject-matter insured, he thereupon becomes entitled 
 to take over the interest of the assured in whatever may remain of 
 the subject-matter so paid for, and he is thereby subrogated to all 
 the rights and remedies of the assured in and in respect of that 
 subject-matter as from the time of the casualty causing the loss. 
 
 (2) Subject to the foregoing provisions, where the insurer pays 
 for a partial loss, he acquires no title to the subject-matter insured, 
 or such part of it as may remain, but he is thereupon subrogated to 
 all rights and remedies of the assured in and in respect of the 
 subject-matter insured as from the time of the casualty causing the 
 loss, in so far as the assured has been indemnified, according to this 
 Act, by such payment for the loss. 
 
 80. Right of Contribution. — (i) Where the assured is over-insured 
 by double insurance, each insurer is bound, as between himself and 
 the other insurers, to contribute rateably to the loss in proportion to 
 the amount for which he is liable under his contract. 
 
 (2) If any insurer pays more than his proportion of the loss, he 
 is entitled to maintain an action for contribution against the other 
 insurers, and is entitled to the like remedies as a surety who has 
 paid more than his proportion of the debt. 
 
 81. Effect of Under Insurance. — Where the assured is insured 
 for an amount less than the insurable value or, in the case of a 
 valued policy, for an amount less than the policy valuation, he is 
 deemed to be his own insurer in respect of the uninsured balance. 
 
 Return of Premium 
 
 82. Enforcement of Return. — Where the premium, or a pro- 
 portionate part thereof is, by this Act, declared to be returnable, — 
 
 (a) If already paid, it may be recovered by the assured from 
 
 the insurer ; and 
 {b) If unpaid, it may be retained by the assured or his agent. 
 
 83. Return by Ag7eement. — Where the policy contains a stipula- 
 tion for the return of the premium, or a proportionate part thereof, 
 on the happening of a certain event, and that event happens, the 
 premium, or, as the case may be, the proportionate part thereof, is 
 thereupon returnable to the assured. 
 
 84. Return for Failure of Consideration. — (i) Where the con- 
 sideration for the payment of the premium totally fails, and there 
 has been no fraud or illegality on the part of the assured or his 
 agents, the premium is thereupon returnable to the assured. 
 
 (2) Where the consideration for the payment of the premium is 
 apportionable and there is a total failure of any apportionable part 
 of the consideration, a proportionate part of the premium is, unde' 
 the like conditions, thereupon returnable to the assured.
 
 APPENDIX 42s 
 
 (3) In particular — 
 (a) Where the policy is void, or is avoided by the insurer as 
 from the commencement of the risk, the premium is 
 returnable, provided that there has been no fraud or 
 illegality on the part of the assured ; but if the risk is 
 not apportionable, and has once attached, the premium 
 is not returnable : 
 (6) Where the subject-matter insured, or part thereof, has never 
 been imperilled, the premium, or, as the case may be, a 
 proportionate part thereof, is returnable : 
 
 Provided that where the subject-matter has been 
 insured "lost or not lost" and has arrived in safety 
 at the time when the contract is concluded, the premium 
 is not returnable unless, at such time, the insurer knew 
 of the safe arrival ; 
 {c) Where the assured has no insurable interest throughout the 
 currency of the risk, the premium is returnable, provided 
 that this rule does not apply to a policy effected by way 
 of gaming or wagering ; 
 {{/) Where the assured has a defeasible interest which is 
 terminated during the currency of the risk, the premium 
 is not returnable ; 
 (<) Where the assured has over-insured under an unvalued 
 j)olicy, a proportionate part of the premium is returnable ; 
 (/) Subject to the foregoing provisions, where the assured has 
 over-insured by double insurance, a proportionate part 
 of the several premiums is returnable : 
 
 Provided that, if the policies are effected at different 
 times, and any earlier policy has at any time borne the 
 entire risk, or if a claim has been paid on the policy 
 in respect of the full sum insured thereby, no |)rcmium 
 is returnable in respect of that policy, and when the 
 double insurance is effected knowingly by the assured, 
 no premium is returnable. 
 
 Mutual Insuranck 
 
 85. Modification of Act in Case of Mutual Insurance. — (l) Where 
 two or more persons mutually agree to insure each other against 
 marine losses, there is said to be a mutual insurance. 
 
 (2) The provisions of this Act relating to the premium do not 
 apply to mutual insurance, but a guarantee, or .such other arrange- 
 ment as may be agreed upon, may be substituted for the prt-nnum. 
 
 (3) The provisions of this Act, in so far as they may be nuidifK-d 
 by the agreement of the parties, may in tlie case of mutual insurance 
 be modified by the terms of the policies issued by the association, 
 or by the rules and regulations of the association. 
 
 (4) Subject to the exceptions mentioned in this section, (he 
 provisions of this Act apply to a mutual insurance.
 
 426 MARINE INSURANCE 
 
 Supplemental 
 
 86. Ratijicalion by Assured. — Where a contract of marine in- 
 surance is in good faith effected by one [lerson on behalf of another, 
 the person on whose behalf it is effected may ratify the contract even 
 after he is aware of a loss. 
 
 87. Implied Obligations varied by Agreement or Usage, — (i) 
 Where any right, duty, or liability would arise under a contract of 
 marine insurance by implication of law, it may be negatived or 
 varied by express agreement, or by usage, if the usage be such as 
 to bind both parties to the contract. 
 
 (2) The provisions of this section extend to any right, duty, or 
 liability declared by this Act which may be lawfully modified by 
 agreement, 
 
 88. Reasonable Time, etc., a Question of Fact. — Where by this 
 Act any reference is made to reasonable time, reasonable premium, 
 or reasonable diligence, the question what is reasonable is a question 
 of fact. 
 
 89. Slip as Evidence. — Where there is a duly stamped policy, 
 reference may be made, as heretofore, to the slip or covering note, 
 
 ■ in any legal proceeding. 
 
 90. Interpretation of Terms. — In this Act, unless the context or 
 subject-matter otherwise requires, — 
 
 "Action" includes counter-claim and set off: 
 
 " Freight " includes the profit derivable by a shipowner from 
 
 the employment of his ship to carry his own goods or 
 
 moveables, as well as freight payable by a third party, 
 
 but does not include passage money : 
 •• Moveables " means any moveable tangible property, other 
 
 than the ship, and includes money, valuable securities, 
 
 and other documents : 
 " Policy " means a marine policy. 
 
 91. Savings. — (i) Nothing in this Act, or in any repeal effected 
 thereby shall affect — 
 
 54&SS VicL (a) The provisions of the Stamp Act, 1891, or any enactment 
 
 c- 39- for the time being in force relating to the revenue ; 
 
 2S&a6VicL {^) The provisions of the Companies Act, 1862, or any enact- 
 
 c 89. ment amending or substituted for the same ; 
 
 (c) The provisions of any statute not expressly repealed by 
 
 this Act. 
 
 (2) The rules of the common law including the law merchant, 
 
 save in so far as they are inconsistent with the express provisions 
 
 of this Act, shall continue to apply to contracts of marine insurance. 
 
 92. Repeals. — The enactments mentioned in the Second Schedule 
 to this Act are hereby repealed to the extent specified in that 
 schedule. 
 
 93. Commencement. — This Act shall come into operation on the 
 first day of January one thousand nine hundred and seven.
 
 APPENDIX 427 
 
 94. Short Title. — This Act may be cited as the Marine Insurance 
 Act, 1906. 
 
 SCHEDULES 
 
 FIRST SCHEDULE Section \a 
 
 Form of Policy 
 
 Be it known that as well in Lloyds 
 
 own name as for and in the name and names of all and every othei S.G. polu-y 
 person or persons to whom the same doth, may, or shall appertain, 
 in part or in all doth make assurance and cause 
 and them, and every of them, to be insured lost or not lost, at 
 and from 
 
 Upon any kind of goods and merchandises, and also upon the 
 body, tackle, apparel, ordnance, munition, artillery, boat, and other 
 furniture, of and in the good ship or vessel called the 
 whereof is master under God, for this present voyage, 
 or whosoever else shall go for master in the said ship, or by whatso- 
 ever other name or names the said ship, or the master thereof, is 
 or shall be named or called ; beginning the adventure upon the said 
 goods and merchandises from the loading thereof aboard the said 
 ship, 
 
 upon the said ship, etc. 
 
 and so shall continue and endure, during her abode there, upon 
 the said ship, etc. And further, until the said ship, with all her 
 ordnance, tackle, apparel, etc., and goods and merchandises what- 
 soever shall be arrived at 
 
 upon the said ship, etc., until she hath moored at anchor twenty- 
 four hours in good safety ; and upon the goods and merchandises, 
 until the same be there discharged and safely landed. And it shall 
 be lawful for the said ship, etc., in this voyage, to proceed and sail 
 to and touch and stay at any ports or places whatsoever 
 without prejudice to this insurance. The said ship, etc., goods and 
 merchandises, etc., for so much as concerns the assured by agree- 
 ment between the assured and assurers in this policy, are and 
 shall be valued at 
 
 Touching the adventures and perils which we the assurers arc 
 contented to bear and do take upon us in this voyage : they are oJ 
 the seas, men of war, fire, enemies, pirates, ri)vers, thieves, jettisons, 
 letters of mart and countermart, surprisals, takings at sea, arrests, 
 restraints, and detainments of all kings, jjrinccs, and people, of what 
 nation, condition, or quality soever, barratry of the master and 
 mariners, and of all other perils, losses, and misfortunes, that have
 
 428 
 
 MARINE INSURANCE 
 
 [Sue and 
 
 labour 
 
 clause] 
 
 ( Waivcj 
 clause.) 
 
 [MemO' 
 randuin.] 
 
 Lost or not 
 losL 
 
 From. 
 
 At and from. 
 [Ship.] 
 
 or shall come to the hurt, detriment, or damage of the said goods 
 and merchandises, and ship, etc., or any part thereof. And in case 
 of any loss or misfortune it shall be lawful to the assured, their 
 factors, servants and assigns, to sue, labour, and travel for, in and 
 about the defence, safeguards, and recovery of the said goods and 
 merchandises, and ship, etc., or any part thereof, without prejudice 
 to this insurance ; to the charges whereof we, the assurers, will 
 contribute each one according to the rate and quantity of his sum 
 herein assured. And it is especially declared and agreed that no 
 acts of the insurer or insured in recovering, saving, or preserving 
 the property insured shall be considered as a waiver, or acceptance 
 of abandonment. And it is agreed by us, the insurers, that this 
 writing or policy of assurance shall be of as much force and effect 
 as the surest writing or policy of assurance heretofore made in 
 Lombard Street, or in the Royal Exchange, or elsewhere in London. 
 And so we, the assurers, are contented, and do hereby promise and 
 bind ourselves, each one for his own part, our heirs, executors, and 
 goods to the assured, their executors, administrators, and assigns, 
 for the true performance of the premises, confessing ourselves paid 
 the consideration due unto us for this assurance by the assured, at 
 and after the rate of 
 
 In Witness whereof we, the assurers, have subscribed our names 
 and sums assured in London. 
 
 A', iff. —Corn, fish, salt, fruit, flour, and seed are warranted free 
 from average, unless general, or the ship be stranded — sugar, 
 tobacco, hemp, flax, hides and skins are warranted free from 
 average, under five pounds per cent, and all other goods, also the 
 ship and freight, are warranted free from average, under three 
 pounds per cent unless general, or the ship be stranded. 
 
 Rules for Construction of Policy 
 
 The follo^ving are tfie rules referred to by this Act for the construc- 
 tion of a policy in the above or other like form, where the context does 
 not othirwise require : — 
 
 1. Where the subject-matter is insured "lost or not lost," and 
 the loss has occurred before the contract is concluded, the risk 
 attaches unless, at such time the assured was aware of the loss, and 
 the insurer was not. 
 
 2. Where the subject-matter is insured "from" a particular 
 place, the risk does not attach until the ship starts on the voyage 
 insured. 
 
 3. (a) Where a ship is insured " at and from " a particular place, 
 and she is at that place in good safety when the contract is concluded, 
 the risk attaches immediately. 
 
 (b) If she be not at that place when the contract is concluded, 
 the risk attaches as soon as she arrives there in good safety, and, 
 unless the policy otherwise provides, it is immaterial that she is 
 covered by another policy for a specified time after arrival.
 
 APPENDIX 429 
 
 (c) \Miere chartered freight is insured "at and from " a particular [Freight.] 
 place, and the ship is at that place in good safety when the contract 
 IS concluded, the risk attaches immediately. If she be not there 
 when the contract is concluded, the risk attaches as soon as she 
 arrives there in good safety. 
 
 ((.') Where freight, other than chartered freight, is payable with- 
 out special conditions and is insured " at and from ' a particular 
 place, the risk attaches pro rata as the goods or merchandise are 
 shipped ; provided that if there be cargo in readiness which belongs 
 to the shipowner, or which some other person has contracted with 
 him to ship, the risk attaches as soon as the ship is ready lo receive 
 such cargo. 
 
 4. Where goods or other moveables are insured "from the load- From the 
 ing thereof," the risk does not attach until such goods or moveables loading 
 are actually on board, and the insurer is not liable for them while 
 
 in transit from the shore to the ship. 
 
 5. Where the risk on goods or other moveables continues until Safely 
 they are "safely landed," they must be landed in the customary landed, 
 manner and within a reasonable time after arrival at the port of 
 discharge, and if they are not so landed the risk ceases. 
 
 6. In the absence of any further license or usage, the liberty to Touch and 
 touch and stay " at any port or place whatsoever " does not authorise stay. 
 
 the ship to depart from the course of her voyage from the port of 
 departure to the port of destination. 
 
 7. The term "perils of the seas" refers only to fortuitous Perils of 
 accidents or casualties of the seas. It does not include the ordinary 'be seas, 
 action of the winds and waves. 
 
 8. The term "pirates" includes passengers who mutiny and P"^'"- 
 rioters who attack the ship from the shore. 
 
 9. The term "thieves" does not cover clandestine theft or a Thieves, 
 theft committed by any one of the ship's company, whether crew 
 
 or passengers. r » " » i 
 
 10. The term "arrests, etc., of kings, princes, and people " refers p^tnc^ 
 to political or executive acts, and does not include a loss caused by 
 
 riot or by ordinary judicial process. 
 
 11. The term "barratry" includes every wrongful act wilhilly Barratry, 
 committed by the master or crew to the prejudice of the owner, or, 
 
 as the case may be, the charterer. ^U ^^^^^^ 
 
 12. The term "all other perils" includes only perils similar in 'p^^^^^ 
 kind to the perils sp)ecifically mentioned in the policy. 
 
 13. The term "average unless general" means a partial loss of Average un- 
 the subject-matter insured other than a general average loss, and e^K'nernL 
 does not include " particular charges." 
 
 14. Where the ship has stranded, the insurer is liable for the Stranded, 
 excepted losses, although the loss is nui attributable to the stran<ling, 
 provided that when the stranding takes place the risk has attached 
 
 and, if the policy be on goods, that llic damaged goods arc on 
 board.
 
 43° 
 
 MARINE INSURANCE 
 
 Shipk 15. The term "ship" includes the hull, materials and outfit, 
 
 stores and provisions for the officers and crew, and, in the case of 
 vessels engaged in a special trade, the ordinary fittings requisite 
 for the trade, and also, in the case of a steamship, the machinery, 
 boilers, and coals and engine stores, if owned by the assured. 
 
 Freight. 16. The term " freight" includes the profit derivable by a ship- 
 
 owner from the employment of his ship to carry his own goods or 
 moveables, as well as freight payable by a third party, but does not 
 include passage money. 
 
 Goodi 1 7. The term " goods " means goods in the nature of merchandise, 
 
 and does not include personal eflfects or pro visions .and stores for use 
 on board. 
 
 In the absence of any usage to the contrary, deck cargo and 
 living animals must be insured specifically, and not under the 
 general denomination of goods. 
 
 Section 9a. 
 
 SECOND SCHEDULE 
 Enactments repealed 
 
 Session and 
 Chapter. 
 
 19 Geo. 2. c 37. 
 
 28 Geo. 3. c. 56. 
 
 31 & 32 Vict, 
 c. 86. 
 
 Title or Short Title. 
 
 An Act to regulate insurance 
 on ships belonging to the 
 subjects of Great Britain, 
 and on merchandises or 
 effects laden thereon. 
 
 An Act to repeal an Act 
 made in the twenty-fifth 
 year of the reign of his 
 present Majesty, intituled 
 " An Act for regulating 
 Insurances on Ships, and 
 on goods, merchandises, or 
 effects," and for substitut- 
 ing other provisions for the 
 like purpose in lieu thereof. 
 
 The Policies of Marine Assur- 
 ance Act, 1868. 
 
 Extent of Repeal. 
 
 The whole Act. 
 
 The whole Act 
 so far as it re- 
 lates to marine 
 insurance. 
 
 The whole Act.
 
 APPENDIX P 
 
 MARINE INSURANCE (GAMBLING POLICIES) 
 
 A Bill to prohibit Gambling on Loss by Maritime Perils (1909) 
 
 Be it enacted by the King's most Excellent Majesty, by and with 
 the advice and consent of the Lords Spiritual and Temporal, and 
 Commons, in this present Parliament assembled, and by the 
 authority of the same, as follows : — 
 
 1. Prohibition of Gambling on Loss by Maritime Penh. — (l) If — 
 * (a) any person effects a contract of marine insurance without 
 having any bona fide interest, direct or indirect, either in 
 the safe arrival of the ship in relation to which the contract 
 is made or in the safety or preservation of the subject- 
 matter insured, or a bona fide expectation of such an 
 interest ; or 
 (*) any person in the employment of the owner of a ship, not 
 being a part owner of the ship, effects a contract of 
 marine insurance in relation to the ship, and the contract 
 is made "interest or no interest," or "without further 
 proof of interest than the policy itself," or "without 
 benefu of salvage to the insurer," or subject to any other 
 like term, 
 the contract shall be deemed to be a contract by way of gambling; 
 on loss by maritime perils, and the person effecting it .shall be 
 guilty of an offence, and shall be liable, on summary conviction, 
 to imprisonment, with or without hard labour, for a term not 
 exceedinc six months, or to a fine not exceeding one humired pounds, 
 and in either case to forfeit any money he may receive under the 
 contract. 
 
 (2) Any broker through whom, and any insurer with whom, any 
 such contract is effected shall be guilty of an offence and liable on 
 summary conviction to the like penalties if he acted knowing that 
 the contract was by way of gambling on lo.ss by maritime perils 
 within the meaning of this Act. 
 
 4JI
 
 432 MARINE INSURANCE 
 
 (3) Froceeilint;s under this Act shall not be instituted without the 
 consent of the Attorney -General. 
 
 (4) Proceedings shall not be instituted under this Act against a 
 person (other than a person in the employment of the owner of the 
 ship in relation to which the contract was made) alleged to have 
 efTected a contract by way of gambling on loss by maritime perils 
 until an opportunity has been afforded him of showing that the 
 contract was not such a contract as aforesaid, and any inlormation 
 given by that person for that purpose shall not be admissible in 
 evidence against him in any prosecution under this Act. 
 
 (5) If proceetlings under this Act are taken against any person 
 (other than a person in the employment of the owner of the ship in 
 relation to wliich the contract was made) for effecting such a contract, 
 and the contract was made "interest or no interest," or "without 
 further proof of interest than the policy itself," or "without 
 benefit of salvage to the insurer," or subject to aiiy other like term, 
 the contract shall be deemed to be a contract by way of gambling 
 on loss by maritime perils unless the contrary is proved. 
 
 (6) Any person aggrieved by an order or decision of a court of 
 summary jurisdiction under this Act, may appeal to quarter sessions. 
 
 (7) For the purposes of this Act the expression "owner" 
 includes charterer. 
 
 (8) Subsections (3) and (6) of this section shall not apply to 
 Scotland. 
 
 a. Short Title.— 1\i\% Act may be cited as the Marine Insurance 
 (Gambling Policies) Act, 1909, and the Marine Insurance Act, 1906, 
 and this Act may be cited together as the Marine Insurance Acts, 
 1906 and 1909^ 
 
 r
 
 ADDENDA 
 
 Page 7, line 8. Add— 
 
 On 1st January 1910 the new German Law relating to the Con- 
 tract of Insurance will come into force ; it deals with the relations 
 between underwriter and assured, leavint; in matters of marine 
 insurance considerable freedom to the parties concerned, while in 
 the insurance of river hulls certain conditions are made compulsory. 
 The year 19 10 will also see a revision of the Hamburg Conditions, 
 prepared by a committee which took into consideration not only 
 the present Hamburg and Bremen Conditions, but also the German 
 Code altered by changes to take effect ist January 1910, and the 
 British Marine Insurance Act of 1906. 
 
 Page 9. Add at foot — 
 
 The NIarine Insurance Bill, after being subjected to a most 
 rigorous examination by the most important commercial, legal, and 
 insurance associations of the United Kingdom, became law on 
 2ist December 1906, and took effect on the ist January 1907. It 
 is essentially a codifying measure, the points on which the law has 
 been altered being very few in number and comparatively un- 
 important. 
 
 This first step in legislation on the subject of British Marine 
 Insurance has been followed by the intrcxJuction in 1909 of a Bill 
 intended to prevent gambling in marine insurance and the improper 
 use of the class of pr)licies known as P. IM. policies {v. p. 77). 
 This Eill, entitled " A Bill to prohibit Gambling on Loss by Maritime 
 Perils," is now under discussion in Parliament (v. Appendix P). 
 
 Page 12, line 7. Add — 
 
 If the premium is i>aid to the underwriter by the brokei, the 
 latter has a lien on the polici's against the assured merchant or 
 shipowner for the amcjunt so paid. 'J"his lien holds good even in 
 the case of a broker employed by another to cover a risk when the 
 premium lias been paid by the merchant to the first broker, but hai 
 not been i>assed on by that broker to the second broker (Suaret v. 
 IVilliams, 1903, Commercial Court, Philliuiorc, J.) 
 
 4.13 * "
 
 434 MARINE INSURANCE 
 
 Page 13, line 4 from foot. Delete "and." 
 
 Page 22, see note on page 26 below. 
 
 Page 24, line 2 firom foot. Add — 
 
 Confirmed by Kennedy, J., in Bowring v. Triton Co., 1903. 
 
 Page 26. Add — 
 
 In the Budget of 1908 a certain amount of relief was granted by 
 the reduction of the duty on voyage policies to id. per cent, the 
 stamp on insurances at a rate of 2s. dd. per cent and under being 
 left as before at the still lower amount of \d. per policy. 
 
 Page 44. Add at end of second paragraph — 
 
 But in the case of cargo carried by river steamers, goods 
 customarily carried on deck are held to be covered by a policy which 
 does not in terms cover deck cargo {Apollinaris Co. v. Norddtutsche 
 Vers. Ges., 1903, Walton, J., 20 Times L.R. 79). 
 
 Page 51, line 5. Delete the words "and free of the loading 
 tackle" for which there is no authority, and insert "i.e. actually 
 on board " ; see Marine Insurance Act 1906, Rules of Construction, 
 sec. 4. 
 
 Page 52, line 12. For " Lord Mansfield " substitute " Sir James 
 Mansfield, C.J." 
 
 Page 54, line 23. After "policies" insert — 
 
 This period has been defined to mean thirty consecutive periods 
 of twenty-four hours each, the first of which commenced to run as 
 soon as the vessel was moored at anchor in good safety at the port 
 of destination (Bigham, J., in Cornfoot v. Royal Exchange, 1903, 
 confirmed by Court of Appeal, 1903, 20 Times L.R. 34). 
 
 Page 77. After first paragraph insert — 
 
 But if the Bill to prohibit Gambling on Loss by Maritime Perils, 
 which is now before the House of Commons, becomes law, the 
 position of the parties concerned in a P.P.I, policy \yill become 
 much more serious than it was under the Act of 1746, for it is now 
 proposed not only to nullify and avoid the policy but also to inflict 
 a fine upon at least some of the parties concerned. 
 
 Page 100, line 8 from foot, insert — 
 
 On the other hand, in Hamiltonv. Pandorf, 1887, Bramwell, B., 
 in the Court of Appeal said, " Neither fire nor lightning is a peril 
 of the sea." 
 
 Page 103, above line 6 from foot, insert — 
 
 In the Knight of the Garter, {Greenshields v. Stephens), 1907, 
 the Appeal Court held that when fire in a coal cargo is extinguished 
 by the use of water and steam, the damage to the coal not yet on 
 fire is recoverable in general average, whether other coal in the 
 same hold was on fire or not.
 
 ADDENDA 
 
 435 
 
 Page U3, line 22. After "theft" insert— 
 
 The most recent decision on piracy is that of Mr. Justice Pickford 
 in the case of the Labrea^ 190S {Republic of Bolivia v. Indemnity 
 Marine Insurance Company ^ Ltd., 24 Times L.R. 724), which 
 turned upon the meaning of the words " piracy excepted," The 
 judge accepted the view propounded by Hall in his International 
 Law, 5th ed. p. 259, that there are two classes of piratical acts : 
 (l) those piratical with reference to the state attacked and not with 
 reference to other states, and (2) those which menace and interfere 
 with the safety of all states and the general good order of the seas. 
 It is in the latter sense, which Hall calls piracy in its coarser form, 
 that the word " piracy " is used in a policy of marine insurance. 
 
 Page 113, line 6 from foot After "and" read "adopting 
 Malyne's phrase (see Eldrilge, p. 112)." 
 
 Page 115, line 12. Add at end — 
 
 See Walton, J., in Mansell v. Hoade, 1903, 20 Times L.R. 15a 
 
 Page 115, line 18. After "arrest" add— 
 
 See Robinson Gold Mining Co. v. Alliance Marine and General 
 Insurance Co., 1904, H.L., 20 Times L.R. 645. 
 
 Page 119, line 7 from foot, at "defect" add footnote- 
 As regards latent defect, the Court of Appeal held in the case of 
 the Zealandia,, 1907 {23 Times L.R. 673) that there must be 
 evidence to show that the loss from the latent defect occurred 
 during the currency of the policy sued upon. The Court did not 
 agree whether the clause covers the cost of making good the latent 
 defect itself or only the damage to some other pare of the ship 
 arising from the latent defect. See Ellaline,, 27 Times L.R- 217, 
 Page 131, line 21. Add- 
 In Hart V. Standard Marine, 1889, 22 Q.B.D., Lord Justice 
 Bowen in quoting this dictum says: "I do not think there is a 
 belter exposition of this than given in Robertson v. French" ; and 
 adds, " It is to be remembered in construing such a document, that 
 it is a commercial one used for business purposes. 
 
 Page 142, Irne 2. After " light " add— 
 
 The case of the Romulus, 1908, ILL. (Andersen v. Marten, 24 
 Times L. R. 715), gives a striking parallel from the Russo-Japanese 
 war. The vessel was insured against total loss only on a policy 
 warranted "free of capture, seizure, detention, and the consi-qucnces 
 of hostilities." Tiie vessel was captured by a Japanese cruiser, and 
 while being taken to a Japanese port wliere a Prize Court sat, slic 
 was lost by a peril of tiie sea. The House of I^rds held that the 
 loss was occasioned by capture within the meaning of the warranty, 
 and therefore the plaintiff w.as not entitled to recover : IjoxA 
 Halsbury saying that the ship was a total loss from the moment she 
 passed into the posscssioo of the Jap.incsc forces.
 
 436 MARINE INSURANCE 
 
 Page 150, note l. Add — 
 
 The question of the admission or rejection of the value of the 
 wreck was definitely settled by the House of Lords in the case of 
 the Araucania, (Alatbeth v. Maritime huurance Company\ 1908, 
 24 Times L. R. 403. It was deciiled that the true test of a con- 
 structive total loss of ship is what a prudent, uninsured owner 
 would do in the circumstances, whether he would repair or sell, 
 and that in the calculation necessary to arrive at this decision the 
 break-up value of the wreck is admissible. But it is noteworthy 
 that the definition of Constructive Total Loss of Ship in the 
 Marine Insurance Act, 6 Edw. VII., Ch. 41, § 60 (2) (ii.), makes 
 no mention of break-up value, but simply requires "that the cost 
 of repairing the damage would exceed the value of the ship when 
 repaired." 
 
 Page 153, after line 5 insert — 
 
 The immediate consequence .of the Araucanioi decision (see 
 above), was the drafting by underwriters of a clause which would 
 by special agreement override that decision. The form adopted 
 was as follows: — "In ascertaining whether the vessel is a con- 
 structive total loss, the insured value shall be taken as the repaired 
 value and nothing in respect of the damaged or break-up value of 
 the vessel or wreck shall be taken into account." 
 
 Page 155. Add to the first paragraph — 
 
 The German Code makes special provision for such cases ; 
 § 134 reads : — " If, with respect to an insurance on goods, the ship 
 becomes unfit to complete the voyage, and the forwarding of such 
 goods by other means would cause disproportionate expense or not 
 be practicable within a reasonable time, then the underwriter is 
 entitled to demand their sale at the place of average." 
 
 Page 166. After line 15 insert following paragraph — 
 Advance freight becomes a total loss by the abandonment of the 
 voyage, whether ex necessitate or by arrangement. Where loss or 
 damage to the cargo by such abandonment is made good in general 
 average, the advance freight is similarly treated. 
 
 Page 182. Add to footnote — 
 
 In the case of the Normaruiy, (which struck the pier at Ilfracombe), 
 before-Jeune, P., and Barnes, J., in-the Admiralty Court, sitting as 
 a Divisional Court, 9th February 1904, Barnes, J., delivering the 
 judgment of the Court, staled that the true meaning uf the word 
 "collision" is not mere striking against, but striking together, and 
 that having regard to the general scope and ordinarily understood 
 meaning of the words "damage by collision" in the Admiralty 
 Court, the word "collision" refers only to collision between ships. 
 
 Page 215. Add at end of second paragraph — 
 That mere distance from a port where permanent repairs can be 
 efTectively done is no bar to shiftinjj the vessel is evident from the
 
 ADDENDA 437 
 
 decision in the Nivj Orleans, case (Appeal Court, February 1909 ; 
 S.S. New. Orleans Co. v. London and provincial Marine Insurance 
 Company) ; by which the Court is held to have power to bring a 
 vessel home from Singapore "for the preservation of the object of 
 litigation and for its inspection." 
 
 Page 226. At the end of the first paragraph add — 
 In the case of the Carinikia, 1903 {Cunard S.S. Co. v. Marten), 
 19 Times L. R. 634, the Court of Appeal decided that the sue and 
 labour clause is not applicable to a policy covering shipowner's 
 liability. 
 
 Page 246. After the R.D.C. clause add — 
 
 The protection given by this clause is limited to the assured. 
 Consequently, if a vessel is insured by her owner and is chartered to 
 another person, there is (in the absence of clear evidence that the 
 owner taking out the policy intended at the time to effect the 
 insurance for the beneht of that person) no obligation on the under- 
 writer to protect that person : The Barttstable, (Boston Fruit Co. 
 V. British and Foreign Marine Insurance Co., Ltd.), Appeal Court, 
 1905, 21 Times L. R. 248. But if the vessel is demised to a third 
 party, that party can obtain the benefit of the statutory limitation 
 of liability : Steam Hopper No. 66, in the House of Lords, 1908, 
 24 Times L.R. 384. 
 
 Page 246. To the footnote add — 
 and Mr. Justice Barnes in the Normandy, vide p. 182. 
 
 Page 271, line 8. Add — 
 
 See GijIJ of Florida ^ (Greenock Steamship Co. v. Maritime Insur- 
 ance Co.), 1903, 19 Times L.R. 680. 
 
 Page 271, line 17. Delete the words " Thompson v. Hopper, 
 1856, and insert ** Bouillon v. Lupton, 1863, changing first 
 footnote to " 33 L.J. C.P. 37." 
 
 The case of Thompson v. Hopper refers to a whaling voyage in 
 which the warranty of seaworthiness wa."; held to have four grada- 
 tions : "the ship must be fit for dock at London, fit for river to 
 Gravesend, fit for sea to Shetland, then fit for whalmg." 
 
 Page 277. Add to footnote i — 
 
 Also Republic of Bolivia v. Indemnity Marine Insurance Co., 
 Ltd., 1908, 24 Times L.R. 724. (The Labrea,). 
 
 Page 278. Add at end of first paragrnph — 
 
 As to the knowledge which an English agent is presumed to 
 have of information within the cognisance of his agents abroad, see 
 Pickford, J., in Republic of Bolivia v. Indemnity Marine Insutanct 
 Co., Ltd., 1908, 24 Times L.K. 729. (The Labrea,).
 
 GENERAL INDEX 
 
 Abandonment, 146-151 
 
 distinguished from notice of abandonment, 147 
 
 no compulsion on assured to tender, 147 
 
 possible results to assured of not tendering, 147 
 
 acceptance of, is definitely operative, 148, 149 
 
 if accepted transfers interest to underwriter immediately, 148 
 
 is declined if no answer is given to notice of abandonment, 148 
 
 the word is of great force, 149 
 
 examples, 149-151 
 
 when would uninsured owner resort to? 150 
 
 theoretical statement of uninsured owner's position regarding, 150 
 
 note 
 of ship by insured owner, when legally substantiated, 150, 151 
 of ship carries with it transfer of freight to underwriter, 153 
 Acceptance of risk, 12 
 
 "subject to approval" (s.a. ), 15 
 
 of oral quotation, within what period to be signified, 15 
 written, ,, ,, ,, ,, 17 
 
 Aden, properly classed as an East Indian port? 40 
 Adjustment of Constructive Total Loss, 170 
 salvage loss, 170 
 particular average, 195-198 
 cost of, allowed when professional adjuster employed, aoo 
 
 not usually allowed when made up by assured or his employee, 
 
 200 
 apportioned over interests concerned, 219 
 process of, 200, 219, 220 
 
 of particular average claims on ship, how arranged, 220 
 of general average, proper Liw and place of. See General 
 Averaf^e 
 Advance freight, 162 
 
 how treated when part cargo sold at port of refuge, 163. 164, 166, 
 
 300 
 lost by abandonment of voyage short of destination, is made good 
 in (Jeneral Average, 301 
 Advances, insurable interest in, 83 
 Adventure, particulars of, in slip, 13, 23 
 
 essentia] to policy, 20, 23 
 destruction of, contemplated, 154, 155 
 Adventures insured against. See Perib 
 
 439
 
 440 MARINE INSURANCE 
 
 Affreightment, contract of, as affecting liabilities of underwriter, 203 
 
 in connection with general average, 310 
 African trade, outward and homeward policies, 52 
 Agent, effect of phrase " *"''/or as agent " in the policy, 32 
 
 insurable interest of agent in ship, 82 
 
 presumed knowledge of, regarding information in cognisance ol 
 correspondents abroad, 437 
 
 See Factors. 
 Agreement, general average, 295, 296 
 
 Algiers, properly classed as a F'rench Mediterranean port ? 40 
 Alien enemies, not protected by English policy of insurance, 32, 33 
 
 trade with, illegal if England at war, 270 
 "All other p>erils," 116-119 
 
 limitation of signification to perils ejusdem generis, 117 
 
 Lord Ellenborough's dictum, 116 
 
 limitation to marine damage, 117, 119 
 Allen's, E. K., Stamp Duties on Sea Insurances, 25 
 Ambiguities in policy controlled but not contradicted by usage, 133 
 
 taken in sense least favourable to underwriters, 136 
 American lakes, risks on, not sea risks, 24 
 American law of insurance based on Lord Mansfield's decisions and 
 
 dicta, 8 
 Amounts made good in general average, 297-301 
 Anchors allowed in full, 219 
 Antwerp, introduction of insurance into, 4 
 
 policy of 1622 refers to usage of Lombard Street, London, 4 
 "Appertain" in policy denotes ownership as only interest originally 
 
 insurable, 32 
 Apportionment of general average, 304 
 Appurtenances necessary or usual for a ship on a given voyage are 
 
 covered by a policy on ship for that voyage, 45 
 Arbitration displacing law proceedings before 1756, 7 
 Armament covered by policy on ship, 45 
 Arrests, 115 
 Arrival at a port, 38, 54 
 
 twenty-four hours after, 54 
 
 thirty days after, or until sailing on next voyage, 55 
 
 effect of words "and arrival" in Return Clause, 241 
 "Assigns, factors, and servants" in sense of Sue and Labour Clause, 
 
 225 
 Assignment of interest, 168 
 Assured, 11, 31, a.nd passitn 
 
 name of assured in policy, 31 
 
 who may be named as assured in policy, 31 
 Assurer or underwriter, 11, and passim 
 "At," commencement of risk "at" a port, 36, 37 
 "At and from," commencement of risk " at and from" a port, 36, 37 
 
 origin of form, 37 
 
 policy does not cover ship or goods unduly delayed at loading 
 port, 40
 
 GENERAL INDEX 44' 
 
 " At and from " p>olicy does not cover ship or goods unduly delayed 
 unless delay caused by genuine preparations for the voyage insured, 41 
 Attestation clause in Lloyd's policies, 138 
 
 in companies' p>olicies, 129 
 Auf gute Oder schUchte Nachricht, 35 
 
 Authority required for undertaking sue and labour operations, 123, 124 
 given by shipo\^-ner, 123 
 captain, 124 
 underwriter, 124 
 Avarie, 283 
 
 Avarie particuliire matirielle , 199 
 particuliire enfrais, 199 
 grosse, 281 
 Average, etymology of word, 282 
 meaning of, 282 
 
 in fire insurance, 283 
 " warranted free from average," 173 
 •' average unless general," 174 
 "unless general" equivalent to " particular average," 174, 185 
 particular. 188-220. Se& Particular Average 
 " as customary, " 190 
 "free of all" (F. A. A.) policies, 191 
 
 pay loss of whole of a species, 191 
 "on the whole," 193 
 
 reasons for introducing "on the whole," 193 
 general, 279-316. See General Average 
 Average Agreement or Average Bond, 295, 296, 297 
 shipowner need not accept, 297 
 consignee not bound to sign, 297 
 Average Deposit, 295, 296, 297 
 
 shipowner has right to demand, 297 
 
 Bailke's insurable interest in goods, 79 
 
 Ballast, if not permanent, not covered by policy on ship, 46 
 
 lialtic Sea includes Gulf of Finland, 39 
 
 Barcelona, ordinances of, 5 
 
 Barratrous acta, examples of, 109 
 
 Barratry, 108-111, 145 
 
 Lord I lardwicke's definition, 109 
 
 Amoulds definition, 109 
 
 Lord Ellenborough's test, no 
 
 cannot occur with shipowner's consent. 109 
 
 arising out of intentional neglect of foreign customs' regulations, 1 10 
 
 insurance against. Lord Mansfiild s rt-niark, 110 
 
 difforence of English and French law on, 1 10 note 
 
 reasonablincss of insuring cargo-owner against, iii 
 
 may result in piracy, 113 
 
 Bcacbmg constitutes strand, 177
 
 442 MARINE INSURANCE 
 
 Belgian definition of marine insurance (in law of 1874), 11 note 
 
 law does not insist on existence of a policy, 12 
 Benecke, W. , System of Marine Insurance and Bottomry, 65 
 
 Treatise on Principle of Indemnity in Marine Insurance, 65 
 his notion of f>erfect indemnity for a merchant, 65 
 
 only applicable to current merchandise to and from important 
 commercial places, 66 
 his explanation of the origin of the Meniorandum, 17a 
 Bilbao, ordinance of, 5 
 Bill of exchange, i 
 
 lading, i 
 Binding clause in Lloyd's policies, 127 
 
 in companies' policies, ir^ 
 Board of Trade's tests of cables and anchors, aio 
 effect of, 210 
 regulations as affecting questions of seaworthiness, 273 
 Boat covered by policy on ship, 45 
 
 but in ordinary English policy insured nominatim, 46 
 Body of ship covered by policy on ship, 45 
 Boilers covered by policy on steamer, 46 
 
 explosion of, 117 
 Bonds not properly described in policy as " goods and merchandise," 45 
 
 bottomry, 84, 297 
 Both to blame, 250, and see Collision 
 
 Bottomry considered a particular species of insurance, 44, 84 
 bond, 84, 297 
 
 lender's insurable interest in, 84 
 
 lender forbidden by Ordinance of Louis XIV. to insure 
 
 profit, 84 
 lender permitted by German Code to insure loan and in- 
 terest, 84 
 borrower forbidden by Ordinance of Louis XIV. to insure, 84 
 
 Code of Commerce to insure, 84 
 insurable interest in, provisions of Italian and Spanish 
 
 Codes, 84 
 a means of raising money to meet general average disburse 
 ments, 297 
 Breach of representation, penalty for, 266 
 warranty, penalty for, 263 
 clause, 265 
 Bremen, conditions of marine insurance, 6, 433 
 Broker, brokerage, 12 
 Brokerage, total loss of, 167 
 Broker's lien on policies, 433 
 Bruges, 4 [bis) 
 
 Bunkers, fire in coal, 180, 181 
 Burgos, ordinance of, 5 
 Burning, what constitutes, in sense of Memorandum, 180, 18I 
 
 must amount to substantial burning of the ship as a whole, 181 note 
 Buyer's insurable interest in goods, 79, 80
 
 GENERAL INDEX 443 
 
 Cables, wear and tear of, 209 
 
 Board of Trade tests of chain. 210 
 
 chain, subject to deduction of one-sixth, 219 
 Canal risks not sea risks, 24 
 
 continental p>olicies against, 42 
 Cancellation of open covers, 229 
 
 of policy a matter of mutual agreement between parties, 242, and 
 note 
 not at option of either party, 242 
 
 agreement for cancellation not provided in Return Clause, 242 
 but only for amount returnable if policy cancelled, 242 
 Cancelling returns, 241, 242 
 Captor's insurable interest in ship, 82 
 Capture, 114 
 
 British, cannot legally be covered by British underwriters, 114 
 
 fear of, not covered by policy, 114 
 
 incidence of loss after, sea peril intervening, 435 
 Cargo. See Goods 
 
 Cargo-owner has no lien for general average, 296 
 Cattle not properly described in policy as "goods and merchandise," 45 
 
 carriage of, on or under deck permitted in steamer lime wording, 235 
 
 feed not properly described in policy as "goods and mer- 
 chandise," 45 
 Caulking and metalling clause in wooden ship policy, 211 
 Cause, proximate, 94, 98 
 
 Central America not included in " Pacific" in certain policies, 40 
 Chain cables. See Cablu 
 Change of voyage, 60. 6t 
 
 clause in floating policy, 61, 62 
 
 phrase implies that voyage actually completed ia not that which 
 was originally commenced, 63 
 Chartered freight. See Freight 
 
 liability for general average, 304 
 Charterer's insurable interest in ship, 82 
 Clauses, marginal, how interpreted, 135, 136 
 
 printed or stamped, 135, 136 
 
 written, 13s, 136 
 
 and te.xt of policy taken as cumulative and npt as mutually re 
 strictive of one another, 136 
 Oeirac, 5 {bit) 
 Close of risk. .See Riik 
 Qubs, small damage, 240 
 Coal for fuel covered by p<jlicy on steamer, 46 
 
 and other stores used for getting vcs.sci off strand, 291 
 
 fire in bunkers, 180, 181 
 
 insufficiency of, constitutes unseaworlhinesi, 271 
 Code d« crommerce of France, 6 
 Codes, their convenience and advantage, 6 
 
 their function, 6 
 
 Judge Duer's remarks on written law, 6 
 
 want of English, 7
 
 444 MARINE INSURANCE 
 
 Codes, continental, admitted as evidence of law and practice, 8 
 
 of insurance, 5, 6 
 Colbert s Ordonnance de la Marine, 5 
 Collision clause. See Runnina-donon Clause 
 'Collision," meaning of, in the Memorandum, 182, 246, 436 
 various methods of including, in Memorandum, 182 
 
 in F.P.A. Clause, 185, and note 
 liability for damage done by, not covered in ordinary Lloyd's 
 policy, 243 
 Lord Denman's reason for this, 243 ; American decisions, 
 244 note 
 damage does not include damage to floating buoys, pontoons, 
 
 ' stages, piers, jetties, quays, etc., 246 
 occurring in foreign jurisdiction deprives English vessel of limita- 
 tion of liability by law of her flag, 247 
 liability of ship limited for each separate, 247 
 what constitutes a separate, 247 
 
 query as to American law in cases of double collision, 248 note 
 with two ships may constitute only one collision, 247 
 liability for, does not exist without proof of negligence, 248 
 different classes of, 248-251 
 inevitable, 248 
 inscrutable, 248, 249 
 
 tendency to regard as cases of both to blame, 249 
 English law that each vessel bears her own loss, 249 
 foreign law, 249 
 one vessel to blame, 249, 250 
 
 method of adjustment of claim on underwriters, 250 
 both vessels to blame, 250 
 
 two modes of settling liability, 250 
 practice of settlement in English Admiralty Court, 950 
 foreign law in this case, 250, 251 
 single liability and cross liability, 251, 253 
 of ships of same ownership, 253 
 
 special addition to collision clause, 253 
 of vessel in tow, 253, 254 
 
 claims against imderwriters, items included in, 354 
 Combustion distinguished from explosion, 104 
 Commencement of risk "at" a port, 36, 37 
 "from" a port, 36, 37, 38 
 "at and from" a port, 36, 37, 38 
 Commission on cost of repairs of ship not allowed to shipowner, 219 
 Commissions, loss of, 167 
 Concealment vitiates insurance, 268 
 
 forbidden equally to assured and underwriter, 276, 277 
 penalty for, voidability of policy at option of injured party, 'a.77 
 Ix)rd Mansfield's statement of what need not be communicated, 377 
 materiality of, a matter of fact, 277 
 of an immaterial fact is difficult to conceive, 277
 
 GENERAL INDEX 445 
 
 Concealment by broker of facts known to him vitiates insurance, 277, 278 
 does not occur when what is substantially the whole truth is 
 disclosed, 278 
 Concurrent repairs on account of owner and underwriter, 208 
 Condemnation, iii 
 
 Consideration essential to legal English contract, 14, 23. See Premium 
 absence of, renders even "firm" offer a mere obligation of 
 
 honour, 14 
 statement of, not demanded by Stamp Act as essential to 
 
 poUcy, 23 
 clause in policy, 128 
 Consignee's insurable interest in goods, 80 
 Consolato del Mare, 3 (bis), 8 
 
 Construction of policy, Duer's statement of controlling principle, 131 
 Lord Ellenborough's dictum. 131 ; Lord Bowen's criticism, 435 
 every word to have its proper value, 131 
 the meaning to be taken from the tenor of the whole instrument 
 
 and not of separate clauses, 131 
 words to be understood in ordinary popular sense, 131, unless 
 
 (a) they have a customary sense, 132-134. See Custom and 
 
 Usage 
 
 (b) context renders ordinary sense inadmissible, 134-^3^ 
 
 See Context 
 of clauses printed in margin of policy, 135, 136 
 stamped on or attached to policy, 135, 136 
 written on policy, 135, 136 
 Constructive Total Loss, meaning of phrase, 147 
 Mr. Justice Vv lUis's memorandum on, 68 
 of Ship, test of Lord Blackburn, 150 
 Tindal, C. J.. 150 
 Patterson, J., 151 
 Wilde, B., 151 
 should break-up value of ship come in ? 1 50, 436 
 should freight come into calculation ? 151 
 insured value not regarded in determining question of, 151 
 law of United States, 151 
 law of France and Italy, 151 
 law of CJerniany, 151 
 
 current freight of ship which has become. 153 
 of Goods from change of species, 154 
 
 from construction of contemplated venture, 154 
 examples, 155 
 
 German law when ship unfit or expense disproportionate, 155 
 from reconditioning, reshipping, and forw.irdlng expenses 
 
 exceeding vh1ii<" of good.s. 155 
 consideration of position of prudent uninsured owner in such 
 case, 155, 156 
 of insured owner, 156 
 
 should freight enter in<o the calculation ? 156, 157 
 Faniwoflh v. Hyde decides " No," 157
 
 446 MARINE INSURANCE 
 
 Constructive Total Loss — continued. 
 
 discussion of reasons for difference in the cases of insured and 
 
 uninsured owners, 157, 158, 159 
 of Freight from detention, 166 
 Claims for Constructive Total Loss, how settled, 170 
 
 reasons for this procedure, 170; at what time determinable? 159 
 Context as affecting construction of policy, 134-136 
 
 must be regarded as forming part of one and the same Contract, 134 
 plain sense of words must be made congruent with purport of 
 
 whole document, 134 
 application of principle ejusdem generis, 135 
 Continent, meaning of word in insurances, 40 
 Continuation Clause in time policy, 20 note, 236, 237 
 necessity for, 236 
 
 an agreement to issue supplementary policy, 237 
 Contraband of war, carrying of, is not illegal trading, if England 
 neutral, 270 
 
 for aliens is illegal if England at war, 270 
 Contraband trade. Parson's definition of, 270 note 
 Contributing Interests and Values, 301. See General Average 
 
 comparative table of, in different countries, 308 
 " Com" in Memorandum includes malt and pease but not rice, 173 
 Cotton Conference Documents, 165 
 Countermarque or countermart, 112 
 Court of Policies of Insiu^ance founded in 1601, 7 
 constitution of, 7 
 
 reason of inactivity, 7 , 
 
 fallen into disuse by 1720, 8 
 Craft, 46 
 
 risk at commencement of voyage not covered unless sp)ecified in 
 
 policy, 51 
 risk not covered for consignee on goods bought f.o.b., 51 
 clause does not extend risk after assured's property in goods 
 
 ceases, 57 
 stranding of, not equivalent to stranding of ship as regards 
 
 Memorandum, 177, 178 
 in Free of Particular Average Clause, 185 
 Crew, sufficiency of, 274 
 Crimea, 4 
 
 Cross liability and single liability in collision cases, 251, 253 
 Custom as affecting construction of policy, 132-134. See Usage 
 
 must be custom of particular trade concerned, not universal trade 
 
 custom, 132 
 will be enforced if shown to be in intention of parties, 132 
 
 unless unreasonable and repugnant to words of contract, 1 3a 
 "Custom of Lloyd's," 213 note 
 
 as to liquid and fragile goods, 172 
 Customary, average as, 190 
 
 Average Clauses, 193, and Appendices M and N
 
 GENERAL INDEX 447 
 
 Damage done by sea-damaged goods to other goods, 98 
 
 unrepaired, to ship, how charged, 216 
 allowance for, 216 
 
 done, limit of shipowner's liability for, 244 
 Damage done to cargo by carrying ship covered by Full Protection 
 PoUcy, 356 
 
 except in certain cases, 256 
 
 harbours, docks, and other fixed property covered by Full Protection 
 Policy, 256 
 
 engines in working steamer ofiF strand, 291 
 
 cargo in General Average, shipowner must take proper steps for 
 adjustment and payment of, 296 
 Date of loss of missing ship assured on time policy, not bound to 
 
 prove, 238 
 Deck cargo not covered by policy on "goods or merchandise," 44 
 
 on river steamers, when covered by ordinary policy ? 432 
 
 jettison of. See Jettison 
 Deductions from cost of repairs, 218, 219 
 
 do not apply to ship's first voyage, 219 
 
 from cost of repairs allowed in General Average, 298, 299 
 Delay, undue, at port of loading regarded as deviation, 41, 228 
 
 change of voyage, 53 
 Demurrage allowed in collision claims, 254, 294 
 
 at port of refuge not allowed in General Average, 294 
 Denman, Lord, on construction of documents, 53 
 Deposit, General Average, 295, 296, 297 
 
 shipowner has right to demand, 297 
 Designation of ship in policy, 47 
 
 master in policy, 47 
 Detainments, 114, 115 
 Detention as cause of loss of freight, 166, 167 
 
 clause, 167 
 
 eflfect of, 167 
 Deviation, 58-63 
 
 limited in steamer time wording, 235 
 
 clauses, 61 
 
 may be barratrous, no 
 
 U barratrous if intent of deviation is criminal, iio 
 
 as vitiating insurance, 273 
 Diligence, due. to complete voyage must be observed, 41 
 Diminishing clause in time in.surances on freight, 233 
 Disbursements insured on time, 232 
 
 two classes of, 233 
 
 second cla.ss vicw<.d with disfavour by underwritcni, 233 
 
 Discharge at quay, 56 
 
 into bfirge, 56 
 
 former usage .it Archan-el. 133 
 Disclosure. S«x- Conceulment 
 Dispatch, extra charges for, in rcpolring ship how trc.ited. 31 j
 
 448 MARINE INSURANCE 
 
 Distance- freight not recognised by English Inw, i6i 
 reason for this pecuharity, i6i 
 
 results as regards claims on freight policies for particular average 
 and salvage loss, 201 
 Docking charges, 217 ' 
 
 Documenting, proper, of ship involved in warranty of nationality, 26a 
 Documents of value not properly described as " goods and merchan- 
 dises," 45 
 required in proving claims for Total Loss, 167, 168 
 
 Particular Average, 220 
 Double insurance. See Multiple Insurance 
 
 Duer, Judge John, explanation of, disregard of insurance in early sea 
 laws, 3 
 remarks on written law, 6 
 definition of marine insurance, 1 1 note 
 Dunnage unless permanent not covered by policy on ship, 46 
 
 Earthquake may be a peril of the seas, 99 
 
 Effects of master not covered by policy on " goods and merchandises, " 45 
 
 must be specified in policy, 45 
 Eflfervescence, 102 
 Efficiency of ship, restoration of, does not imply exact reinstatement, 
 
 208 
 Ejusdem generis, 117 
 
 a leading principle of interpretation of policy, 134, 135 
 
 principle controls general scope and purport of pohcy, 135 
 Elements, loss and damage arising exUaordinarily from, are perils of 
 the seas, 99 
 
 ordinary and extraordinary action of, 97 note 
 
 perils of nature or of the elements, 100-105 
 Embargo, 115 
 Enemies. See Aliens 
 
 alien not protected by English policy of insurance, 3a, 33 
 
 meaning of word in policy, 112 
 Engines covered by policy on steamer, 46 
 Europe, meaning of word in insurances, 40 
 Ejcorbitant valuation as evidence of fraud, 70 
 Expenses of proving claim for Total Loss not allowed, 168 
 
 partial loss payable only when materiaJ 
 damage attains franchise, 180 
 of survey, etc. , unless claim results, fall on merchant, 199 
 Expiry of previous policies, 38, 39 
 Elxplosion distinguished from ignition, 104 and note 
 
 damage done by, not on board insured vessel, 105 
 
 Lord Esher's earlier views, 118 
 later views, 118 
 
 of boiler, 117 
 
 of dynamite, 104 
 
 of steam, 104
 
 GENERAL INDEX 449 
 
 Explosion resulting from fire covered by word "fire" in policy, 104 ; 
 
 resulting from impact, 104 
 Extra charges, incidence of, 125 
 Exuaordinary, transition from ordinary to, 97 
 F. A. A. See Free of All A vcrage 
 F. C. & S. See Free of Capture, etc. 
 F.G.A. See Foreign General Average 
 F. P.A. See Free of Particular Average 
 
 Factors, servants, assigns, under sue and labour clause, who are, 235 
 Fear of fire may cause loss on policy, 103 
 Fear of capture, 103, 114, 117 
 Fmland, Gulf of, included in Baltic Sea, 39 
 Fire. 100-105 
 
 only elemental peril named in policy besides sea peril, 100 
 
 not a peril " of the sea," 432 
 
 includes lightning, loi 
 
 intentional, non-fraudulent burning, loi, 102 
 accidental fire rising from negligence, 101 
 
 to prevent spread of pestilence, how treated, 102 
 
 hability of underwriters for, if caused by spontaneous combustion 
 of other goods, 103 
 
 fear of, may cause loss on policy, 103 
 
 damage done by, not on board insured vessel, 105 
 " Fire, on," effect of these words when added to Memorandum, 181 
 
 note 
 Firm offer, popular opinion of obligation, 14 
 
 erroneous in absence of consideration, 14 
 First voyage, no deductions made from repairs, 219 
 Fittings, permanent, covered by fKjhcy on ship or steamer, 46 
 
 temporary, not covered by policy on ship or steamer, 46 
 "Flax" in Memorandum does not include juie, 173 
 Floating policy, 18 
 
 with " change of voyage " clause, 61 
 
 on goods not strictly a time policy, 231 
 Florence, Ordinance of, 5 
 
 Fodder for live stock must be specifically named in policy. 45 
 Force and effect of the policy, 126 
 Force m^jjeure. 45 
 Foreign General Average, when enforo-d by English law, 306 
 
 contributing interests and value, 307, 308 
 
 (F.G.A.) clause, 313 
 Forwarding charges included in frceofjxirticulnr average clau.«ie, 186, aaa 
 Franchifw: varies with susceptibility of gootls to daiii;i(;c, 19a (/u) 
 
 intended to exclude petty rLiims, 19a 
 
 under Memorandum must \x attained by actual ma'.enal d;iiiiagc, 
 179 
 
 nan)i;(l in Mrmorandum originally meant to be deducted from claim, 
 188. 19s 
 
 nvfA now only to Ik- .ittairie*! to secure payni'-nt in full, 195 
 
 prop«T expression of this condition of fraii<!jivr. i<y5 
 
 2 U
 
 450 MARINE INSURANCE 
 
 Franchise — continued 
 
 vne fois attetntt, remboursemeni integral, 195 
 toujours dMuiU, 195 
 
 in time policies applies to each separate voyage, 235 
 in some time policies i per cent, 239 
 Fraud plainly evidenced by outrageously large or exorbiunt valua- 
 tions, 69, 70 
 not often, if ever, deduced from figures alone, 69 
 entirely vitiates contract of insurance, 69 
 Free of All Average (F.A. A. ) policy liable for total loss of a species, 191 
 
 effect of this, 191 
 Free of Capture and Seizure (F.C. & S. ) Clause, 115 
 
 effect of deletion of, 115 
 Free of Particular Average (F.P.A.) clause, 183-187 
 a development of the Memorandum, 183 
 when inserted in a policy overrides Memorandum, 184 
 various forms of, 184-187 
 provides for payment of certain special charges, 186 {bis) 
 
 total loss of packages in transhipment, 186, 187 
 restricted by incorporation of Suez Canal grounding clause, 187 
 definitive form of clause adopted in 1883, 187 
 excludes reconditionmg charges, 22a 
 Freight, etymology of, 160 and note 
 
 not mentioned in text of English printed policy before 1749- 8S 
 
 160 
 on goods to West Coast of South America, due on discharge into 
 
 lighters at destination, 58 
 valuation under open policy, 67 
 insurable interest in, 85, 86 
 
 depends on existence of legally enforceable contract, 86 
 French law distinguishes /r/V dfaire 7mA frit acquis, 86, 87, 88 
 Emerigon's theory of the distinction, 88 
 alien to ideas of English law, 88 
 De Courcy's critique of alleged French prohibition of insurance ol 
 
 freight, 88 note 
 loss of, proximate cause of, 143 
 should freight come into calculation regarding constructive total 
 
 loss of ship? 151 
 of ship which has become constn.ictive total loss, 153 
 
 if afterwards earned by ship nullifies shipowner's claim 
 
 against freight underwriters, 153 
 if afterwards earned by substituted ship does not pass to 
 hull underwriters of original ship, 153 
 does not enter into calculations respecting constructive total loss of 
 
 goods from loss of contemplated venture, 157-159 
 difference Ijetween English and foreign law as to partial perform- 
 ance of freight contract, 160, 161 
 dist;uice, not in accordance with English law, 161 
 prepay.nents on account of. how treated. i6r
 
 GENERAL INDEX 451 
 
 Freight, pxrepayments on account of, as loans, 161 
 
 as out and out p>ayinents (advance freight), 162 
 loGS of, two meanings distin^ished by Lord Truro, 163 
 
 owing to whole cargo becoming physically or commerciallj 
 
 incapable of being carried to destination, 162, 163 
 owing to part cargo, etc. {as abovt), 163, 164 
 treatment of advance freight in such cases, 163, 164 
 in case of abandonment by arrangement, 166 
 of cargo loaded in room of cargo destroyed, how 10 be treated. 165 
 loss of, through ship becoming incapable of carrying cargo to 
 destination, 165, 166 
 through detention, 166 
 involved in particular average on goods, 198 
 consequent French practice of insuring against total loss only 
 
 freight payable abroad, 199 
 particular average on, 200 
 
 does not necessarily presuppose particular average on goods, 
 200 
 usually insured on memorandum terms, but occasionally free of 
 
 Particular Average, 201 
 mere delay not sufficient to substantiate particular average claims 
 
 on, 201 
 delivery of goods at intermediate ports also insufficient (as above), 
 
 30I 
 
 may substantiate claim for salvage loss in case of foreign 
 ship, 201 
 prefwyment of. as affecting claims for partial loss of freight, 203 
 chartered, particular average on, 203-205 
 
 claim can only arise from loss of hire during currency of 
 
 policy of, 304 
 liability for General Average, 304 
 insurances on time, 232, 233 
 
 wth diminishing clause, 233 
 chartered or as if chartered, on board or not on board, 333 
 
 full interest admitted, 333 
 payable at destination of goods sacrificed in General Average, 
 
 made good to shipowner, 300 
 prepaid, of goods sacrificed in General Average made gootl to 
 
 cargo-owner, 300 
 timr-freighl, loss of, not recoverable in General Average, 301 
 homeward chartered freight of vcsbcl in buUast outward tonti ibuics 
 to General Average, 304 
 French Code of Commerce, 6 
 
 law regarding insurance of freight, 86, 88 
 Fi(l d/aire. 86, 87 88 
 
 acquis, 86, 8K 
 " From." cnmmTiremcnt of risk "from" a port, 36, 37 
 Fuel covered by policy on Mirariicr, 46 
 
 Furniture of fishing craft hclil not to include fishing stores. 46 
 Furs not included in Memoraiiduin under "hides" or "skins," 173
 
 452 MARINE INSURANCE 
 
 "Gaming, by way of," words render insurance void, 77 
 
 Gear improperly carried on deck and lost not charged to underwriter, ai9 
 
 General Average Expenses, insurable interest in, 83 
 
 not primarily an insurance liability, 381 
 different senses of the words, 282 
 as understood in Knglish law, 283-303 
 Birkley v. Presgrave, 284-280 
 Job V. Langton, 28b 
 Schuster v. lUelcher, 287, 288 
 definition of, by Laurence, J., 284 
 
 Kenyon, L. , 284, 285 
 sacrifice must be voluntary, 285 
 extraordinary, 285 
 
 for common safety of ship and cargo, 285 
 incurred in emergency, 285 
 judicious or reasonable, 285, 286 
 who must order ? 285 note 
 sacrifice must not be inevitable, 285 
 
 of things used in ordinary course, 285 
 
 per Hannen, L. , 20c 
 of things sacrificed foranyseparateinterest, 285 
 expenditure distinguished from sue and labour charges, 226, 227 
 expenditure must be incurred while both ship and cargo are ex- 
 posed to same perils, 286 
 incurred for benefit of any number of separate interests 
 is not General Average, 287 
 port of refuge expenses, incidence of, in case of, 
 
 (a) vessel put in to repair particular average (Svendsen v. 
 
 Wallace), 289 
 
 (b) vessel put in to repair sacrifices intentionally made for 
 
 common safety (Atwood v. Sellar), 289 
 cannot exist without occurrence of common peril, 289, 290, 292 
 Jury Rig, 290 
 
 reasons for admitting cost of, into General Average, 290 
 
 divergence of usual practice from true theory, 290 
 
 views of Blackburn, L. , 290 
 damage done to engines in working steamer off strand, 291 
 
 question of principle, is there any intentional saciifice? 291 
 
 Lowndes's views, 291 
 
 recent American practice, 291 
 value of coal and other stores used in getting steamer off strand, 2qa 
 
 disallowed till quite recently. 292 
 
 now allowed with sanction of courts, 292 and note 
 wages and provisions of crew at port of refuge, 292, 293 
 
 Thesiger's (L. J.) views, 293 
 
 not allowed in English practice, 293 
 
 disallowed by Lord Mansfield, 293 
 Buller J. , 293 
 
 act a sacrifice of part for preservation of the rest, 294
 
 GENERAL INDEX 453 
 
 General Average — continued 
 
 wages and provisions of crew at port of rr.fuge no sacrifice of 
 
 any part involved, but only of time and patience, 294 
 demurrage at port of refuge not allowed, 294 
 substituted expenses, 294, 295 
 
 apportionment of, 295 
 
 charges treated by agreement as, 295 
 
 the two essential features of, 295 
 procedure of recovery in, 295 
 
 average deposit, 295, 296 
 
 signature of average agreement or bond, 295 
 duty of shipov^■ner as to adjustment and payment, 296 
 bond, shipowner not bound to accept, 297 
 
 consignee not bound to sign, 297 
 deposit, shipowner has right to demand, 297 
 amounts made good, 297-300 
 
 disbursements, 297 
 
 e.g. bottomry, 297 
 
 sacrifices, 298-301 
 
 (a) of ship's materials, 298 
 
 deductions from cost of repairs, 298, 299 
 
 (b) of cargo, 299 
 
 Lowndes's statement of principle, 299 
 values to be made good if goods completely sacri- 
 ficed, 300 
 
 if goods merely damaged, 300 
 (f ) of freight of sacrificed goods, 300 
 themselves contribute to General Average, 999. 300 
 time freight, loss of, not recovable in General Average, 301 
 oontributing interests and values, 301-303 
 general considerations, 301 
 of ship, 302 
 
 of cargo, when venture is completed, 30a 
 broken up at intermediate port, 303 
 of freight advanced, 30a 
 
 due at destination, 30a 
 of ulterior chartered freight, 303 
 
 comparative table of Knglish and foreign law and practice, 
 307, 308 
 apportionment, 304 
 English theory ami practice of, based on considerations of common 
 
 physical safety, 304 
 foreign theory and practice of, based on considerations of comwum 
 
 benefit, 304 
 proper law and place of adjustment. 304-306 
 (i) if venture compl<-ti-d, 304. 305 
 
 but what if cargo 1« not all for one drstinatinn ? 305 
 (1) if vriiture rifil comfilrled, 306 
 foreign law and practice of, when enforced by Eii|{lub Uw, 306, 
 311, jia
 
 454 MARINE INSURANCE 
 
 General Average — continued 
 
 international systems of, 309, 310 
 York-Antwerp rules, 309, and Appendix G 
 application of, 314 
 
 not a complete code of General Average, 314 
 ID connection with affreightment, 310 
 
 can only mean General Average contribution, 311 
 application of, to insurance, 310 , 
 
 incidence of liability, 310 
 extent of liability of underwriter, 310, 311 
 Foreign General Average (F.G.A. ) Clause, effect of, 312 
 various forms of, 313 
 General Average loss as distinguished from General Average con- 
 tribution, 314. 315 
 effect of decisions in Dickenson v. Jardine and Price v. Ai 
 Small Damage, 315 
 proposal to abolish General Average, 309 note 
 to reform General Average, 309 note 
 Genoese, 4 
 Geographical terms, interpretation of, 39 
 
 taken in ordinary mercantile sense, 39 
 German Empire accepts North German Mercantile Code, 6 
 German General Mercantile Code, 36 
 
 Insurance Law, 433 
 Good faith, 10 [bis) 
 Good safety, 54, 55 
 
 not same as absolute security, 55 
 illustrations, 55 
 
 means safety necessary for discharge and ordinary business, 55 
 "Good ship or vessel," explanation of phrase, 46, 47 
 Goods, insurable interest in, 78-81 
 insured on time, 229 
 
 different methods of insurance on time, 230-232 
 carriage of, on deck permitted by steamer lime wording, 235 
 of certain kinds always carried on deck, 44 
 insurance not invalidated thereby, 44 
 Goods of same nature as part of ship's apparel not covered by policy 
 on ship, 45 
 valuation of, under open policy, 67 
 "Goods and merchandises," 43 
 
 insured on ordinary English policy must be carried under deck, 
 
 43. 44 
 insurance of, does not cover respondentia bond, 44 
 
 effects, 45 
 
 spare outfit of ship, 45 
 
 live stock, 45 
 
 fodder, 45 
 
 bonds or titles, 45 
 
 mortgage nor special lien, 45 
 
 may cover gold and silver specie, 45
 
 GENERAL INDEX 455 
 
 Gross values of goods, Justice I^wrence's reason for adjusting 
 particular average on, 198 
 of freight adopted in adjusting particular average on freight, 202 
 reasons, 203 
 Grounding, mere, does not necessarily constitute strand, 176 
 e.g. in tidal river or harbour, 176, 177 
 unless resorted to for refuge, 177 
 Goidon de la Mer, 5 
 
 insists on proportion of pwlicy valuation remaining uninsured, 64 
 
 Hamburg conditions of marine insurance, 6, 433 
 
 Hamburg Underwriting and Average Regulations of 1731, 5 note 
 
 Hansa league, 4, 5 
 
 Hanseatic laws, 3 (,bh) 
 
 Hawsers, wear and tear ot, 209 
 
 " Hemp" in Memorandum does not include jute, 173 
 
 " Hides" in Memorandum does not include furs, 173 
 
 Homeward and outward African cargoes, 52, 53 
 
 Honour policies, 77 
 
 "Hull and Macliinery," meaning of, 239 note 
 
 Illegal trade, foreign smuggling is not in English law, 269 
 
 blockade running, if England is neutral, is not in Knglish law, 
 
 270 
 can^-ing contraband, if England is neutral, is not in English 
 
 law, 270 
 as vitiating insurance, 272 
 Illegal voyage, policy on, cannot be enforced, 269 
 In quovis policy, iB 
 " Inchmaree" clause, 119 
 IncrcasL-d value, loss of, 167 
 Indemnity, 10, 11 
 
 policy of insurance not perfect contract of (per Patterson, J.), 11 
 as affecting valuation, 65 
 
 Lord Mansfield's view and its grounds, 65 
 what constitutes, 65 
 Benecke's system, 65 
 
 only applicable to current merchandise to and from important 
 markets, 66 
 under open policies, 66, 67, 68 
 principle of, as affecting insurable interest, 76 
 limit of, under full protection policy, 25a, 259 
 Indian islands include Mauritius, 39 
 Inherent defect not a peril insured against, 93, 154. '9© 
 Inland nsks, 41, 4^ 
 
 water risks l)cyond tidal limits are not sea risks, 34 
 Insurable interest, 33, 33, 76-86 
 transfer of. i 
 as determined by principle of indemnity, 76
 
 4S6 MARINE INSURANCE 
 
 Insurable interest may be ownership or relation of risk or of responsi- 
 bility, 78 
 in goods, 78-81 
 
 wharfinger's and lighterman's, 78 
 
 bailee's, salvor's, and shipmaster's, 79 
 
 seller's and buyer's, 79, 80 
 
 consignee's and speculating salvors, 80 
 ia ship, 81-83 
 
 shipowner's and ship shareholder's, 81 
 
 captor's, charterer's, and shipmaster's, 8a 
 
 agents, 83 
 
 mortgagee's and mortgagor's, 83 
 in advances, 83 
 
 In General Average expenses, 83 
 in profits, 85 
 in freight, 85, 86 
 
 depends on existence of legally enforceable contract, 86 
 Insurance, fire, 208 
 
 marine, i and passim 
 
 considered as existing time out of mind, i 
 
 origin really lost in obscurity, 2 
 
 an inducement to commercial adventure and enterprise, a 
 
 originally a mere subsidiary in oversea commerce, a 
 
 now an absolute necessity to oversea commerce, a 
 
 not directly referred to in Roman literature, 2 
 
 no evidence of its existence before 1000 A. D. , 3 
 
 reference to, in Celtic literature, 3 
 
 examination of said reference, 3 
 
 not mentioned in early European sea laws, 3 . 
 
 Judge Duer's explanation of this silence, 3 
 
 silence of sea laws not conclusive of non-existence of insurance, 3 
 
 rediscovered or invented in Italy in 1182, 3 
 
 introduced into England by Lombards, 4 
 
 codes and ordinances of, 5, 6 
 
 no English code of, 7 
 
 dearth of case reports down to 1756, 7 
 
 few positive regulations before 1756, 7 
 
 principles not generally known in England before 1756, 7 
 
 law of England based, on decisions and dicta of Lord Mansfield, 8 
 
 Marine Insurance Act of 1906, 392-417, 43 r 
 
 Bill to prohibit Gambling on Loss by Maritime Perils of 1909, 
 
 431-432, 433. 434 
 purport of coulracl of, 10 
 description of contract of, 10, 11 (bis) 
 Duer's definition of, 11, note 
 definition of, in Belgian code, 1 1 note 
 no definition of, in Spanish code, 1 1 note 
 is a limited contract of indemnity, 1 1 and note 
 broker, 12 
 brokerage, la 
 premium, 12
 
 GENERAL INDEX 457 
 
 Insurance, policy usually necessary to prove contract, 12 
 not so in Belgium, 12 
 policy essential in France to validity of contract, 13 
 note. See Slip 
 contract definitely considered in policy, 18, 27 
 
 not fully expressed in policy, 27, 132-134, 144 
 subjecu of, 86-88 
 
 distinction between instirance and wagering, 76 
 as stated by Lawrence, J., 77, 78 
 Instirer, or assurer, or underwriter, i, 11, 18, and /OJ-W"* 
 Intention manifested at starting-point to d;ange voyage lemiinates 
 
 risk, S3 
 Interest. See Insurable Interest 
 actual, 10 
 
 policy, 18 ♦ 
 
 " Interest or no interest," words in policy render insurance void, 77 
 Intermediate voyage not covered by ordinary policy on named voyage, 
 
 53 
 Italy, ancient Mediterranean trade of, 2 
 
 rediscovery or invention of insurance in, 3 
 Iter navis, 37 
 Iter viaggii, 37 
 
 Jettison, 105-108 
 
 practice of I-ombard underwriters, 106 
 
 regular and irregular, distinguished, 106 
 De Courcy's remark, 106 
 
 irregular, recognised as valid, to6 
 
 of deck cargo not claimable on ordinary policy, T07 
 
 in consequence of inherent defect not recoverable, T07 
 
 of cargo carried on deck as customary, 107 
 
 of dangerous chemicals ordinarily covered by agrccinent, 107, 108 
 
 dishonest, of goods with shipowner's approval is barratry, io8 
 
 Rhodian law, 279, 280 
 
 Justinian's Digest (or I'andects) on, 280 
 
 provisions of Digest regarding, afterwards extended to othei 
 sacrifices, 281 
 
 of goods involves that of freight payable at destination, 295 
 Jews, invention of marine insurance attributed to, 3 
 
 expulsion of, from France in 1182 by Philip Augustus, 3 
 Jury Kig. See General Average 
 
 \joxA Blackburn's views, 290 
 Justinian's Digest or I'andects, Bk. xiv.. Tit. a. § i, a, c8o 
 
 Bk. xiv.. Tit. a, § o. aSo 
 Jute not included in Memorandum under " hemp" or '• flax," 173 
 
 Lakk risks not cxt< nding to tid.il wat«a-s not technically aea risk«, 94 
 
 continental prjlicies for, 4a 
 Landing, safe, what implic<1 in, t;6 
 Latent defect, evidence requirc<l .is 10 time of occurrence, iiq. 435
 
 45S MARINE INSURANCE 
 
 Ij»w, English, of insurance largely founded on Lord Mansfield's 
 decisions and dicta, 8 
 
 a branch of English general contract law, 9 
 
 based on common intention of parties, 9 
 
 simplified by general use of one jMjlicy form, 9 
 lyCgality of trade, 269, 270 
 Inciters of mart and countermart, H2 
 Levantine usages of marine trade, 2 
 Liabilities arising out of ownership, 33 
 
 insurance of, -243-259 
 Liability for collision damages not covered by ordinary Lloyd's policy 
 
 =43 
 Lord Denman's reason for this, 243 
 
 limit of shipowner's, for damage done, in English jurisdiction, 244 
 apportionment between life claims and cargo claims, 244 
 on what tonnage calculated, 244 
 foreign limit of, 246 
 covered till recently by underwriters only three-quarters of damage 
 
 done to property, 245 
 limitation of, takes effect on each separate occasion of liability, 
 
 247 
 query as to American law in case of double collision, 248 note 
 does not exist without proof of negligence, 248 
 Liability insurance, mutual associations for, 255 
 
 limitation on full protection policy, ^^30 a ton, 259 
 shipowner bound by Full Protection Policy to limit, where legally 
 possible, 259 
 Lien not insurable as " goods and merchandises," 44 
 Life claims not covered by ordinary running-down clause, 356 
 covered by Full Protection Policy, 256 
 salvage not recoverable under Lloyd's policy, 256 
 Lighterage, 56 
 
 of Russian hemp in London, 56 
 
 risk of, not covered during unnecessary delays, 56 
 
 in consignee's lighters is not at shipper's underwriter's risk, 57 
 
 reasons for this, 57 
 stranding of lighter not equivalent to stranding of ship in ordinary 
 policy, 177 178 
 Lighterman's insurable interest in goods, 78 
 liability for loss in lighters, 51 
 
 recovery from, subrogated to cargo-owner's underwriter, 51 
 Lightning included under fire, 101 ; not a peril of the sea, 43a 
 Limitation of liability for collision damage, 244, 246, 247 
 Live stock must be specifically named in policy, 45 
 Liverpool Slip Warranties, 265, and Appendix L 
 Lloyd's, proposal of committee of, to abolish General Average, 309 note 
 Register requirements not the measure of repairs claimable from 
 underwriters, aoS
 
 GENERAL INDEX 459 
 
 Lloyd's, customs of, 213 
 
 Lombaxd merchants, 4 and note, and passim in Historical Intro- 
 duction 
 introduced insurance into England, 4 
 
 Antwerp (perhaps), 4 
 Lombard Street, 4 
 
 London, 4, znd passim in Historical Introduction 
 Loss. See Partial Loss and Total Loss 
 Loss of time or through failure to meet engagements, included La 
 
 collision claims, 254 
 • Lost or not lost," suggested explanation of clause, 33 
 probable real origin of clause, 33 
 not found in Florentine form of 1523, 33 
 occurs in English policy of 1613, 33 
 must be read as part of a contract of indemnity made in good 
 
 faith, 34 
 of no effect if assured only knows vessel to be lost, 34 
 
 underwriter only knows vessel to be arrived, 34 
 of effect if both assured and underwriter know of loss or arrival, 
 
 34 
 declaration in open policy made after loss maintained as valid, 
 
 34. 35 
 considered by Marshall as in many rases implied, 35 
 Story's %-iew of effect of absence of clause, 35 
 Park's contrary view, 35 
 words are peculiar to English policy, 35 
 equivalent clause in French f)olicies, 35 
 
 its validity, 35, and penalty for fraud, 35 
 equivalent clause in German policy, 35 
 provisions of G<*rman code in this matter, 36 
 difference of English and German law m cases whore k>tk assured 
 
 and underwriter know of loss and arrival, 36 
 Insurances on these terms permitted by the Codes of Holland. 
 Portugal, and Spain, 36 
 Louis XIV. 's Ordonnance de la Marine, 5 
 Lowndes's theory of the value of a ship, 74, 85 
 
 tables of General Averajje, 306 
 Lump sum charters as affecting [articular avcr.igc claims for partial 
 loss of freight, 30a 
 
 Machinery damage, 117-119 
 
 resulting from wear .and tear, 210. 211 
 Malt included in Mcmonindurn un^ler 'Torn." 173 
 Malyne, 4, 37 
 
 Managing owner's or manager's authority to insure ships, 81 
 Mansfield, Ix)rd, 7 (bis), 8 (Itr) and passim 
 
 his procedure, 8 
 
 his influence on American law, 8
 
 46o MARINE INSURANCE 
 
 Mansfield, Lxsrd, his use of continental authorities, 8 
 his training of mercantile special jurors, 8 
 his decisions and dicta the foundntion of English commercial law, 
 
 including insurance law, 8 
 on construction of documents, 53 
 Marginal clauses in policy, how interpreted, 135, 136 
 Marine insiuance. See Insurance, Marine 
 
 damage, Lord Herschell's definition, 1 19 
 Marque or mart, 112 
 Master, name of, in policy, 47 
 reason for giving, 47 
 rarely given in modern practice, 47 
 named in policy, effect of substituting another master as provided 
 
 by the policy, 48 
 if named in policy must not be wantonly or unnecessarily changed, 
 
 48 
 entitled to sue and labour for the saving of the ship, 122 
 
 of the cargo, 123 
 his duty to the cargo in "instant, unforeseen, and unprovided 
 
 necessity," 122 
 must communicate in such cases with principals where possible, 
 
 122 
 may hypothecate ship and cargo to raise money for repairs, 
 
 123 
 may sell goods if he cannot find means of forwarding, 123 
 
 but only in case of necessity, 123 
 authority for sue and labour operations, 124 
 Material representation if incorrect is misrepresentation, a68 
 Materiality of representation, 268 
 
 a question of fact, 274 
 Mauritius included in Indian Islands, 39 
 Mediterranean, 2 
 Memorandum added to policy May 1749, 129, 171 
 
 effect of, to free underwriters from all claims for partial loss below 
 
 a fixed percentage, 171 
 original intention, 172 
 Benecke's explanation of origin of, 172 
 original treatment of percentages named in, 188 
 why liquid and fragile goods not named in, 172 
 is more recent than the clause " free of all average," 17a 
 fewness of articles named in, 173 
 meaning of " Warranted free from Average," 173 
 
 "warranted free from average, unless general," 174 
 
 " . . . or the ship be stranded," 174 
 on ordinary policy strand of lighter not equivalent to strand of 
 
 ship, 177, 178 
 to constitute claim under, goods and ship must be in one common 
 adventure when ship takes the ground, 178, 179
 
 GENERAL INDEX 461 
 
 Memorandum — continued 
 
 occurrence of excepted peri! renders all sea-damage occurring on 
 
 the voyage claimable on the policy, 179 
 damage claimed under, need not siU result from one casualty Of 
 
 one kind of casualty, 179 
 franchise must be attained by actual material damage, 179 
 if franchise so attained, expenses of proving claim also admitted, 
 
 179 
 "sunk or burnt," generally addpd to, since about i860, 180 
 " on fire," effect of recent addition of these words, 181 note 
 extended to collision damage, 182 
 various forms of collision exception : — 
 "or in collision," 182 
 " or the damage be caused by collision," 182 
 
 "... with another ship or vessel," iSa 
 usually so worded that excepted perils refer to ship even when 
 
 interest insured is not ship, 182 
 suggested reform in wording .ind purport, 183 
 American form of, 182, 183 
 effect of American form, 183 
 
 overridden by special terms inserted in policy, e.g. free of particular 
 average clause, 184 
 by other average clauses, 184 
 Men-of war, 11 1 
 
 Merchandise. See " Goods and Merchandises," 43 
 Metalling and Caulking Clauses for Wooden Ships. 211 
 Middelburg, Ordinance of, 5 
 
 Misrepresentation is incorrect material representation, 268 
 vitiates insurance, 268 
 Phillips's definition of, 274 
 Araould's view that if fraudulent it should, whether material or not, 
 
 vitiate insurance, 275 
 Lowndes's remarks, 275 
 effect of, in law, 275 
 
 consideration of, as it appf-ars in practice, 275 
 occxu-s whenever a stateiri<nt not substantially correct affects under- 
 writer's opinion of a risk or its premium, 276 
 may be withdrawn or corrected by assured before conclusion o( 
 insurance, 376 
 
 Missing ship, 33, 14S . ^ , , 
 
 insured on time policy, assured not bound to frovt date of low, 
 
 238 
 Mistake as affecting valuation, 71 
 
 Cockburn's (C. J.) views, 71 
 Jesscls (M. k.) virws, 71 
 class of, entitling parties to reopen valuation. 71 
 Mortgage not insurable as " good^ anJ iiicrcliandi>c3, " 4$ 
 Mortgng'-e's insurable interest in ship, 83 
 Mortgatjor's insurable iulcreit in ship, 63
 
 462 MARINE INSURANCE 
 
 Multiple insurance, 88-91 
 commonest cases of, 89 
 course usually adopted, 89 
 
 what if done intentionally neither in mistake nor fraud ? 89, 90 
 aw of England, 89 
 France, 90 
 America, 90 
 Germany, 90 
 Italy, 91 
 Spain, 91 
 Mutinous crew making off with ship commits piracy, 113 
 Mutiny a cause of total loss, 145 
 Mutual associations for small damage insurance, 240 
 for liabilities insurance, 355 
 
 N^CHRICHT, au/gute oder schlechte, 35 
 
 Name of ship in policy, 18 
 
 Named policy, 47 
 
 Napoleon I.'s Code de Commerce, 5 
 
 Nationality, warranty of, 262 
 
 involves proper documenting of vessel, 263 
 Nature, jjerils of, 100-105 
 
 Neglect, intentional, may constitute barratry, no 
 Negligence does not necessarily constitute barratry, no 
 Negligent navigation does not void claim for loss presumably caused 
 
 by sea perils, 141 
 New for old. See Deductions 
 North German Mercantile Code, 6 
 
 Mr. Justice Willes's opinion of, 6 
 Nolle, Vincent, editor of Benecke's Ma-rine Insurance, 2nd edition, 65 
 Non-cumulative clause in time policies, 235 
 Notice of abandonment distinguished from abandonment, 147 
 
 signification of, 147 
 
 implied meaning of, 147 
 
 proper time for, 147 
 
 possible result of delay in giving, 147, 148 
 
 no compulsion on assured to give, 147 
 
 should contain word abandon, 149 
 
 if unanswered is taken to be declined, 148 
 
 no special form prescribed, 149 
 
 must be unequivocal, 149 
 unconditional, 149 
 absolute, 149 
 
 may be oral, 149 
 
 need not be in writing, but is usually iu writing, 149 
 reasons, 149 
 NoMvelUi, sur bonnes ou mauvaises, 34 
 
 Offer of risk, 12 
 
 Old materials, value of, credited to underwriter, ai9
 
 GENER-\L INDEX 463 
 
 Old materials, value of, credited in England after deduction of thirds, 
 
 319 
 in America before deduction of thirds, 319 
 Oleron, Laws of, 3 {Hj), 8 
 Open cover, 229 
 
 really floating contract for definite pjeriod, 229 
 
 usually mere document of honour, 229 
 
 provision for cancellation, 229 
 
 unstamped agreement to issue stamped policies, 299 
 Open policy, 18, 64, 67 
 
 on ship and freight together give shipowner more than indemnity, 
 
 67 
 
 on cargo gives less than indemnity to assured, 68 
 
 rarely used for cargo, 68 
 Ordinances of Marine Insurance, 5, 6 
 
 continental, admitted in English Courts as evidence of custom 
 and practice, -, 
 Ordinary, transition from, to extraordinary, 97 and note 
 Ordonnance de la Marine, 5, 9 
 
 author unknown, 5 
 
 insists on proportion of policy valuation remaining uninsured, 
 
 64 
 "Otherwise" in P.P. A. clause (1883 definitive form), meaning of, 186 
 
 Outfit, spare, of ship not covered by policy on "goods and merchan- 
 dises," 45 
 Outward and homeward African cargoes, 52, 53 
 Over insurance, Mr. Justice Willes's memorandum on, 68 
 
 beyond just and complete indemnity voids insurance, 68 
 
 by mistake, Cockbiim's (C. J. ) views, 71 
 Jessel's (M. k.) views, 71 
 Overtime in expediting repairs, charge for, how to be treated, 215 
 Ownership originally regarded as the only insurable interest, 3a 
 
 the ideal of insurable interest, 78 
 
 " Pacific " in certain policies held not to include Central America, 
 
 40 
 Park's (Mr. Justice) remarks on dearth of English insurance cases 
 before 1756, 7 
 remarks on " lost or not lost," 35 
 Partial loss, 190 
 
 in transhipment included under F. P.A. clause, 186 
 objection to this form, 186 
 See Particular Average 
 Particular Average, 188-220 
 Arnould's rW-finition, 188 
 
 ni' Ifnaiion of. n'.x-essitaled by decision m Ktdtlon^. P.mfirt 
 A/iHite. 188 
 Fliillips's definition, 189
 
 464 MARINE INSURANCE 
 
 Particular Average — continued 
 
 both dctiiiitioas describe merchant's loss rather than underwriter's 
 
 liability on policy, 189 
 suggested modification of Arnould's definition, 189 
 Particular Average on Goods deals with damage to goods arriving at 
 destination in specie, 189 
 a combination of amounts named in the policy with 
 
 amounts expressing merchant's loss, 189, 190 
 may arise from diminution or deterioration or both, 
 
 190 
 adjustment of, 195-198 
 
 Lord Mansfield's decision in L^twis v. Rucker, 
 
 196 
 Justice Lawrence's decision in Johnson y. 
 Sheddon, 197 
 to be adjusted on gross values sound and damaged, 
 
 198 
 adjustment on gross values of goods involves intro- 
 duction of freight payable abroad, 198 
 consequent French practice regarding insurance of 
 
 freight payable abroad, 199 
 expenses of proving and adjusting claim, 199 
 on Freight cannot arise from mere delay, 201 
 
 or from delivery of cargo short 
 of destination, 201 
 adjusted by comparison of gross values, 
 
 202 
 reasons for this, 202 
 on Chartered Freight, 203-205 
 
 fine or mulct for insufficiency of ship does not 
 
 substantiate claim, 203 
 can only arise from loss of time during cur- 
 rency of policy, 204 
 arising from loss of time occupied by repairs 
 necessitated by immediate action of perils 
 insured against, 205 
 arising from loss of time occasioned by twenty- 
 four hours' brealidown clause in charter, 
 even though clause not divulged, 205 
 oia Ship, 206-220 
 franchise, 206 
 valuations, 206 
 
 measured by cost of repairs, 207 
 leason, 207 
 
 w«vir and tear damage excluded, 208-313 
 metalling and caulking clause in wooden ship 
 
 policies, 211 
 eaiis lost, when charged to underwriters, a 13
 
 GENERAL INDEX 465 
 
 Particular Average on Ship, rigging strained and chafed, when charged 
 
 to underwriters, 212 
 casks, warps, and gear lost from deck, when 
 
 charged to iinderwTiters, 312 
 does not include collision liabilities, 214 
 wages of crew during repairs, 214 
 demurrage, 214 
 • thirds deducted, 217, 218 
 no thirds clause, 2i3 
 
 deductions made in practice by Average Ad- 
 justers' Association, 219 
 allowances for superintendence of repairs, 219 
 apportionment of costs of surveys and of ad- 
 justment, 219 
 method of adjustment, 220 
 Particular Charges, 221-227 
 
 entirely different in nature from particular average, aai 
 not excluded by memorandum or similar clause, 221 
 
 by any provision regarding franchise, 222 
 certain, recoverable under Sue and Laboiu- Clause (which see) 
 
 223 
 
 Passage of ship must correspond with voyage named m policy, 37 
 
 Paulus (Sententiae) on jettison, 279 
 
 Pauschal pwlicy will probably take hold in America and Russia, 33a 
 
 Pease included in memorandum under "corn," 173 
 
 Penalty for stamping policy after execution. 21 
 
 •• People," meaning of word in policy, 115 and note 
 
 Perils insured against, 92-119 
 
 specified rufminatim, 93-116 
 
 the general words, 116-119 
 
 not ordinary occurrences hut extraordinary accidental events, 93 
 
 exclude wear and tear and inherent defect (vice frofre), 93, 97 
 
 must occur in the " voyage" insured, 93 
 
 effect of this condition, 93 
 
 proximate cause, 94 
 Perils of the sea, 94-100 
 
 distinguished from perils <nt the sea, 94 note 
 
 Lord ilerscheirs explanation, 9,, 99 
 
 Mr. Justice Lush's explan.iiK>n, vS 
 I^owndes's criticism of, 95 
 suggestion on criticism, 9(1 
 
 I>ord .Vl.-icnaghtcn's explan.ition, 99 
 
 Phillips's dcfmition, 99 
 criticised, 96 
 
 Lord Justice Ixjprs's definition, 96 
 
 must result from an unusiwl or atcidcnMl occurrence, 96 
 
 vice prcffre (mhrrciit dirfcct), is not, Q7 
 
 nor is damage by rats or other vcrmm. 98 
 
 2 11
 
 466 MARINE INSURANCE 
 
 I'ilferaRe, loss by, borne by ship or captain, 113 
 
 Pilferers not " thieves" in the sense of the policy, 1x3 
 
 Piracy may result from barratry, 112, 113 
 may ht committed by passengers, 113 
 covered under general words of policy, 116 
 meaning of the word in a marine policy, 435 
 
 Pirates, iia 
 
 meal mob regarded as pirates, 113 
 
 Policy, I 
 
 IJoyd's, of to-day very similar to English policy of 1613, q 
 
 thus embodies three centuries of tradition, 9 
 advantage of a fixed form, 9 
 stability resulting from a fixed form, 9 
 danger of increasing inadequacy of a fixed form, 9 
 merchants and underwriters hampered by a fixed form, 9 
 of insurance not a perfect contract of indemnity (per Patterson, 
 
 J-). " 
 usually required as evidence of contract of insurance, 12 
 
 not insisted on in Belgium, 12 
 
 in France essential to the validity of the contract, 12 
 
 in Kngland essential to the validity of the contract, 20 
 
 the definitive expression of the contract to insure, 18, 27 
 
 not the full exjjression of the contract to insure, 27, 132-134, 
 
 144 
 different classes of policies, 18 
 
 of sea insurance as defined in Stamp Act, 1891, 19 
 may not extend beyond twelve months, 20 
 essentials of, 20, 24 
 may not be stamped after signature, 20 
 
 may not be stamped after signature except policies of mutual 
 insurance, 20 
 
 and policies executed abroad, 20 
 may be altered after execution, 21 
 English form based on Italian forms. 27 
 earliest English form, 27 and Appendix B 
 Lloyd's form of 1779, 28 
 English forms before 1865, 28 
 
 after 1865. 28 
 modem Lloyd's form, 28 
 text of modem Lloyd's fomi, 29, 30 
 
 detailed explanation, 30-129 
 heading of, 30, 31 
 
 originally intended for strictly marine risks only, 41 
 extended in modern practice to include land risks, 41 
 continental foniis for canal, river, and lake risks, 42 
 earliest form probably for goods only, 43 
 
 ordinary English form applicable both to goods and to ship, 43 
 not adapted for covering goods from a point 
 otherthantheplace of original loading, 52
 
 GENERAL INDEX 467 
 
 Policy — con Hn ued 
 
 ordinary English form not adapted for covering goods from a 
 p)oint other than the place of original loading, unless 
 " wheresoever' loaded " or similar words are used, 53 
 "without further proof of interest than the poUcy," words render 
 
 insurance void, jj 
 honour policy, 77 
 clean policy, 30 
 force and effect of, 126 
 signature of, 129 
 sealing of,' 129 
 
 interpretation of, 130-143. See Construction 
 criticisms of wording of, 130 
 
 interpretation of, proceeds from actual intention of the parties, 131 
 Duer's statement of the controlling principle, 131 
 Lord Ellen borough's dictum, 131; Lord Bowen's criticism, <;?<; 
 and clauses interpreted cumulatively, not restriclively, rj'i 
 is a commercial document used for business purposes, 435 
 printed text controlled by written clauses conflicting with it, 136 
 taken clause by clause, 255-259 
 an attempt at adequate protection of shipowner, 359 
 Port in policy of insurance not necessarily the same as port in customs 
 regulations, 40 
 of refuge exjienses. See General Average ^ 
 
 Posting of missing ships, 145 
 Premium, 12. See Connderation 
 
 statement of, in p>olicy not required by Stamp Act 1891, 33 
 Presumption of loss of a missing ship insured on time policy, 238 
 Previous p>olicies, expiry of, 39 
 Printed text of policy li conflicting with written clause is conltoUed by 
 
 it. 136 
 Priic, vessel condemned as, lii 
 
 should be pnse, 11 1 note 
 Pro rata freight. See Distance Freight ' 
 
 Profits, insurable interest in, 85 
 
 loss of, 167 
 Propeller shafts, damage to, 210, an 
 Protection clubs, 255 
 Provisions covered by policy on ship, 45 
 Proximate cause. 94, 97, 136 143 
 
 better termed "immediate" cause, 137 
 Phillips's interprcuiion of principle of, 137 
 Lindlcys (I^ J.) exposition of principle of, 14a, 143 
 application of principle of, in caie of dam.iRr 10 ship. 138 
 
 sale of part cargo to rnlte 
 
 funds, 138 
 cur^o -c>wiicr't Imbilltlea foi 
 <ilitl)'<i dcl>ts, 138 
 principle must lie applied with good v;n»«, 139
 
 468 MARINE INSURANCE 
 
 Proximaie cause, personal fault of assured may prevent application oi 
 principJe, 139 
 aggravation of loss through wear and tear may prevent applica- 
 tion of principle, 140 
 summary of decisions on, 141 
 
 how applied when only certain named perils covered, 141-143 
 of loss of expectations of gain, how ascertained, 143 
 doctrine not strictly applied to collision claims, 254 
 
 Prudent uninsured owner, ambiguity of phrase, 151 
 action of, 156, 159, 436 
 
 I-*russia adopts North German Mercantile Code, 6 
 
 Quotation explained, 14 
 effect of, 14, 15 
 
 absence of consideration, 14, 15 
 practice in, 16 
 
 example of practice in, 16, 17 
 form, Appendix D 
 in writing, period for acceptance of, if none definitely specified, 17 
 
 Ransom for captured ship, 114 
 
 may be general average, 286, 287 
 Rathbone, Philip H. , Tables of General Average, 309 
 Ratification of a policy ex post J ado, 32 
 Rats, 'damage by, not peril of the seas, 98 
 
 may lead to peril of the seas, 98, 99 
 R.D.C. See Running-down clause 
 Reck, F., 6 
 
 Reconditioning expenses at intermediate port are sue and labour ex- 
 penses, I as 
 at destination may be particular average, 125 
 as a means of estimating particular average 
 
 in certain cases, 179 
 not included in 1883 form of free of particular 
 
 average clause, 222 
 but included in some other forms, 222 
 Registry requirements not the measure of repairs claimable from under- 
 writers, 208 
 render proof of unseaworthiness increasingly more difficult, 272 
 Reinstatement not required in repairing vessel, 208 
 Remboursement inUgral, 195 
 Removal for repairs, cost of, how treated : — 
 
 (a) removal for repair in port where vessel lies damaged, 214 
 
 (b) from outport or foreign port to another port for repair, 215 
 distance from repairing port no bar to, 437 
 
 Repair of ship equivalent to reconditioning at destination, 2c8 
 does not involve reinstatement, 208 
 claimable from underwriters is such as will make her as fit to sail 
 
 or to sell as before the acc«dent causing the damage, 208 
 concurrent, on account of owner and underwriter, cost of, 208, 217
 
 GENERAL INDEX 469 
 
 Repair of ship, terhporaTy, when charged 10 underwriters, 214 
 done over again, when charged to underwriters, 314 
 deductions from 217-219 
 Representation, 266-268 
 
 less formal and binding than warranty, 266 
 
 breach of, less severely punished than breach of warranty, 266 
 
 penalty, a66 
 fulfilled by substantial compliance, 266 
 may be oral or wTitten, 267 
 may if written be folded, pinned, wafered, or otherwise attached to 
 
 policy, 267 
 paper folded up in policy may contain representation, 267 
 classes of, 267, 268 
 of fact, 268 
 of expectation (i) of assured, (2) of third party, 268 
 
 made bonk fide, nonfulfilment of, sonietiraes passed by court 
 without penalty, 268 
 when material, 268 
 
 may Ije withdrawn or corrected before conclusion of insurance, 276 
 Re-shipping charges in free of particular average clause, 186, 222 
 Respondentia bond not covered by insurance on goods, 44 
 
 description of, 44 
 Respwnsibility as creating insurable interest, 78 
 Restoration of ship's efficiency does not mean reinstatement, 208 
 Restraints, 115 
 
 Return clause in steamer time policy, 240, 241 
 reason for existence of, 240 
 varieties of, 241 
 
 stipulations of various forms of, 241 
 
 does not provide for cancellation but only for return payable ia 
 case of cancellation, 242 
 Rhodes, 106 
 Rliodian law, 2 (bis) 
 
 in vogue 900 H.C. to 700 H. C. , 106 
 what is meant by the words. 280. 281 
 examination of passages in Paulus and Justinian, 279. a8o 
 Rice not included in meinorundum under "corn," 173 
 Rigging covered by policy on ship, 45 
 
 chafed and strained, when charged to underwriters. 21a 
 Rights to ownership or disposal of property insurable. 33 
 Risk, various senses of word, 11 
 
 offer •'"*/or acceptance, may be or.ol or wnt'cn. la 
 
 and »cceptancc usu-iiiy signified in a documt-ni (policy), !■ 
 .xs practised in l-'.ngland. la 
 commencement of. "at" a pL-ice. j'.i, 37 
 ■ • from " a place. 36. 37, 38 
 " at and from " a place. 36, 37. 38 
 00 ^tp, 50
 
 470 MARINE INSURANCE 
 
 Risk, commencement of, on cargo lo.ided from quay or wharf, 51 
 
 in stream or roads, 51 
 f.o.V). , 51 
 
 free alongside, 51 note 
 at starling point of voyage ceases as soon as intention of proceed- 
 ing on that voyage is abandoned, 53 
 close of, on ship, 53-56 
 
 goods, 56, 58 
 on ship usually nms thirty days after arrival in good safety, 55 
 on goods closes immediately consignee takes delivery in his own 
 
 lighters, 57 ; but sec The Ellon, 
 on goods closes immediately assured's property in them ceases, 
 unless transfer of the insurance was a condition of the contract 
 of sale, 57 
 as creating insurable interest, 78 
 River risk not extending to tidal waters not sea risk, 24 
 
 continental policies for, 42 
 Roman literature contains no direct reference to marine insurance, a 
 
 Pandects, 2, 8 
 Rotterdam, Ordinance of, 5 
 Rouen, 5 
 Rovers, 112 
 Running-down Clause (R.D.C. ), 244 
 
 a special contract supplementary to the ordinary policy, 244 
 
 appears now in almost every ship policy, 244 
 
 usually covers only three-quarters of damage done to another ship 
 
 and property on board her, 245 
 results of this restrictive policy, 245 
 various forms of clause, 245, 246 
 does not cover damage done to buoys, pontoons, stages, piers, 
 
 jetties, quays, etc., 246 
 result of incorporation of £Z a ton limit in, 246 
 is guarantee of repayment of proportion of liabilities, 254 
 
 consequently not interpreted strictly with reference to doctrine 
 of proximate cause, 254 
 four-fourths, 255 
 
 in Full Protection Policy, 255, 256 
 
 does not protect charterer unless definitely intended to, 437 
 does protect party to whom vessel is demised, 437 
 Running landing numbers, 192, 194 
 
 S.A. (subject to approval), 15 
 
 S.G., suggested explanations of, 30, 31 
 
 Safety. See Good Safety 
 
 "Sail" distinguished from "sail from," 264 
 
 Sailing " from" a port, definition of, 38 
 
 Sails covered by poUcy on ship, 45 
 
 lost, when charged to underwriters, 21a 
 "Salt" in memorandum does not include saltjxitre, 173 
 Salvage Associations, 123 
 
 for life saved not recoverable under Lloyd's policy, 356
 
 GENERAL INDEX 47r 
 
 Salvage, how recoverable from underwriters, 286 
 Salvage loss, what it is, 170 
 
 method of settlement, 170, 189 
 
 paid or awarded to salvors picking up venture at sea is not 
 general average, 287 ; nor sue and labour expense, 226 
 Salvage not apportioned over insured values of interests affected, 226 
 " Salvage, without benefit of," words render insurance void, 77 
 Salvor's insurable interest in goods, 79, 80, 81 
 Same ownership clause, 253 
 Scarphed beams, 216 
 Screw shafts, damage to, 210, 211 
 
 " Sea risk," what voyages not included under this designation, 24 
 Seaworthiness, warranty of, 47, 270-272 
 does not apply to time policies, 242 
 essentials of, 271 
 
 stated in close connection with named voyage, 271 
 no absolute standard of, 271 
 different degrees of, 271 
 
 for different stages of one voyage, 271 
 if vessel unseaworthy for one stage, policy thereafter void, 271 
 Seaworthy, vessel in English law, assumed to be. till contrary shown bj 
 
 fact or proof, 273 
 Seizure, 114 
 
 Sellers insurable interest in goods, 79, 80 
 
 Series, a subdivision of cargo for assured's advantage as regards particu 
 lar averagt:, 192 
 varies inversely to intrinsic value of goods, 192 
 formation of, 194 
 
 disregard of original intention regarding formation nf, 194 
 tail, 194 
 "Servants, factors, and assigns" in sense of Sue and labour Clause, 225 
 Shafting, covered by policy on steamer, 46 
 Shafts, damage to, 210, 211 
 Shareholders insurable mterest in ship, 81 
 
 right to insure own shares, 8r 
 Ship, what covered by p<jlicy on, 45 
 "Ship or vessel," explanation of phrase, 46 
 Ship, insurable interest in, 81-83 
 name of, in pfjlicy. 47 
 valuation of, under oprn policy, 67 (Hi) 
 
 as stated by Marshall, 67 notf 
 I^wndcs's theory of v.iluc of, 74, 85 
 shipowner's insurable interest in, 81 
 Shipowner's insurable interest in g'wds, 79 ; in ship. 81 
 authority to unde.rtakc sue and lalK)ur operations, laj 
 liability for dainiigc done, limit of, 244 
 not covered by sue and l.it)Our clause. 435 
 must take steps to procure ndjusimcnt and secure payment ol 
 
 General Average damage to cargo, 396 
 ts only person entitled to require security for General AvernjEe. nyt
 
 472 MARINE INSURANCE 
 
 Silence in reply to tender of abandonment means declining, 149 
 
 Single liability and cross liability in collision cases, 251, 252 
 
 " Sinking," what constitutes, in sense of the memorandum, 180 
 
 Sister ship clause, 253 
 
 "Skins" in memorandum does not include furs, 173 
 
 Slip, 12, and Appendix A 
 
 merely a memorandum of the risk, 13 
 
 of no legal value except for fixing date of acceptance of risk, 13 
 
 document of honour and jealously regarded, 13 
 
 terms of risk taken as definitely fixed by slip, 13 
 
 information arriving after signature of, need not be communicated 
 to underwriter, 13, 14 
 reason, 14 
 
 usually taken to be less binding on assured than on underwriter, 
 
 erroneously, as it is submitted, 14 
 
 particulars of adventure given in, 23, 24 
 
 effect of stamping, 13, 24 
 Small Damage Clubs, 240 
 Smoke damage, 105 
 
 Smuggling, foreign, not in English law, illegal trading, 269 
 Special charges in free of particular average clause, 186 
 
 " if incurred," 186 
 
 " for which undervvriters would otherwise be liable," 186 
 Specie probably included under goods and merchandises, 45 
 Sp)ecies, change of, 154 (cf. 146) 
 
 may constitute constructive total loss, 154 
 
 e.g. putrefied hides, 154 
 
 such settlement may almost amount to paying for vice prof re, 
 
 154 
 goods of different, insured on one policy, treated as if each 
 
 species separately insured, 191 
 loss of whole, claimable on free of particular average policy, 191 
 Spontaneous combustion, 103 
 
 De Courcy's remarks on, 103 
 liability of underwriters for, 103 
 Stamp, 19-26 
 
 on policies executed abroad, 20 
 penalty for stamping after execution, 2X 
 evasion, 21, 22 
 
 issuing alleged copy of policy when no stamp policy is 
 in existence, 22 
 duty on policies at premium not exceeding one-eighth per cent, 22 
 voyage policies, 22, 42a 
 time policies, 22, 23 
 canal risks, 24 
 river risks, 24 
 
 lake risks, 24 , 
 
 American lake risks, 24 
 floating policies, 231
 
 GENERAL INDEX 473 
 
 Stamp, if affixed to slip, does it make slip legal evidence of insurance 
 contract ? 24 
 
 recovery of spoilt or unused, 25 
 
 correspondence with Board of Inland Revenue, 25 
 
 regulations and duties, suggestions for revision and alteration of, 
 25, 26 
 Stamp Act of 1891, §§ 91-97, and Schedule, 19-23 
 Statutes quoted : 
 
 43 Elizabeth c 12 ; i 
 
 19 Geo. II. c 37 ; 68. 77 
 
 28 Geo. III. c. 56 ; 31 
 
 35 Geo. III. c. 63 ; 28, 36, 129 
 
 54 & 55 Vict. c. 39 ; 19-23 
 
 57 & 58 Vict. c. 60 ; 244 
 
 I Edw. VII. c. 7 ; 237 
 Steam damage to coal on fire, 432 
 Stowage, improper, claims for, excluded from full protection policy, 
 
 258. 359 
 Strand, nie-ining of words " or the ship be stranded," 174-178 
 what does not constitute, 174 
 
 not striking ground or anything firmly attached to it, 174 
 not touching and grazing, 174 
 means remaining perceptibly fast for appreciable time, 175 
 
 e.g. vessel aground fifteen to twenty minutes stranded, 175 
 but vessel on beam ends aground one and a half minutes 
 not stranded, 175 
 implies settling of the ship and interruption of voyage, 176 
 
 so as to render ship fro tempore wrecked, 170 
 Bailys theory that centre ol gravity of ship must be supported by 
 
 ground, examined, 176 
 must be fortuitous and not part of customary navigation on voyage 
 insured, 176 
 e.g. not grounding in tidal river, 176 
 
 or in tid.1l harbour, 177 
 
 unless entered for refuge, 177 
 reason given by Tindal, C. J., 177 
 voluntary. See Beaching 
 beaching constitutes, 177 
 of liphter not equivalent on ordinary policy to strand of ship, 177, 
 
 178 
 must occur when goo<ls on fxjard ship to establish claim on goods 
 under memorandum, 178, 179 
 Subrogation to underwriter of assurefl's recover)- from lighterman, 51 
 Subrogation, 168-170 
 
 nghts obtained by underwriter through, not limited to amount he 
 
 has paid, it>8, 169 
 effect of doctrine of, as regards amounts recovered for collision 
 damage, 169 
 Substituted cargo, freight of, how to b^ trraird. 164. l^5 
 ICxpenjcs. See General Axfrage
 
 474 MARINE INSURANCE 
 
 Sue and Labour Clause, iao-136 
 
 a supplementary side contract, 120 
 
 deals with particular charges, 120, 226 
 
 seemingly indigenous to England, 120 
 
 effect of clause taken together with waiver clause, iti 
 
 object of clause, 121 
 
 refers only to accidents actually occurred, not to efTorts to avoid 
 
 accidents, 121 
 why containing no provision for assurer's expenses, lai 
 operations frequently undertaken by salvage associations, 133 
 authority required by salvage associations, 134 
 expenses under, incidence of, 124 
 
 if exceeding values saved, 124, 125 
 
 apportioned over insured values as far as regards under- 
 writers, 124 
 recapitulation, 125, 126, 226, 227 
 does not include operations of salvors at sea or speculative salvors, 
 
 126, 225 
 does not include General Average, 126 
 includes certain particular charges, 22a 
 
 e.g. charges of forwarding cargo to avert total loss of freight 
 223 
 ambiguity of wording of, 223, 224 
 deals only with expenses incurred on behalf of special interest 
 
 insured, 226 
 expenses incurred under, must not be excessive, 226 
 exi>enses incurred under, must not be for work done in foolhardy 
 
 or imprudent ways, 226 
 expenses distinguished from General Average Expenditure, 226, 227 
 not applicable to policy on shipowner's liability, 437 
 Suez Canal grounding clause incorporated in 1883 K. P.A. clause, 
 
 187 
 " Sunk or burnt" generally added to memorandum since i860, 180 
 Superintendence or repairs, allowance for, 219 
 Sur bonnes ou sur mauvaises nouvelUs, 35 
 Surprisal, 114. See Capture 
 
 Survey, cost of, apportioned over interests concerned, 319 
 Sweat, 97 
 
 Tackle covered by policy on ship, 45 
 Tail Series, 194 
 
 Takings at Sea, 114. See Seizure 
 Termination of Risk. See Close 
 Terminus a quo of voyage, 37 (bis) 
 
 ad quern of voyage, 37 [bis) 
 Temporary repairs, when charged to underwriters, 214 
 Tender of Abandonment. See Notice 
 Theft, petty, 113. See Pilferage
 
 GENERAL INDEX 475 
 
 Thieves in the sense of the policy not mere pilferers but violent 
 pillagers, 113 
 bettered described as "assailing thieves." 113 
 Thirds, deduction of, 218 
 
 "no thirds" clause, 218 
 Thirty days after arrival, 54 ; meaning of words " thirty days." 432 
 Time, insurance on, 228-242 
 
 policy on goods and cfTects, 230 
 
 two methods of working, 230, 231 
 policies in use on the Continent, 231 
 on freight, 232. 233 
 on ship, 333-242 
 
 rare in case of sailers, 333 » 
 
 asual in case of steamers, 233 
 policy wording for steamers. 234 
 
 composition of wording for steamers, 234 
 intention of, 235 
 begins and ends with Greenwich mean time, 235 
 
 reason, 235 
 provisions of franchise apply to each separate voyage, 23.^ 
 
 policy on goods, 230 
 
 freight, 232, 233 
 ship, 233-242 
 exenipt from warranty of seaworthiness, 242, a7« 
 reason, 271 
 reform suggested. 272 
 clause embodying suggested reform, 27a 
 limit of floating poucy, 231 
 policy, 18 
 
 may not extend beyond twelve months, 20, 33 
 stamp duty on, if not exceeding six months, 23 
 if exceeding six months, 23 
 Titles (litres) not insurable as " goods and merchandises," 45 
 Tonnage in which shipowner's liability for damage done is calculated 
 
 244 
 Total lor,s defined by Phillips, 146 
 
 of ship and cargo, i44-*S9 
 freight, 160-^67 
 other interests, 167 
 nctual. of ship by foundering. 144. I45 
 missing. 145 
 by othT casualties. 145 
 barratry or mutiny. I4<; 
 constnictive. of ship. 146, 147 
 of goods, 153-159 
 when determinable? 159 
 of frciglit from detention. lOft. 167 
 documents sul»stanti.iting. must Ijc supplied free of charge, 168
 
 476 MARINE INSURANCE 
 
 Total loss of any package in transhipment included under 1883 F.P.A 
 clause, 187 
 of part, 190 
 Touch and stay, 58-61 
 
 clause controlled by words " in this voyage," 58 
 
 affected by clause granting all libt:rties as per Bill of Lading, 
 
 59 
 closely restricted to main object of voyage, 59 
 Lord Mansfield's exposition of, 60 
 jtistified if in attempt to save life, 60 
 
 by repair of damage arising from perils insured against, 60 
 not justified if not connected with the venture insured, 60 
 Tow, 253 
 
 vessel in, collision of, 253 
 "Towing and being towed " covered by steamer time wording, 235 
 Transfer of interest in marine insurance. See Insurable Interest 
 Transhipment, certain losses in, covered by 1883 F.P.A. clause, 
 187 
 meaning of, 187 
 Transport, 46 
 
 Trial trips covered by steamer time wording, 234 
 Tug, 253 
 
 is merely supplier of necessary motive power for ship, 254 
 
 " U. K; Cont," meaning of phrase, 40 
 Ulrich, Rudolph, Tables of General Average, 308 
 Undermanning, 274 
 
 Underwriter or assurer or instu-er, i, 11, 18, z.\\A passim 
 etymology of word, 11 
 
 authority of, for sue and labour operations, 125 
 Uninsured proportion of valuation in early policies, 64 
 prescribed in Guidon de la Mer, 64 
 Ordinance of Louis XIV., 64 
 not prescribed in French Code of Commerce, 64 
 " United States," meaning of expression, 40 
 
 " Unless" in memorandum denotes exception, not condition, 174 
 Unseaworthiness as vitiating insurance, 273 
 
 biu"den of proof generally on underwriter, 273 
 
 exceptionally on insured, 273 
 becomes increasingly difficult to prove, 273 
 on account of Registry requirements, 274 
 
 Board of Trade regulations, 274 
 Unseaworthy, if vessel so for one stage of voyage, policy thereaftet 
 
 void, 271 
 Upheaval of reefs may be peril of the seas, 99 
 Us et coutumes de la Mer, 5 
 Usage, 132-134. See Custom and Policy 
 valid, IS part of the contract (Duer), 133
 
 GENERAL INDEX 477 
 
 Usage, always considered even when meaning of words plain (Lord 
 Ellen borough), 133 
 not merely explains, but also controls pwlicy (BuUer, J.), 133 
 in controlling ambiguous words does not contradict them, 133 
 merely varies application of ambiguous words, 133 
 diflSculty of enforcing control without introducing contradiction, 134 
 special trade, of ver)- limited application in steam trades, 134 
 
 much limited by employment of special terms in contract, 134 
 Usurers, 4 
 
 Valuation, 64-75 
 
 limited by considerations of indemnity. 65 
 
 under open policies on goods, 67 
 ship, 67 
 freight, 67 
 other subjects of insurance, 67 
 
 in steamer's policies, 207, 238 
 
 Mr. Justice Willes's views, 68 
 
 Lord Mansfield's views, 68 
 
 mere exaggeration of, does not avoid policy, 68 
 
 exaggeration of, must be fraudult-nt to avoid policy, 68 
 or designed to obtain more than full indemnity, 68 
 
 what constitutes excessive, 69 
 
 outrageously L-irge, as evidence of intended fraud, 69 
 
 exorbitant, may be evidence of fraud, 70 
 
 not binding for ascertaining whether loss is constructive toiaJ 
 or not, 70. 151 
 
 effect in law of amount of valuation, 70, 151 
 
 not affected by mistake, 71 
 
 American law on, 73 
 
 French law on, 72 
 
 German law on, 72, 73 
 
 Dutch, Belgian, and I'orlugnese law on, 79 
 
 Italian law on, 73 
 
 Spanish law on, 73, 74 
 Valuation Clause, 74, 75, 152, 153 
 
 various forms of, examined, 15a 
 
 ordinary form of. 153 • 
 
 V-alue of ship. Lowndes's theory of, 74 
 Valued policy, 18, 64. 68-72 
 
 valid if no fraud or wagering. 71 
 
 limitations and advantages of. 68 
 
 Mr. Justice Wil!es'« memorandum on, 68 
 Venture. See Adi-enturt 
 Vermin. See Katt 
 Vessel, 46 
 
 Vice pTvfre not a peril insured against. O"*, 154. 190 
 Villani's account of the invention o< iitsuraace, 3, 4 
 
 (tatemciit, what it csl:ibli&l<es. 4
 
 478 MARINE INSURANCE 
 
 yis major, 45 
 
 Vitiation of insurance by fraud, 69 
 
 gaming, 77 
 
 deviation, 273 
 
 illegality of trade, 273 
 
 unseaworthiness, 273, 274 
 Vitriol always carried on deck, 44 
 
 Void, insurance rendered, by introducing into the policy words interest 
 or no interest, without Jurther proof of interest than the policy, by 
 way of gaming or wagering, or without benefit of salvage, 77 
 Volucius Maecianus, 280 
 Voyage (viaggium) named in policy, how interpreted in law, 37 
 
 the sea-path covered by the word, defined, 37 
 
 meaning of the word in a lime pohcy, 236 
 Voyage policy, 18 
 
 may extend thirty days after arrival at destination, ao 
 
 Wager distinguished from insurance, 76 
 
 as p)er Mr. Justice Lawrence, 77, 78 
 policy, 18, 68 
 "Wagering, by way of," words render insurance void. 77 
 Wages and provisions of crew, 292, 293. See General Average 
 Waiver clause, 120-126 
 object of, 121 
 
 recognises that underwriter may make efforts to salve, 12a 
 War clause, 115 
 
 Warehouse rent in Free of Particular Average clause, 186, 222 
 Warehousing charges in Free of Particular Average clause, 186 
 Warps and other gear improperly carried on deck and lost not claim- 
 able from underwriter, 21a 
 Warranties, 260-272 
 modem, 264 
 
 Liverpool slip, 265, and Appendix L 
 Warranty, two senses of word, 260 
 
 used in a sp)ecial sense in marine insurance, 261 note 
 express, 261-265 
 
 must be written or printed on face of policy, 261 
 
 whether in body or margin, at foot or transversely, 26a 
 paper folded up in policy not a warranty, 261 
 any explicit reference on face of policy to any special rules oi 
 conditions is a warranty, 261 
 most decisions on, are old, 262 
 no special form essential, 262 
 need not contain word "warranted," 262 
 ' may consist of only one word, 262 
 
 of nationality, 262 
 
 involves proper documenting of vessel, 263 
 of armament and equipment, 263
 
 GENERAL INDEX 479 
 
 Warranty of convoy, 263 
 
 penalty for breach of, 263, 274 
 
 in interpretation of, words taken in commercial sense, 263 
 
 but read strictly and literally, 264 
 of sailing, distinction between "to sail" by a named date and 
 
 " to sail from " a named port by a named date, 264 
 modem forms of, 264 
 breach of, clause, 265 
 implied, 269-272 
 
 the substratum of every English insurance contract, 269 
 the three great implied warranties, 269 
 
 I. That the vemure be carried out without deviation, 269 
 3. That the venture be not illegal, 269, 270 
 3. That the ship carrying out the venture be seaworthy, 
 270, 271 
 
 but No. 3 does not apply to time policies, 272 
 Water casks and tanks if lost from deck not claimable from under- 
 writer, 213 
 Water damage to coal on fire, recoverable in General Average, 432 
 Wear and tear not insured against, 93, ico 
 
 in particular average claims on ship, 208, 21 1 
 
 perhaps too leniently treated, 210 
 as cause of damage and break in propeller shafts, 210, 211 
 in wooden hulls partly excluded by metalling clause, 21 1 
 Wendt. Ur. E. E. , 6 (its) 
 Wharfinger's insurab'le interest in goods, 79 
 " WTiole, average payable on the," meaning and effect of clause, 136, 
 
 194, 207 
 Willes, Mr. Justice, memorandum on over-insurance, valued policy 
 
 and constructive total loss, 68 
 Windlass, wear and tear of, 209 
 Wisby, laws of, 3 (iij), 8 
 
 Wooden ships, caulking and metalling clauses, 211 
 Wreck, expense of removal of, not covered by ordinary policy, 257 
 by whom borne, 257 
 
 not transferred to underwriter by abandonment, 257 
 not payable by cargo-owner when his consent to operations has 
 
 not been obtairic-d, 258 
 covered by Full Protection Policy, 258, 259 
 Wrecking Organisations, 123. ^,cc Salvage A ssociatioHM 
 Written clauses in policy, interpretation of, 135. 136 
 if conflicting with pnnted text, control it, 136 
 
 York-Antwkkp Rules, 309, and App»:ndix G 
 
 THK RND
 
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