Sect. 80. At one time an opinion prevailed that a policy was not necessary for the validity of contracts of mutual insurance (a), The Stamp Acts apply to but it has been established that the Stamp Acts apply to mutual insursuch insurances, for the validity of which, therefore, a policy containing the particulars required by the Stamp Act, 1891, is requisite (b). In favour of these clubs an exception has been made to the general rule that policies may not be stamped after they have been underwritten (except on payment of a penalty). By sect. 95 of the Stamp Act, 1891, a policy of mutual insurance, originally sufficiently stamped, may, if required, be stamped with an additional stamp. A club policy has been held to be properly signed within the meaning of the Stamp Act when sealed with the seal of the association, and attested by the manager (c). ance. liabilities in 81. The system of mutual insurance is now used by Risks and shipowners, not only for the ordinary insurance of ship and sured by the freight, but also to cover a number of risks and liabilities club. which are not protected by the ordinary policies. The insurances are made subject to the articles of association and the rules and regulations of the particular association (d), which are usually by express reference incorporated into the policies issued to the members (e). One class of mutual in Lion Ins. Association v. Tucker (1883), 12 Q. B. D. 176, 187, on the question of consideration, where the members of the association were themselves the insurers. (a) Bromley v. Williams (1863), 32 L. J. Ch. 716; see also Harvey v. Beckwith (1864), 2 H. & M. 429. (b) In re London Marine Ins. Association, Smith's Case (1869), L. R. 4 Ch. 611; In re Arthur Average Association (1875), L. R. 10 Ch. 542. (c) Marine Mutual Ins. Co. v. Young (1880), 43 L. T. N. S. 441. (d) A knowledge of the rules by which a member of an association has agreed to be bound will be im- (e) A policy incorporated the pro- Sect. 81. insurances on ship. insurance associations insures the ships of the members against the same risks as are undertaken by Lloyd's Ordinary time underwriters under their ordinary policies. The policies are made subject to exceptions and special clauses similar in most respects to those contained in the time policies subscribed at Lloyd's. The exception of particular average is, however, not always the same as in the memorandum of Lloyd's policy. Sometimes the amount is not 37. per cent. as in the latter, but 17. per cent. or at a certain rate (e. g., 38.) per gross registered ton. Sometimes the ship is warranted free from particular average under a specified sum, e. g., under 5007. Freight. "Thirds." Another class comprises mutual associations for the insurance of freight. Not only do the policies of these associations insure the members against a loss of freight in respect of which there is an insurable interest, but they commonly incorporate a rule which provides that in case of the total loss of a member's ship, the amount insured with the association shall be deemed to be his interest at risk. This provision seems to amount to an admission of interest, and to make a policy into which the rules are incorporated a wager policy (ƒ). Mutual associations have been established to indemnify the members against loss caused by the customary deduction of was held that the member who had (f) See post, "Wager Policies," of the total loss of the steam ship entered, whether the vessel be loaded, in ballast, or under time charter," Bigham, J., thought that the rule was framed to cover loss of freight consequent on the total loss of the ship, and not caused by perils of the sea. The plain meaning, however, of this and similar rules seems to be that the assured shall recover in the event of a total loss of ship, whether or not he has any freight at risk, and it is believed that this is the construction which in practice has been put upon these rules. "thirds" and "sixths" from the cost of new materials or of repairs to their ships (g). Sect. 81. Other associations insure their members against certain kinds of losses, not covered by the ordinary insurances, which are included under the head of "small damage." Among Small damage. these losses are―(1) particular average losses on ship under 31. per cent. or other small particular average losses which the underwriters except in the ordinary policies; (2) the cost of the wages and provisions of the crew while the ship is ashore, or disabled, or under average repairs; (3) damage to the ship by striking the ground when such striking does not amount to stranding. Other associations insure shipowners against loss caused by Detention. the detention of their ships from various causes, such as detention while stranded or sunk, or under repair, detention by breakdown of machinery, in quarantine, through the arrest of the ship, or when the ship is ice-bound in consequence of damage. An important class of mutual insurance associations are Protection those called protection and indemnity associations. Their and indemnity. object is not only to indemnify their members against certain liabilities, but also to assist them in certain kinds of litigation in respect of their ships, e. g., with charterers, cargo-owners, seamen and public authorities. They usually undertake, inter alia, to indemnify their members against liabilities— (1) for life salvage and for damages in respect of loss of life and personal injury; (2) for medical and funeral expenses, &c. incurred in respect of the crews of their ships (h); (3) for the loss of or damage to goods carried on their ships (i); (g) See, as to these deductions, post, ss. 1024-1030. (h) See Rogers v. British Shipowners' Mutual Protection, &c. Association (1896), 1 Com. Cas. 414, in which it was held that the club was not liable under its rules for expenses incurred in obtaining substitutes for members of the crew dis abled by illness. (i) For the meaning of the term "improper navigation," where the shipowners were protected against damage to goods on board when caused by the improper navigation of their ship, see Good v. London S.S. Owners' Mutual Indemnity Association (1871), L. R. 6 C. P. 563; Car Sect. 81. (4) for the one-fourth of the damages and expenses consequent on collision, which is not covered by the ordinary collision clause; (5) for damage to harbours, piers, &c.; (6) for the expenses of raising wrecks. They also usually undertake to pay to the shipowner the cargo's proportion of general average (not including damage to the ship) when it is not recoverable from the cargo-owner or the ship's underwriter (). michael. Liverpool Sailing Ship Owners' Mutual Indemnity Association (1887), 19 Q. B. D. 242; Canada Shipping Co. v. British Shipowners' Mutual Protection Association (1889), 23 Q. B. D. 342. See also The Warkworth, C. A. (1884), 9 P. D. 145. () It is not the practice of protection and indemnity associations to issue policies to their members. The contract between the association and the member is effected by a request, usually made on a printed form, on the part of the shipowner addressed to the association, to enter the specified ship or ships for protection and indemnity for specified tonnages, and the acceptance of such request by the association. Whether or not this procedure is sufficient to make a valid contract depends on whether the contract is "a contract for sea insurance" within the meaning of s. 93 of the Stamp Act, 1891. It would, in fact, be impossible to comply with the provisions of s. 93 (3), which requires that a policy of sea insurance shall specify inter alia the sum or sums insured. This impossibility is due to the fact that the liability of the association is not restricted to any particular sum, and any such restriction would defeat the main object for which the association exists-i.e., to protect its members against liabilities which are themselves indefinite. A contract of this nature differs from an ordinary contract of marine insurance, inasmuch as it does not pretend to recoup a member for damage affecting any subject-matter of insurance. And it is not at all clear from the Stamp Act that an agreement of indemnity against a liability to a third person, although such liability may itself arise indirectly from a sea peril, is itself a contract for sea insurance requiring a policy. Of the liabilities ordinarily undertaken by such associations, that which it is most difficult to distinguish from a sea risk is the liability to pay the shipowner the cargo's proportion of general average in certain cases. On the other hand, s. 93 (1) of the Act expressly exempts the insurances referred to in s. 55 of the Merchant Shipping Act Amendment Act, 1862, from the necessity of being expressed in a policy of sea insurance. These are insurances against liability for damages, in respect of which a shipowner was thereby entitled to limit his liability -i.e., for loss of life and loss of or damage to goods on board his ship. This sub-section is unnecessary unless a policy of sea insurance would otherwise be requisite. Its existence is, therefore, some ground for the argument that, inasmuch as the associations undertake other risks of the same nature as those referred to in the 55th section of the Act of 1862, which, however, are not excepted by s. 93 (1) of the Act of In consequence of the modern practice of inserting in the Sect. 81. ordinary policies the clause excepting capture and seizure, War risks. a number of associations have recently been founded for mutual insurance against war risks. mutual insurance associa tions. 82. The rules of the mutual insurance associations vary Rules of according to their objects, and to some extent according to the views of their directors and members; but there are certain provisions which are almost invariably to be found in the rules of all. It is usually provided that a person desiring to insure a ship shall deliver to the association a proposal in writing, authorizing the directors, if they accept the proposal, to enter his name in the register of members, and the insurance in the register of insurances (1). We have already seen that a contract for sea insurance must, with certain exceptions, to be valid, comply with the requirements of the Stamp Act. Where, however, a member of a mutual association, having vessels on its books as insured, paid calls and otherwise acted as if he were a member, he was held to be estopped, in an action for calls on losses, from denying his liability on the ground that the losses were paid without any stamped policies having been issued (m). Again, 1891, a policy in respect thereof is necessary. The question might also be raised whether an agreement between such an association and a member, if containing several provisions of which some taken by themselves do, but others do not, amount to sea insurance, is severable, so that the contract would be good so far as its terms were not required to be expressed in a policy, and bad only as to the remainder; or whether, on the other hand, the whole agreement is void. In many cases there would undoubtedly be much difficulty in severing the different provisions of such an agreement from each other. It may be arguable that where the agreement between the association (1) Where a rule provided that a (m) Barrow-in-Furness Mutual |