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.

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 1891, § 93 (see p. 20, ll. 15 and 16), and for many years it was the practice of underwriters to print their continuation clause on an attached slip (which in the case of extremely careful assured and underwriters 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 unsatisfactory. Fortunately the revenue authorities allowed themselves 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 1901 (1 Edw. VII. ch. 7) legalised the continuation clause by the following provisions:

PART II.-STAMPS

II. (1) Notwithstanding anything contained in the Stamp Act, 1901, a policy of sea insurance made for time may contain a continuation clause as defined in this section, and such a policy shall not be invalid on the ground only that by reason of the continuation clause it may become available for a period exceeding twelve months.

(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 time 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 subjectmatter 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, 1886,1 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.

(2) Valuations.—The separate valuations clearly indicate the inadequacy of the old form of policy to the requirements of modern trade. In treating of particular average we had to deal with a 3 per cent franchise on ship. With steamers ranging in value from £50,000 to £500,000, 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 £15,000 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 : 1—

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 :

(1) 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 therewith (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 I per cent or a lump

1 For the meaning of "Hull and Machinery," see Lord Esher in Roddick v. Indemnity M. M. Ins. Co., Ct. Appeal, June 1895, II Times L. R. 480.

sum, say £500, as the minimum limit of liability. The practice of the Mutual Insurance Clubs of the north-east coast is to pay all claims for average exceeding 1 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 desired to protect themselves against every loss, however small. They founded mutual associations worked on the assessment 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 deduction 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) The 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 carrying cargo at sea, or loading or discharging in port-some provision may fairly be made by the assured

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,1 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 constructively 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. As follows for each consecutive thirty days To return the vessel may be laid up in port, viz.per cent if in the United Kingdom not under average.

per cent under average, or if abroad.

and

arrival.

1 For the meaning of the words port, harbour, etc., in the return clause see Mr. Justice Bucknil in Columbian,, 1901 (Leyland v. B. & F. M. I. Co., Ltd.).

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