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 Seaworthiness.—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).

1 This appears to differ from what is laid down by Mr. Justice Charles in his decision of the Abrotas case (26th Jan. 1895, II Times L. R. 195) 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 words: "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 submitted 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 of De Vaux v. Salvador1 came before Lord Denman in the Court of King's Bench. The ship La Valeur came into collision with a steamer in the Hugli 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 La Valeur brought an action against his underwriter 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 " 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 1 4 A. & E. 420.

a

quite consistent with it."1 It is worth remarking how near the commencement of the era of steam-shipping is the date of this decision regarding the indirect effects of the peril which has become almost the most frequent and disastrous in modern navigation. Similarly underwriters on an ordinary policy on ship have been held not liable for expenses incurred by the shipowner in disposing of a cargo damaged in a collision and rejected by the cargo owners as worthless.2

Running-down Clause. As the shipowner had no protection 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 Liability.-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 £15 per ton. The liability under the latter head alone The tonnage on which this liability is calculated 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.

is £8 per ton.

1 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. Sherwood) 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.

2 Field S. S. Co. v. Burr, 1899 (15 Times L. R. 193, Ct. Appeal). 3 Reproducing the provisions of the Merchant Shipping Amendment Act of 1862 (25 26 Vict. cap. 63), § $ 54.

4 For apportionment see the Victoria (Admiralty 3rd July 1881, Butt, J.), Aspinall M. L. Cases VI. N.S. p. 335: £7 a ton to be exclusively applied to life claims, and the balance of such claims and the cargo claims are to rank pari passu against the balance of £15 a ton.

Until within the last few years it was the universal practice of English underwriters to refuse to cover shipowners 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 onefourth of the collision liabilities and the whole of all other liabilities connected with his vessel. The practical result of these restrictions will appear in the course of examining the clauses generally adopted.

Various Forms of Running-down Clause. In 1884 there were nine or ten distinct varieties of the running-down clause, in 1890 there were some fifteen or sixteen.1 But in some points they all agree: as already explained, there is in all the customary clauses the limitation of the underwriter's liability to three-quarters of the shipowner's. But with modern 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 full 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, therefore, 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, introduced 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 1 Owen's Marine Insurance Notes and Clauses, 3rd ed. 1890,

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. I. p. 199).1 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 pay to the persons interested in such other ship or vessel, or in the freight 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 £8 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 £8 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 proportion of three-fourths of the costs thereby incurred or paid, provided 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 of life or personal injury to individuals for any cause whatsoever.

As this clause incorporates the English statutory limitation 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 1 See p. 182, and Mr. Justice Bigham in Chandler v. Blogg, 14 Times L. R. 65.