Neutral Goods on Enemy Ships: the question of Freight. If an enemy ship be captured with neutral cargo on board, the captors are entitled, if they so elect, to carry the cargo to its intended destination, and to earn the freight there payable. But captors cannot claim freight unless they carry the property to its port of destination, or at any rate to the country in which the latter is situated (y). There have, however, been cases in which freight has been allowed to captors where the goods, instead of being taken to destination, have been carried to the claimants in their own country (). In The Weldsborgaren (a), the vessel, bound from Philadelphia to Lisbon, had been brought into a British port under an embargo on Swedish vessels, and it became necessary to discharge the cargo, which was forwarded in another vessel. On the release of the vessel a claim was made against the cargo for freight, but the Court rejected this application, observing that the cargo had itself been a sufferer on account of the ship.

But when the goods have been sold short of their destination, even though the sale be to the advantage of the owners, the captors cannot lay claim to freight (b). And where freight is allowed to the captors, if they have done any damage to the cargo, the amount may be deducted by way of set-off or compensation (c).

No exception, as regards captured cargo, is made by the Court to the rule respecting payment of pro-ratá freight. Thus, delivery by a neutral carrier to the captor, at a port selected by the latter, is deemed a delivery under the original contract, and the full freight due at destination must be paid by the captor. On the other hand, as appears above, a captor, in order to earn freight from a neutral consignee, must carry the cargo to its destination, and he has no right to part-payment for delivery at a port

(y) The Diana, 5 Rob. 67; The Vrow Henrietta, ib. 75. But cf. The Wilhelmina Eleonora, 3 Rob. 234.

(2) The Fortuna, 4 Rob. 278; The Diana, supra; The Vrow Anna Catharina, 6 Rob. 269.

(a) 4 Rob. 17. Vide also The Isabella Jacobina, 4 Rob. 77. (b) The Vrow Anna Catharina, supra.

(c) The Fortuna, supra.

short of such destination. (The converse view,-Belligerent Obligations: payment of Freight to Neutral Carriers (p. 339, infra) is of some interest in connexion with the foregoing remarks.)

The common form of the English policy of marine insurance expressly protects the assured against the risk of capture. "Touching the adventures and perils which we, the assurers, are contented to bear, and do take upon us in this voyage, they are," says the Lloyd's policy-" of the seas, men of war, fire, enemies, pirates, rovers, thieves, jettisons, letters of mart and counter-mart, surprisals, takings at sea, restraints and detainments of all kings, princes, and people, of what nation, condition or quality soever" (d). In cases where the underwriters intend to exclude hostile risks, they do so by inserting a special clause commonly known as the "F. C. & S." or "free of capture clause (e). The risk of hostile capture is thus covered in the body of all the marine policy forms in common use in England; and if the underwriter in any case decides to exclude the risk, he does so, as just stated, by inserting a clause expressly to override the words including it. A large proportion of British tonnage is, however, insured in the so-called Mutual Insurance Clubs or associations of shipowners. Whether war risks are covered by the conditions of the insurance in such clubs must in each case be ascertained by reference to the club terms.

It is now settled law in this country that as between the underwriters and the assured, the vessel insured, if captured, is prima facie to be deemed a loss within the policy, notwithstanding that she be never condemned or even taken into port (f). It is the fact of the capture which constitutes the loss; and the circumstance that the vessel may possibly be subsequently released or recaptured, and that by the law of Great

(d) The following clause is sometimes inserted in policies on vessels chartered by the government for employment in connexion with hostilities: "To include war risks except those taken by H. M. Government." Owen's Mar. Insce. Notes and Clauses, 2nd ed. p. 100.

(e) Vide as to this clause, sub War Warranties, p. 386, infra. (ƒ) Goss v. Withers, 2 Burr. 694; and p. 73, infra.

Britain the property is deemed to remain vested in the owners until the vessel has been condemned by a Court of prize, does not affect the position. It can never be positively affirmed that a captured vessel remaining afloat can by no possibility come again into the owners' possession, and ships may be justifiably captured, though the captors fail to obtain condemnation by the tribunals of prize. And whether the capture be legal or illegal (g), or effected under a mistake (h), the underwriters are equally liable. Capture is prima facie a case of constructive total loss (i), and gives the right to abandon to the underwriters on receipt of the announcement of the capture. If the underwriters accept the tender, the question of liability becomes thereby definitely fixed. If on the other hand the abandonment be declined, it remains for the assured either to bring their action forthwith, or to abide the issue of events and claim ultimately as for an average loss. As a general principle, if a loss be in fact total, there is nothing to abandon, and the assured can claim for payment of the sum insured without previous abandonment. In the case of constructive total loss, however, the position is different, and notice of abandonment is a necessary preliminary to the right to recover as for a total loss. If, before action brought, news be received of the safety of the ship, by release, rescue, recapture, or otherwise; or if the assured so proceed as to indicate their intention to claim as for an average loss and to waive the right to claim as for a total loss; then the claim will be not for total loss, but for the actual damages and costs caused by the capture. As in other cases giving rise to tender of abandonment, the assured must make up their mind as to the course to be taken so soon as the facts communicated to them enable them to come to a decision. They must not stand by from day to day before deciding to abandon, as by so doing they may be deemed to have elected to claim as

(g) Goss v. Withers, 2 Burr. 683, 694-5, and p. 73, infra.

(h) Lozano v. Janson, 2 E. & E. 100; 28 L. J. (Q. B.) 337.

(i) Of course, if, in the case of cargo, only a portion of it be on board on capture of the vessel, and only such portion be captured, the loss will not be total; and in this case, if the insurance be free of particular average, a question may arise as to the liability of underwriters. As to this, see McArthur's Contract of Insce., 1st ed. 254-5.

for an average loss. The reason for this is that, if immediate notice of abandonment be given to underwriters, they are thus put in a position to take prompt steps to protect their interests, whereas by the indecision of the assured the opportunity to take such protective measures at the outset may have been lost to them. But though the assured may thus lose their right to abandon, the right will revive if circumstances should subsequently occur to renew the option of decision.

In Stringer v. English Mar. Insce. Co. (k), the assured, instead of abandoning on news of the capture, as they might have done, intervened in the suit for condemnation, with the result that judgment was given in their favour. Against this decision, however, an appeal was lodged by the captors, and pending the final judgment the goods insured were ordered by the Court to be sold, in default of bail or deposit in American currency up to their full value. The condition of the American currency was at that time very unsatisfactory, and the assured declined to provide the security. The underwriters similarly declining to interfere, proceedings were instituted against them for payment of a total loss under the policy. The Court decided for the plaintiffs. The latter had, it was true, tendered at the outset no notice of abandonment, but the subsequent material alteration in the circumstances revived, it was held, their right to abandon.

As has already been mentioned sub Embargo and Reprisals (7), abandonment of the ship carries with it the right to the freight in course of being earned by her. Shipowners, therefore, have to take care, when abandoning their ship to underwriters, to secure themselves for payment of total loss by underwriters on freight. For if underwriters on ship accept abandonment, and the ship be, for example, released before action brought against those on freight, the shipowner will be in the position of having alienated his freight in favour of the hull underwriters, without having any right to claim for a total loss under the policy on freight. Apparently it may, during hostilities, be on occasion a politic course for underwriters on ship to accept abandonment, as by so doing they may acquire the title to a considerable

(k) L. R. 4 Q. B. 676; 5 Q. B. 599.
(1) P. 36, supra.

amount of unearned freight,-the more so as the bare risk of capture or detention may have forced the rate of freight to a point much in excess of rates current in times of peace.

If after acceptance of abandonment, but before payment of loss, the ship be again in safety, underwriters have, notwithstanding, to consummate their acceptance by paying the sum insured under the policy (m). They are under no legal obligation to accept abandonment, but if they elect to do so they must needs abide by their decision. On abandonment being accepted, or on a total loss being paid, the assured's title to the property becomes transferred to the underwriters, with whom it rests until divested by condemnation. If the vessel be ultimately released, then the various underwriters concerned will have to decide as to the course to be adopted with the property. For this purpose, as has been already mentioned sub Embargo and Reprisals (n), it may be necessary for all concerned to vest the property in trustees to be by them sold and apportioned over the various interests involved.

The assured cannot abandon to underwriters on the ground that, though restitution may in fact have been decreed, they are meantime out of possession of the property (o).

If a neutral vessel be seized by a belligerent, and taken into port in order to be examined as to the nature or ownership of her cargo, such a seizure, although not intended as a capture, is a detainment for which underwriters are expressly liable under the policy. And as between underwriter and assured, a loss so arising is to be dealt with as if the seizure had been with a view to condemnation of the vessel in a prize court of the captors (p). Belligerents have a right to visit and search all neutral private vessels, and, in case of need, to carry them into port for further examination (q).

If in case of capture the claim under the policy be treated as

(m) Smith v. Robertson, 2 Dow's P. C. 474. Vide also Hudson v. Harrison, 3 Brod. & B. 153.

(n) Vide p. 46, supra.

(0) Arnould's Insce., 5th ed. p. 1016.

(p) Barker v. Blakes, 9 East, 283.

(7) Vide as to this, sub Belligerent Rights against Neutrals, "Visit and Search," p. 144.