Let us

nify against loss, and the sue and labour clause. endeavour to ascertain the extent to which such a contract will protect the original underwriter, first without, and then with, the addition of the special clause which stands at the head of this section. It may be assumed, for example, that the original insurance is for £1000, on 100 bales of cotton, so valued; and that the re-insurance is upon the same terms. The interest covered by the re-insurance is the risk of loss on the cotton to which the original underwriter is subject to the extent of £1000. The re-insurer further agrees to pay any charges for the prevention of loss which may be incurred by "the assured, their factors, servants, and assigns." These words, construed literally refer to charges incurred by the original underwriter, who is the party assured by the re-insurance, and do not extend to the original assured, who is outside of the contract. Accordingly, unless a liberal construction is given to the sue and labour clause in the re-insurance policy, so that services rendered by the original assured, their factors, &c. to the original underwriters are to be taken by implication as rendered to the re-insurers, the charges attaching to those services will not be recoverable under the re-insurance policy. Any doubt which might otherwise exist as to the liability of the re-insurers for such charges is however removed by the insertion of the clause providing that the re-insurance shall be "subject to all clauses and conditions of the original policy," and that all payments made by the original insurer shall be refunded by the re-insurer. Nothing, as it would seem, can be clearer than the meaning of this arrangement. The re-insurer is subrogated into the position of the original insurer, so far as the chances of profit or loss are concerned, so that any loss or expense which devolves upon the latter is to be borne by the former. Accordingly, if for the prevention of loss a charge is incurred, for which the original underwriter is liable to the original assured, the former, on payment of the charge, is entitled to recover the amount from the re-insurer, for whose benefit it was in reality expended. The answer to the question at issue, suggested by the ordinary principles of construction, is, therefore, that the sue and labour

clause, when occurring in a re-insurance in juxtaposition with the special clause above specified, is to be understood in an enlarged sense, as applicable to any charges which may be incurred for the prevention of loss, whether by the original or immediate assured.

When we proceed to inquire how far the question has been determined by authority, the answer is not so clear. Up to a certain point, indeed, the ruling of the Courts is in accordance with the lines above indicated. Thus the decision in Mackenzie v. Whitworth (i), though not an authority upon the point in question, bears upon it to a considerable extent. In that case, a re-insurance having been effected simply as an insurance “on cotton," it was held that the description was sufficient to cover the interest insured, and that it was unnecessary to specify in the policy the fact that it was a re-insurance, as the liability of the underwriters was unaffected by the circumstance. In the case which has now to be stated, a different view was taken of the nature of the interest covered by a re-insurance, as also of the effect of the suing and labouring clause when occurring in such a contract. The owners of a ship insured her with underwriters by a Lloyd's policy for £1,000, with the usual sue and labour clause. The underwriters effected a re-insurance with a French company, and the latter, in their turn, protected themselves by effecting with the defendants a re-insurance policy, which contained the sue and labour clause, and also the clause “subject to the same terms, clauses and conditions as the original policy or policies, and to pay as may be paid thereon, but to cover the risk of total loss only." The ship went ashore, and became a constructive total loss. The claim was compromised as between the assured and the original underwriters for 88 per cent; and the underwriters took over the ship and instituted salvage operations, which, however, were unsuccessful; for, after the proceeds realised were credited against the expenses incurred, there remained a deficit which was equal to 24 per cent. upon the insured value. The loss sustained by the original underwriters thus amounted in the aggregate to 112 per cent., but (i) 3 Asp. Mar. L. C. 83.

this they recovered from their re-insurers; and the latter, having indemnified the original underwriters, sought to recover the sum which they had paid from the second re-insurers. The latter resisted the claim on various grounds, and an action was brought by the first re-insurers for its recovery. Judgment was given by the Divisional Court in favour of the plaintiffs for £1120; but, upon appeal, the judgment was varied, and the amount reduced to £1,000. The ground for this reduction, as stated by the Court of Appeal, was that, in the circumstances of the case, the expenses incurred in the salvage operations were not recoverable under the sue and labour clause in the final reinsurance, as the original underwriters were not "factors, servants," or "assigns" of the ultimate re-insurers. In support of the allowance of the claim to the extent of a total loss, it was said that the interest of the plaintiffs was the loss which they were liable to incur under their re-insurance, and that the loss actually incurred was composed, partly of the compromised claim on the ship, and partly of the charges incurred under the sue and labour clause. It was held that the second re-insurers were liable to indemnify the first re-insurers for the aggregate loss sustained as above to the extent of the amount re-insured, viz., £1,000, but no further; for the excess could only have been recovered if the sue and labour clause in the final re-insurance had been applicable to the expenses incurred in the salvage operations (k).

(k) Uzielli v. Boston Marine Insurance Co., L. R. 15 Q. B. D. 11. The facts of this case are so complicated and exceptional, that it would be unsafe to attempt to draw from the decision any principle of general application, otherwise it might be inferred that the suing and labouring clause in a re-insurance policy is of very little value, in view of the fact that charges for the prevention of loss are usually incurred by the original assured, and not by the immediate assured, their factors, &c., who are alone recognised by the decision. From the report of the case, there appears no reason to doubt that the salvage operations were justifiably undertaken and prosecuted,

III-WAIVER CLAUSE.

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 abandonment.

The purport of this stipulation is to enable either of the parties to the contract, in the event of accident, to take action for the prevention or diminution of loss, without incurring the risk of being compromised by so doing. The suing and labouring clause provides, as already explained, for the adoption by the assured of measures for the protection or recovery of the property, in the event of apprehended or actual loss, without prejudice to the insurance, but makes no reference to the effect of such measures upon abandonment. In the event of a notice of abandonment having been given but not accepted, it is possible that without some such clause as the above, both the assured and the underwriters might be restrained from taking steps for the preservation of the property, the former from the fear that such action might operate as a waiver, and the latter from the fear that it might operate as an acceptance of abandonment.

To a certain extent, that apprehension would be unfounded, because it is open, either to the assured or to the underwriters, in case of accident, to take necessary steps for the safeguard or recovery of the property, without prejudice to the ultimate rights of either, in relation to abandonment. For instance, where a ship was stranded, and notice of abandonment was thereupon given to but declined by the underwriters, who however sent an agent to the spot, by whom the ship was got off, taken to a place of safety, and repaired sufficiently to enable her to lie there in safety, it was held that the action of the underwriters did not imply an acceptance of abandonment, as it

decision to the contrary must be understood to indicate, either that there were some modifying circumstances which are not mentioned in the re

port, or that the protection afforded by a re-insurance policy is not so complete as might have been supposed on general grounds.

was quite consistent with the supposition that they acted merely as salvors (1).

At the same time, it has been decided that, after a notice of abandonment has been given, the performance by the underwriter of any act which can only be justified under a right derived from abandonment, is decisive evidence of acceptance (m). Thus, where underwriters upon a ship, on a loss occurring, and after notice of abandoment duly given, took possession of the ship by their agent, removed her to a place of safety, repaired her, and detained her in their custody without giving notice to the assured that they were acting on his behalf and declined the abandonment, it was held that their proceedings amounted to a constructive acceptance of abandonment (n).

Under these circumstances, the insertion of the "waiver clause" in policies is desirable in the common interest, so that, in case of need, either party may be free to take such action as may appear expedient for the prevention of loss.

IV.-COLLISION LIABILITIES.

The shipowner is answerable at common law for damages caused by the negligence of his servants in the course of their lawful employment to the full extent of the injury suffered in person or property (o), but the amount of his liability is limited. by statute.

The statutory limitation of liability, as contained in the Merchant Shipping Acts, is as follows (p) :—

"The owners of any ship, whether British or foreign, shall not, in cases where all or any of the following events occur without their actual fault or privity, that is to say,

(1) Shepherd v. Henderson, L. R. 7 H. of L. 49.

(m) Peele v. Merchants' Insurance Co., 3 Mason's C. C. Rep. 27 ; cited with approval in Shepherd v. Henderson, L. R. 7 H. of L. 63.

(n) Provincial Insurance Co. of

Canada v. Leduc, 2 Asp. Mar. L. C. 338.

(0) See Maclachlan on the Law of Merchant Shipping, 2nd ed., p. 109. (p) Merchant Shipping Act Amendment Act, 1862, 25 & 26 Vict. c. 63, S. 54.