Form 256. and agrees with the sd, his exs, ads, and assigns that the co will pay and make good all such losses and damages hereinafter expressed as may happen to the subject-matter hby insured, which insurance is hby declared to be upon in the ship or vessel called the whereof is at present master, or whoever shall go for master, of the sd ship or vessel, lost or not lost, at and from, including risk of craft to and from the ship. AND the sd co promises and agrees that the insurance afsd shall commence upon the freight and goods or merchandise afsd from the loading of the sd goods or merchandise on board the sd ship or vessel at [as above], and continue until the sd goods or merchandise be discharged and safely landed at [as above]. [Add paragraphs (d), (e), (ƒ), (h), and (i) of Form 255.] IN WITNESS, &c. The following are some of the additional clauses commonly inserted in marine policies : 1. It is agreed to hold the assured covered in case of deviation, at a premium, to be mutually arranged, provided notice of such deviation be given to the company on receipt of advices. 2. To pay general average as per foreign custom, or per York-Antwerp rules, if in accordance with the contract of affreightment. 3. Warranted free from particular average, unless the ship be stranded, sunk, burnt, or in collision, the collision to be of such a nature as may reasonably be supposed to have caused or led to damage to cargo, but this warranty not to exonerate the underwriters from the liability to pay any special charges for warehousing, forwarding or otherwise, if incurred, as well as partial loss arising from transhipment. 4. Including all liberties as per bill of lading. 5. It is agreed that the vessel grounding between Port Said and Suez shall not cancel the warranty of F. P. A. 6. It is hereby agreed and declared that in case of any dispute concerning this policy, or the company's liability thereunder, the same shall be decided according to English law. 7. The risk not to commence before the expiration of the previous policies. 8. Warranted free from particular average below the water, unless caused by injury to the stern, or stern-post, or by fire, grounding, or contact with some substance other than water. 9. With leave to dock, undock, and go in and out of graving dock, and on to gridiron, as often as required, without prejudice to this insurance. 10. Should the above vessel be at sea on the expiration of this policy, it is agreed to hold her covered till arrival at port of destination (provided that before the expiration the assured shall have given notice of intention to so continue), at a pro ratâ monthly premium. 11. In the event of particular average, the claim to be adjusted as if the vessel were insured separately for each voyage out and home. 12. Warranted not to be in the Baltic Sea, Black Sea, or White Sea, between 1st October and 1st April; and not to sail to any port in British North America before the 1st April, nor from any port there after 1st October; nor to be employed in the West Indies, or Gulf of Mexico, between 1st of August and 12th January; and not to trade to the Azores. 13. Say for and during the space of calendar months commencing and ending (beginning and ending with Greenwich mean time), as employment may offer, in port or at sea, in docks or graving docks, and on ways, grid irons and pontoons, at all times and in all places, and on all occasions, services Form 256. and trades whatsoever and wheresoever, under steam or sail; with leave to sail with or without pilots, to tow and assist vessels or craft in all situations, and to be towed, and to go on trial trips. 14. With liberty to discharge, exchange, and take on board, goods, specie, passengers and stores wheresoever the vessel may call at or proceed to, without its being deemed a deviation, and with liberty to carry goods, live cattle, &c., on deck or otherwise, but warranted free from any claim in respect of jettison of cattle or goods carried on deck. 14a. To return per cent. for every consecutive days the vessel may be in port or in dock during such period, the vessel being at the risk of the be cancelled on arrival. PRIVATE COMPANIES. Meaning of "private company." Inducements to formation. To what concern not vested in a company is liable. INTRODUCTORY NOTES. In this section the term "private company" is used in its popular sense as denoting a company registered under the Act of 1862, but intended to be carried on without any appeal to the public for capital. The meaning of the term is now well recognised, even in the courts of law: thus, in a recent case before the Court of Appeal, Lord Justice Cotton said," But here it is an established fact that when the company was formed, it was intended to be a private company, that is, it was intended to carry it on without calling in the public or issuing any shares, except to the then existing shareholders; . . . . Re British Seamless Paper Box Co., Lim., 17 C. Div. 467. The following are some of the principal reasons which induce persons to form private companies: 1. Because by means of a private company a trade or undertaking, or transaction, can be carried on with limited liability, and without exposing the members, in the event of failure, to the harsh provisions of the Bankruptcy law. 2. Because a company has much greater facilities for borrowing money than an ordinary trader, e. g., it can raise money on debentures, or debenture stock, or by the issue of preference shares. 3. Because in the case of a registered company the powers of the directors or managers can be effectually limited and restricted by the regulations, whereas in the case of an ordinary partnership this cannot be done as against outsiders. 4. Because the shares in a company can be readily dealt with by way of sale, mortgage, settlement, and otherwise, whereas in a partnership such transactions involve serious difficulties and complications. 5. Because arrangements, e.g., as to disposition by will, subdivision of interests, partial withdrawal of capital, optional retirement, compulsory retirements, &c., can readily be expressed in and secured by the regulations of a company, which if embodied in an ordinary deed of partnership are necessarily complicated, and by no means certain to work effectually. 6. Because by conversion into a company a concern is placed on a permanent footing, free from the liability to dislocation and even destruction, which death of partners, withdrawal of capital, refusal of executors to carry on the concern on account of the unlimited liability, bankruptcy, lunacy, and other contingencies may involve. 7. Because the members of a company can lend money to it and accept security, and otherwise deal with the company just as if they were strangers, whereas in the case of an ordinary partnership such dealings stand on a very different footing. classes. Private companies are of two classes—(1) those formed to start some The two new undertaking; (2) those formed to acquire and carry on some existing undertaking. As to class (1).—Where a few persons are about to concur in some New concerns. joint business or undertaking, e. g., to develop a patent; to purchase and develop a building estate; to undertake and carry out a contract for the construction of buildings or works at home or abroad; to acquire a concession or mine with a view to selling at a profit to a public company or otherwise; to print and publish a newspaper; to acquire and work a vessel; to lend money to a trader in consideration of a share of profits; or to start any business which can conveniently be carried on by a company; it is now very commonly deemed expedient to form a private company for the purpose. If the founders are not seven in number, they get a few friends to hold a share apiece, in order to make up the requisite number. See further as to single ship companies, supra, Form 104. concerns. of conversion. As to class (2).—A considerable proportion of the private companies Conversion of formed within the last few years belong to this class. The formation of existing the company, and the acquisition by it of the business, is commonly called the conversion of the business into a private company, and such conversions are now of frequent occurrence. There are two plans of conversion commonly adopted—(1) the first plan; according to this, a The first plan company consisting of the founders, and, if necessary, a few friends, is formed under Part I. of the Act of 1862 (i. e., by registration of a memorandum and articles of association), and the concern is sold and transferred to such company when formed in consideration of shares to be allotted to the vendors; and (2) the second plan; under this the founders The second execute a deed constituting themselves an unincorporated joint-stock com- plan. pany, into the joint-stock of which they undertake to bring the assets of the concern, a few shares are then transferred to friends or otherwise, so as to make up the number to seven, a resolution is passed to register under Part VII. of the Act as a company limited by shares, and the company in due course is registered accordingly. The first plan is generally adopted where the assets consist for the most part of chattels and effects capable of manual delivery, and the second plan is generally reserved for cases in which the assets comprise a large amount of land or other property not capable of manual delivery. The principal object of the second plan is to avoid the heavy ad valorem See further, as to the formation of such companies, the author's pamphlet intituled "Private Companies: their Formation and Advantages." Stevens & Sons, 5th edition, 1884. New plan much used. stamp duty (10 per cent.), which, if the conversion be carried out under the first plan, may become payable on the conveyance to the company of assets not capable of manual delivery, for under the first plan the conveyance is a conveyance on sale," and chargeable accordingly. It is generally regarded as a great hardship that where seven persons register themselves as a company, and then, in consideration of shares or otherwise, convey their business or property to the company so formed, the transaction should be regarded as a sale, since in substance (though not in law) the same persons are both vendors and purchasers. However, there can be no question that the law does regard the company as a person wholly distinct from its members. As was said by Lindley, J., in Ryhope Colliery Co. v. Foyer, 7 Q. B. D. 485; 45 L. T. 410; 30 W. R. 90, "A company incorporated under the Act of 1862 is for no legal purpose the same as the persons who have become a corporation with distinct rights and distinct liabilities, and whether the shares are bought by those who form it, seems to me, for that purpose, utterly immaterial." Where, therefore, the ad valorem duty on a conversion in accordance with the first plan would amount to a considerable sum, it seems best to adopt the second plan, if the circumstances permit. The reasons why, under the second plan, no ad valorem duty is payable, are as follows:-The deed constituting the unincorporated company is, in law, merely a partnership agreement, and therefore only requires a 10s. stamp ; when, subsequently, the property is conveyed to the unincorporated company, or to a trustee for the company, it is conveyed pursuant to the partnership agreement; and as the conveyance is not a conveyance "on sale of any property," it is chargeable as a "conveyance or transfer of any kind not hereinbefore described, 10s." See schedule to Stamp Act, 1870. When the company is subsequently registered under Part VII. of the Act, the property passes, by virtue of the Act (s. 193), to the incorporated company for all the estate and interest of the unincorporated company. Hence no conveyance chargeable with the ad valorem duty is ever executed. Very commonly the legal estate is left outstanding in one of the partners or some other person until after the registration, and is subsequently conveyed to the incorporated company, but this does not make any difference as regards duty, for the Act vests the equitable interest of the unincorporated company in the incorporated company, and the subsequent conveyance to it of the legal estate is not a conveyance on sale, and therefore only requires the 10s. stamp. A considerable number of companies have within the last few years been formed and registered in accordance with the second plan, and although at first some doubt was raised whether such companies prior to registration were "duly constituted by law" within the meaning of section 180 of the Act of 1862, so as to be capable of registration, that doubt has long since then been set at rest. It is clear (1) that at common law a joint stock company can be duly constituted by deed; (2) that the Act of 1862 only prohibits the forma |