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of interest on such bonds owing to the risk the lender runs of losing his money. Should there be several bonds given during a voyage, they are paid off in reverse order, viz., the last is paid off first, as the presumption is that without the last the voyage could not have been completed. The bondholder's claim is superior to all other claims except for wages earned subsequently to the execution of the bond, and for salvage. But it was held in the case of the St. Lawrence (1880) that, if a person has advanced money for the purpose of discharging dock dues, he stands in the place of the dock company and his claim has priority of that of a bottomry bondholder.
The rules as to Bottomry and Respondentia Bonds are universally observed, being founded on ancient maritime law.
Duties of Owner or Master.-It is the duty of the owner or master to comply with all conditions of contracts of affreightment, and to observe the implied and express warranties and conditions in any policies of insurance, e.g., as to non-deviation and reasonable despatch.
Lien for Freight on landing goods.-Where goods are landed from any ship and placed in the custody of a wharfinger or warehouseman, if the shipowner gives him notice in writing that the goods are to remain subject to a lien for freight or other charges payable to the shipowner, the goods so landed remain subject to the lien, and the wharfinger or warehouseman must retain them until the lien is discharged. If the lien is not discharged within a space of ninety days, or, if the goods are perishable, at an earlier date at his discretion, the wharfinger or warehouseman may sell the goods or so much as may be necessary to defray the charges in question.
Salvage is a reward payable by the shipowner, or by the owners of goods carried in the ship, to persons who save a ship or cargo from shipwreck, capture or other loss. The right to salvage arises out of an implied contract and the actual amount payable is, as a rule, assessed by the court; but express agreement fixing such amount is often made before the assistance is rendered, in which case it is not salvage.
In order that the salvors may be entitled to this reward they must show
(1) That the work was performed voluntarily. (2) That the services were beneficial, i.e., that the ship, or such cargo as was saved from loss, would probably have been lost without the rendering of such service.
The passengers and crew of the vessel salved are not entitled
to salvage for their exertions in attempting to save the ship or cargo. The salvors have a maritime lien over the ship, freight and cargo, and this lien has precedence of all other liens already attaching to the property salved.
Any salvage money earned is divided in varying proportions between the owners, master, officers and crew of the vessel which rendered the salvage services, if such was rendered on the high seas; but in the case of a coast wreck or grounding of the vessel, it is frequently a matter of arrangement between the master or owners and the owners of the tug or other vessel rendering the service. In such cases, salvage money, as such, cannot be claimed.
It should be noted that salvage only applies to the saving of ship and cargo and not to human life, so that where a vessel is wrecked, and a coast life-boat removes the crew and passengers in safety, there can be no claim for salvage.
Somewhat akin to the question of salvage is the matter of wrecks and wreckage. When a vessel is wrecked the wreckage of the vessel and cargo that remains floating on the sea is termed Flotsam; when goods are cast overboard during a time of peril and remain under water, they are called Jetsam; and where they are thrown overboard and sink, but by reason of having been buoyed they are able to be subsequently recovered, they are termed Ligan or Lagan.
Barratry. This is any wrongful act by the master or crew of a ship, whereby they intend to defraud the owner, charterer or insurer by running away with or sinking or deserting the ship or embezzling the cargo. Barratry is usually one of the perils insured against in Marine Insurance.
A seaman may not enter into any agreement to abandon any right he may have or obtain in the nature of salvage.
With the exception of certain small coasting vessels, the master of every ship must enter into an agreement in the form approved by the Board of Trade with every seaman he carries to sea as one of his crew from any port in the United Kingdom, and, in the case of foreign-going ships, such agreement must be read over to the seaman by the superintendent of a mercantile marine office and the seaman must sign in his presence. This agreement (called an "agreement with the crew ") contains all the conditions of the employment and particulars of the intended voyage. Similarly, a seaman on the termination of his engagement from a foreign-going ship must be discharged in the presence of a superintendent, and the master must sign a form relating to the conduct, character and qualification of the sea
man. Under the Merchant Shipping Act, 1906, if, for any reason, a seaman is discharged or left behind abroad, the master must obtain the sanction of the official specified in the Act, and the fact must be endorsed on the agreement.
It is an implied term in every contract of service with a seaman that the owner or his agents shall use all reasonable means to insure the seaworthiness of the ship at the time the voyage commences, and to keep her in a seaworthy condition during the voyage. There is a statutory scale of provisions, and among many other rights of a seaman specified in the Act of 1906 is the right to be properly fed and to receive compensation for short or bad provisions. He is entitled to medical attendance also and, in certain cases, to repatriation if shipwrecked or in distress abroad.
The seaman's right to wages does not now depend on the earning of freight, and they are payable even if none has been earned. But in the case of wreck or loss of the ship, if it is proved that he did not exert himself to the utmost to save the ship, cargo and stores, he is not entitled to claim wages, Certain times are laid down in the Act for the payment of wages, but the seaman must be paid £2 or one-fourth of the wages due, whichever is the less, at the time when he lawfully leaves the ship at the end of his engagement.
The duties of a seaman are to do his work properly until the end of his engagement, to obey his superior officers, and do his best under all emergencies.
A seaman has a maritime lien on the ship and freight for his wages, which may be enforced by means of arrest and action in the Admiralty Court.
Insurance (or Assurance) is a contract whereby one person called the "insurer or assurer contracts with another called the "insured" or "assured" to indemnify the former up to a specified amount against a loss that may arise upon the happening of some event, e.g., a loss caused by fire or burglary; or to pay a sum of money on the happening of a specified event, e.g., death of a certain person, or injury by accident. The consideration for such an undertaking is a sum of money called "the premium," which may be either a lump sum or a periodical payment. The instrument evidencing the contract is called a policy" of insurance. In the case of marine insurance, the insurer is usually termed the "underwriter."
Assurance. This word is used for contracts which provide for the payment of an agreed sum of money when an inevitable event happens, e.g., death. It is therefore correct to speak of Life Assurance, not Life Insurance.
Insurance. This applies to the undertaking to indemnity against losses which may or may not occur, e.g., the destruction of a building by fire, against which a Fire Insurance Policy would provide.
In both cases, however, it is correct to speak of insurable interest.
Although there are many forms of insurance, there are four main kinds, viz., Life, Fire, Marine, and Accident; but it is possible to insure against any conceivable risk, however ridiculous it may appear.
Not all contracts of insurance are contracts of indemnity, although many are. Fire and Marine insurance are contracts of indemnity, that is, in consideration of the payment of certain annual sums by way of premium, or of a single payment, the insured is indemnified against loss that may happen by reason of fire, or against the losses incident to marine adventure respec
tively. But Life and Accident insurances are not contracts of mere indemnity, but are undertakings to pay a certain sum of money on the death of, or in the event of injury by accident to, a specified person.
It is sometimes difficult to distinguish in principle a contract of insurance from a wager. As regards contracts of pure indemnity the difference is clear, for these are simply to compensate the insured. As regards life assurance, the difference is not so apparent, but it exists; for here the contract is to pay a certain sum on the death of a specified person, and once this is fixed it is an event that is bound to happen. Accident insurance partakes of elements of both classes.
In contracts of indemnity, only the amount of loss actually suffered can be recovered; so that if an insurance company has paid the insured an amount in excess of his actual loss it can recover the excess back from him. Further, the insurer is entitled to every right of the insured to recover from any other source and thus diminish his loss; in other words, the insurance company is entitled to stand in the shoes of the insured. This is called the doctrine of subrogation. In Castellain v. Preston (1883), A had agreed to sell a house to B for £3,000, and had previously insured it against fire. Before the purchase was completed the house was burnt and the insurance company paid the amount of the damage to A. The purchase was subsequently completed, B paying A the full price agreed. It was held that the amount paid by the company must be refunded to the insurance company, as if A had kept it the contract of insurance would not be a contract against loss but a speculation for gain.
In all insurance contracts the person who seeks indemnity must have some pecuniary interest in the event against which he wishes to provide: he must stand in some legal or equitable relationship to the thing that he insures, so that as LAWRENCE J. said in Lucena v. Crauford (1802), "he is so circumstanced with respect to it as to have benefit from its existence, prejudice from its destruction."
Although in all kinds of insurance the insurable interest must exist, yet it need not necessarily in all cases exist both at the time of effecting the insurance and at the time of loss. In Fire Insurance the interest must exist throughout the transaction; in Life Assurance it need only exist at the time of effecting the assurance; and in Marine Insurance the insured must be