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B and A, and a similar gift over to X; and C and D make similar settlements of their respective £1,000 upon the next two, in what the Algebra books call cyclic order, with a discretionary trust in favour of their respective selves and the other member of the four in each case, with an ultimate gift over of unapplied income to X.
The scheme will, perhaps, be best described in tabular form: (1) A settles £1,000 on B and C upon the discretionary
trust described above A and D
in favour of . C and D
B and A (3) C D and a
C and B (4) D A and B
D and C (5) with an ultimate gift over to X in each case of all income
which the trustees cannot both agree to apply for one or
other of the primary beneficiaries. Now in each of these cases the settlor apparently surrenders all the advantages of property in his £1,000 and throws himself upon the mercy of his trustees. But in fact he has a reasonable assurance that the income will, until he shall go bankrupt or alienate it, be paid to the settlor himself, and that after bankruptcy or alienation, it will, so far as possible, be applied for his benefit. For each beneficiary under one settlement is at the same time a trustee of another, and as trustee he has a veto over the income of each of his own trustees, and so can bring pressure upon his own trustees for the proper application of his own income. In the case of settlement No. (1), if B and C both insist that all the income shall be paid to D, or unless they both agree in paying it all to A, then in (3) and (4) A can veto the application of any income at all to either C, B, or D, and the income in both those cases will, by the terms of the trust, have to be paid to X, who is made the receptacle to catch all unapplied income. And the settlor in each of the other cases has a similar safeguard. It would not be necessary always to have four parties to the transaction. The same result could be reached with three or more, but an increase in the number of parties would necessitate a corresponding increase in the number of trustees.
It is, of course, very questionable whether such a scheme would hold water. It appears to be within the four corners of the principles accepted by the Courts in these cases, and would have the advantage of not being a voluntary settlement, though the consideration in each case is perhaps a somewhat indefinite quantity and unascertainable in terms of pounds, shillings and pence. But from an ethical point of view these settlements to defeat creditors are quite dishonest, and the Court might well lay hold of any
circumstance to defeat their frankly fraudulent end. In a comparatively recent case (Hemming v. Neil, 62 L. T. 649) decided in 1890, the trust was 'for the support, maintenance, or education or otherwise for the benefit of the testator's son Philip (which words are almost identical with the common form adopted by Key and Elphinstone), and in that case Mr. Justice Kekewich, emphasizing the word 'benefit,' held, and with submission reasonably held, that money paid to Philip or to any person on his behalf, was necessarily part of his beneficial interest under the will, and would pass to an assignee of all Philip's estate and interest thereunder.
So that it is impossible to say how far a settlor can safely go in this direction. But for persons with moderate means, or trading partners who do not wish to stake all their private capital on their concern, it might be worth while to lock up their spare capital in the manner indicated above for the purpose of securing limited liability.
While paying their way they would be no worse off than before, and in the event of execution or bankruptcy their position might be considerably improved.
W. J. LEOF. AMBROSE.
MARINE INSURANCE-THE SUE AND LABOUR CLAUSE.
ND in case of any Loss or Misfortune it shall be lawful to the
Assureds their Factors Servants and Assigns to sue labour
and travel for in and about the Defence Safeguard and Recovery of the said Goods and Merchandise and Ship &c. (or any part thereof) without Prejudice to this Assurance to the Charge whereof we the Assurers will contribute each one according to the Rate and Quantity of his sum herein assured.'
This provision, embodied in tho common form of policy of Marine Insurance in use at the present day, is known as the Sue and Labour clause; and it is with the origin, object, and effect of this clause that the present inquiry is concerned.
The only sure foundation on which to base such an inquiry is a correct appreciation of what the law of marine insurance really is.
This has been well expressed by Mr. Serjeant Marshall (1802) in the preliminary discourse to his · Treatise on the Law of Insurance,' where he says?:
• The law of insurance is considered as a branch of marine law, and was borrowed by us from the Lombards, who first introduced the use of this contract into England. It is also a branch of the law of merchants, being founded on the practice of merchants, which is nearly the same in all countries where insurance is in use; and indeed, merchants themselves were, for a long time, the only expounders of it. The law of merchants, not being founded in the institutions or local customs of any particular country, but consisting of certain principles which general convenience has established, to regulate the dealings of merchants with each other in all countries, may be considered as a branch of public law. “Non erit alia lex Romae alia Athenis, alia nunc, alia posthac; sed et omnes gentes et omni tempore, una eademque lex obtinebat” (Cic. Off. 3). ... If it be asked where the law of insurance is to be found; the answer is, in the marine law, and in the custom of merchants, which may be collected (1) from the ordinances of different commercial states; (2) from the treatises of learned authors on the subject of insurance; (3) from judicial decisions in this country and others, professing to follow the general marine law and the law
" 3rd ed., 1823, edited in the author's lifetime by his son, Charles Marshall, of the Inner Temple, vol. i, at p. 17.
of merchants. Particular ordinances have seldom gone farther than to define, and to sanction by legislative authority, those principles which were already received as law in all commercial countries. ... These ordinances are not, it is true, in force in England; but they are of authority, at least as expressing the usage of other countries upon a contract, which is presumed to be governed by general rules, that are understood to constitute a branch of public law. Non habent vim legis, sed rationis.'
At Bordeaux, in 1647, Cleirac? published Les Us et Coustumes de la Mer, in which he reproduced a treatise on marine insurance known as Le Guidon de la Mer? The name of the author of this world-famed treatise—the one sure source of information as to the early customs of merchants in matters of marine insurance-is not known, nor now perhaps can ever be. But that his work was held in high esteem in 1647 is well established by Cleirac himself in a prefatory passage where he says 3 :
'L'autheur n'a rien obmis si ce n'est seulement d'y mettre son nom, pour en conserver la mémoire, & l'honneur qu'il mérite d'avoir tant obligé sa Patrie & toutes les autres nations de l'Europe.'
And—the research of intervening centuries not affecting it-to the careful investigator, the patient seeker after historic truth, to the law student, the bar, and not less to the bench, this treatiso is a Guidon still. Of it Pardessus writes :
• Il est prouvé par le texte du Guidon, qu'à l'époque de sa rédaction l'usage en (des assurances maritimes) étoit général dans la France, l'Italie, la Flandre et l'Angleterre, et que cet ouvrage offre le résumé de tout ce qui était pratiqué dans ces pays 4.'
Yet the exact date of its first appearance, in spite of untiring industry and exhaustive inquiry, remained concealed from this distinguished lawyer, who having satisfied himself that it could not have been subsequent to 1607—while it might have been between 1556 and 1584--allocated its publication generally to the closing years of the sixteenth century 5.
With regard to its authorship he but ventures the suggestion, • Il a été composé par un particulier.'
The doctrine of abandonment is dealt with in Chapter vii (Des Delais ou Delaissemens), section 4 of which is as follows 7:—
· Étienne Cleirac was • avocat au parlement de Bordeaux.' ? The most ancient treatise in any modern language on insurance.' Duer, Mar.
3 Edn. 1661, p. 213. Ins., N. York, 1845, vol. i, p. 45.
Collection de Lois Maritimes antérieures aux xvine siècle (Paris, 1831), tome II, . p. 370. 5 Ibid., p. 372.
6 Ibid., p. 371. ? Cleirac, p. 281 ; Pardessus, p. 402.
Quand le navire est pris ou jetté à la coste par tormente en pays étranger, et qu'il y a quelque espoir de recouvrance du tout ou en partie, il est en liberté de l'assuré de faire ses delais, ou autrement s'arrester à protestation, et quelque poursuite ou adjonction qu'il donne aux assureurs, cela ne luy portera de préjudice que par aprez il ne fasse son delais.'
It will be seen that this section concedes to the assured the right—if indeed it does not impose on him a duty—to be diligent, and co-operate with the underwriters for the purpose of recovering his goods; while it expressly reserves to him the further right to abandon, if need be, at a later period. And it is noticeable that Cleirac, commenting on this section, confines his remarks to the legal effect of the noting of a protest?, the permission to assist in the recovery of the goods being-it would seem--too well established to call for attention.
Writing in 1786, and giving his reasons, Park expresses the conviction that 'abandonment dates its origin from the period at which the contract of insurance was itself introduced '2; and on this, it might well be argued, that such a permission-important to the shipowner on account of his freight, to the freighter on account of his shipment, and to the underwriter on account of the liability of his policy-must have been a rule of marine insurance coeval with the doctrine of abandonment.
But-not pressing this argument-it seems certain that the compiler of the Guidon ('un particulier' Pardessus) can only have recorded those rules and customs of commerce which by their long observance had become legalized, and that among them nothing new or original is to be found. If then the true date of this treatise be not later than 1600, moderation is not exceeded by the suggestion, that as early at least as 1500 3_by which time Insurance had been practised in Europe for 300 years—the right of the trader to protect his property was, as an incident of abandonment, as freely acknowledged as the right of abandonment itself. And more than this need not be established.
In the celebrated Ordonnance de la Marine du mois d'août 1681,' the completeness and comprehensiveness of which transcends alike all codes which it had succeeded and those by which it has been followed, 'will be found,' says Marshall*, 'the best and most complete system of positive law for the regulation of insurance that has yet (1802) appeared in any country.'
1 Protestatio conservat ius ideo in actibus dubiis fieri debet, &c.
3 Marshall (p. 20) thinks that the Guidon itself was 100 years anterior to this date.