4. Your exemption from liability does not extend to damage due to improper loading and stowage.
11. Insurance.—
Where the shipowner is entitled to the benefits of the Limited Liability Law, his liability is terminated by a surrender or abandonment of the ship and her pending freight. He may retain the insurance and her creditors can not claim it. He is not obliged to account for the insurance money which he may have collected for the loss or damage to his vessel. In this respect the law of the United States is more liberal to the shipowner than that of many other countries. The question was decided in the cases of the City of Norwich, 118 U. S. 468, and the Scotland, in the same volume at page 507. The latter will illustrate the rule; the Scotland and the Dyer were in collision and both sunk; the lower court held the Scotland at fault and awarded the owners of the Dyer upwards of $250,000, as damages. The value of the Scotland before the collision was about $500,000, and her owners had collected insurance on her to the amount of $299,867.42. The value of her wreckage was $4,927.85. The Supreme Court held that her owners' liability was limited to this last amount and that the owners of the Dyer could not claim any part of the insurance.
12. Single Ship Companies.—
This is a form of organization which has the advantages of the general law of corporations in limiting the liability of shareholders to the amount of their stock. If such a corporation has all its capital invested in a single ship, its liability is, of course, limited to the amount of the investment and if the shares have been paid in full there can be no further calls upon the shareholders. When the ship is lost, all liabilities are lost with her except such as the shareholders may have personally guaranteed or assumed. The corporation which owns several ships will obviously not have the same degree of limitation. Hence the popularity among investors, particularly in England, of the single ship company. As far as the corporate affairs are concerned the laws of the State in which it is incorporated must be observed. In the maritime law, its status is that of an individual shipowner. The privity or knowledge of its managing officers may preclude it from the protection of the admiralty law of limited liability; if so, it cannot retain the insurance or any other part of its capital against its creditors, but, when the capital is lost or exhausted, the stockholders who have paid in full for their shares will have no further responsibility.
REFERENCES FOR GENERAL READING
Admiralty (1910), Benedict, Chapter XXXV.
Carriers, Wheeler, Chapters I-III.
Admiralty, Hughes, Chapters VIII and XVI.
Collisions at Sea, Marsden (1904), Chapter VII.