LIMITED LIABILITY, in modern stat ute law, a principle whereby the persons liable are bound under certain clearly defined condi tions. The phrase is chiefly used in connection with stock companies, meaning that the stock holders shall not be called upon, under any cir; cumstances, to contribute more than the par value of the shares of stock for which they have subscribed. If the debts of such a com pany, when wound up, amount to more than the resources of the company can meet, the creditors must bear the loss. In the United States shareholders in national and other banks, insurance companies, etc., are held to a specific and strict liability; in the case of the national banks, it is for twice the amount subscribed. In England the shareholders of a limited com parky from whose name the word °limited)) is omitted must pay its debts in full. The United States Congress has adopted the rule followed by the British Parliament, and prevailing in European countries generally, with respect to the maritime law (q.v.) whereby a ship owner, by surrender of the ship and the freight, may absolve himself from liability for negli gence on the part of master or crew. Under
the amended United States Revised Statutes the principle of limited liability is clearly main tained and defined as applicable in this country; wherefrom it appears that °the owner of any vessel, whether steamer or canal-boat, employed whether in seagoing or inland navigation, whether he be an American citizen or a foreigner, may obtain a limitation to the value of his interest in the vessel and her pending freight, of his liability not only for the results of a single disaster, but for the results of a disastrous voyage, including all debts due on account of the vessel save seamen's wages?) If the ship and freight are lost, the owner must abandon all claims in regard to the vessel and cargo to the injured party. If he collects these he is liable to the injured parties to the extent of the proceeds. This limitation is confined to the owner of a vessel who is not in charge thereof and master and seamen are not exempted from liability if the injury is due to their misconduct. Consult Benedict. E. C., 'The American Admiralty, its Jurisdiction and Practice' (New York 1808).