LIMITED LIABILITY. At CO111111011 law, this could be secured only by a special contract ; that is, by one to which both parties expressly assented. If an insurance or banking partnership wished to limit its liabilities to its assets, and save its members from personal responsibility for its debts, it was bound to notify the insured. or the bank depositor or holder of bank hills, as the case might be, that it would cmitract with him only on that basis. Under modern statutes, however, authorizing the formation of joint-stock companies (q.v.) and limited partnerships (q.v.), the term of limited liability is imported into all contracts made with such associations. Persons dealing with them are bound to take notice of the privilege accorded to them by the legislatures, but this privilege is statutory, and avails only those who have complied with the legislative re quirements. Thus, if a limited company in England omits the word 'limited' from its mime, its shareholders are bound to pay its debts in full.
By the general maritime law (q.v.) of Europe. a ship-owner can absolve himself from liability for the negligence of the master or crew by sur rendering the ship and the freight. This rule has been adopted by Parliament in England and by the Federal Congress in this country. (See 7 Geo. 11., e. 15.) Its present provisions are found in the Merchant Shipping Act, 1891 (57 and 5S Viet., c. 60), as amended by various nets especially by Merchant Shipping Aet, 1900 (63 and 64 Viet., c. 32). Congressional legislation
on this topic began in 1851, and is now em bodied in the United States Revised Statutes, §§42S2 to 4289, as amended. Under it "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 pend ing freight, of his liability not only for the results of a single disaster, hut for the re sults of a disastrous voyage, including all debts due on account of the vessel save seamen's wages." These statutory provisions apply to cases of personal injury and death. as well as to those of harm to property. If the ship and freight are lost, the owner Hurst abandon to the injured parties all claims and causes of action having reference to the vessel and freight. if he collects these he is liable to the injured parties to the extent of the proceeds.
It is to be noticed that this limitation of liability is confined to the owners of the vessels who are not in eharpe thereof. The master and seamen whose misconduct causes the injuries are not exempted from liability by maritime law or by statutes. Consult Benedict, The American Admiralty (New York, 1898).