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Caemichael, M.A. (Ox 'n.), of the Inner Temple and Oxford Circuit, Barrister-at-Law. Super royal 8vo., 988 pages, cloth, ;£2 ; cash price, 32J. ; postage in U.K., ^. PATENTS. The Law and Practice relating to Letters Patent for Inventions, With full appendices of Statutes, Rules, and Forms. By Roger William Wallace, Esq., of the Middle Temple, one of Her Majesty's Counsel, and John Bruce Williamson, Esq., of the Middle Temple and North-Eastern Circuit, Barrister-at-Law. 7, FLEET STREET, LONDONf, E.G. 1924 022 376 234 WM. CLOWES AND SOgt^LiraiK KD 1845!c43" """""" '""'"'* ~ A d gest of the law relating to marine i WOLSTENHOLME'S CONVEY - Eighth Edition, thoroughly revised, d THE CONVEYANCING ACTS, li Vendor and Purchaser Act, 1874 ; the Land Transfer Act tion and Searches Act, 1888 ; the Trustee Acts, r888, li Properly Acts, 1882 and 1S93 ; and the Settled Land Acts, iB^iTto iSgu. "WTtTiTifoTes and Rules oT Court. 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Third Edition, demy 8vo., cloth, 2oj, DIXON'S LAW AND PRACTICE OF DIVORCE AND OTHER MATRIMONIAL CAUSES. Third Edition, thoroughly revised. By W. J. DixoN, LL.M., of the Inner Temple, Barrister-at-Law. 7, FLEET STREET, LONDON, E.G. The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/cletails/cu31924022376234 A DIGEST OF THE LAW BELATIHG TO MARII^E INSUBANOE A DIGEST OF THE LAW RELATING TO MAEINE INSUEANCE M. D. CHALMERS, C.S.I., ASSISTANT PARLIAMENTARY COUNSEL TO THE TREASURY AND DOUGLAS OWEN, or THE INNER TEMPLE, BARRISTER-AT-LAW, SECRETARY OP THE ALLIANCE, MARINE AND GENERAL ASSURANCE CO., LTD. LONDON : WILLIAM CLOWES AND SONS, LIMITED, 27, FLEET STREET. 1901. LONDON : PRINTED BT WILLIAM CLOWES AND SONS, LIMITED, STAMFOKD STREET AKt> CHARING CROSS, INTRODUCTION. The large type propositions of this Digest are taken, with a few slight corrections,, and with the necessary verbal alterations (such as the substitution of the in- dicative for the imperative), from the clauses of the Marine Insurance Bill, which was introduced in the House of Lords in 1894, 1895, 1896, and 1899. The object of that Bill was to reproduce as exactly as possible the existing law, without making any attempt to amend it. Lord Herschell, who originally took charge of the Bill, was strongly of opinion that a codifying Bill, in its inception, ought to be a mere reproduction of existing law. If amendments in the law are made in the initial stage, the whole Bill becomes controversial. Any amendment which seems desirable should be deliberately inserted by the Legislature when the Bill is under consideration. In some instances, of course, the Bill has to deal with questions where the law is un- settled, and the framers of the Bill must decide what they believe the law to be. In the Digest, propositions which appear to be unsettled law are included in square brackets, and the doubt is dealt with in the notes. Again, in one or two instances the Lords Select Com- mittee which partially examined the Bill introduced some small amendment in the law. In those cases the VI INTEODVGTION. Digest reverts to the original draft, and the point is mentioned in the notes. The law of marine insurauee rests almost entirely upon common law. Only a few isolated points are dealt with by statute. The reported cases are very numerous, being over 2000 in number. On some points there is a, plethora of authority. On other points of apparently •equal importance the decisions are meagre, and not always satisfactory. Some important questions are still "untouched by authority, and the rule depends on recog- nized commercial usage. Again, many of the older cases turn upon commercial conditions which are now obsolete. The subject, therefore, is not an easy one to deal with in a brief Digest. It would be altogether beyond the scope -of this Digest to attempt even to refer to the great bulk ■of decided cases, much more so to endeavour to criticize them in detail. The objects of the Digest are twofold : iirst, to state the main principles of marine insurance law in brief consecutive propositions ; and, secondly, to support those propositions, where possible, by references to leading cases, or cases containing good expositions of principle by eminent commercial judges. Each case is dated, and if a later case reviews previous cases only a reference to the later case is given. Where rules of law seem difficult to apply, illustrations drawn from decided cases are inserted after the section to show the applica- tion of the abstract proposition to concrete states of fact. After the list of cases referred to, there is added a list of important cases, , which have been overruled, doubted, or explained. This list has no pretensions to completenless, but may be useful as far as it goes. Occasional reference is made to foreign codes by way of illustration, but no attempt has been made to INTRODUCTION. vii compare the English rules systematically with any foreign code. The Marine Insurance Bill was first introduced by Lord Herschell in 1894. Its history up to the present time sufficiently appears from the following extract from the Memorandum attached to it, viz. : — "The Bill is founded on the Bill which was intro- duced in 1894. Its provisions and suggestions received from various sources have been carefully considered by a Committee appointed by the late Lord Chancellor (Lord Herschell). The Committee met at first under the presidency of the late Attorney-General (Sir R. T. Beid, Q.C.), and afterwards under the presidency of Lord Herschell. It consisted of Mr. John Glover and Mr. Milburn, representing the shipowners, Mr. McArthur (Cliairman of the Liverpool Chamber of Commerce), and Mr. Hogg, representing the average adjusters, and Mr. J. E. Street, Deputy Chairman of Lloyd's, Mr. Douglas Owen, of the Alliance Marine and General Assurance Company, Mr, William Walton (legal adviser to Lloyd's), representing the underwriters and insurance companies, Mr. C. B. Vallence, Chairman of the Liverpool Underwriters' Association, and the draftsman, Mr. Chalmers. "The first 33 clauses were examined and passed with some small amendments, by a Select Committee of the House of Lords, which included the Lord Chancellor (the Earl of Halsbury), Lord Herschell, Lord Watson, and Lord Rothschild. " In dealing with rules of law, which may be modified by the stipulations of the parties, it is to be borne in mind that the certainty of the rule laid down is of more importance than its theoretical perfection. As Willes, J,, via INTRODUOTION. said in 1776, ' In all commercial transactions the great object is certainty ; it will therefore be necessary for the Court to lay down some rule, and it is of more conse- quence that the rule should be certain, than whether it is established one way or the other.' (Lockyer v. Offlej/, 1 T. E. at p. 259. See, too. Sailing Ship Blairmore v. Macredie (1898), A. C. at p. 597, per Lord Halsbury.) What mercantile men require is a clear rule to provide for cases where the parties have either formed no inten- tion or have failed to express it clearly. Where the rule of law is certain, the parties know when ^o stipulate and what to stipulate for." The future which awaits the Bill is uncertain. Mer- cantile opinion is in favour of codification, but probably the balance of legal opinion is against it. As long as freedom of contract is preserved, it suits the man of business to have the law stated in black and white. The certainty of the rule laid down is of more importance than its nicety. It is cheaper to legislate than to liti- gate ; moreover, while a moot point is being litigated and appealed, pending business is embarrassed. The lawyer, on the other hand, feels cramped by codification. Discussions on the wording of the Act in question have to take the place of discussions of principles. No code can provide for every case that may arise, or always use language which is absolutely accurate. The cases which come before lawyers, are the cases in which the code is defective. In so far as it works well it does not come before them. Every man's view of a question is naturally coloured by his own experience, and a lawyer's view of commerce is perhaps affected by the fact that he sees mainly the pathology of business. He does not often see its healthy physiological action. INTRODUGTION. IX If the Bill passes, this Digest may be useful as showing the foundations on which it was built up. If it does not pass, it is hoped that the Digest may be useful as a brief and succinct exposition of the existing law. I may add that I am mainly responsible for the purely legal part of this Digest, though I have had throughout the benefit of the criticisms of my colleague, Mr. Douglas Owen. M. D. 0. January, 1901. CONTENTS. FAGB Introduction. . . . v Table of Cases Cited ... . xv Table of Cases Oterbuled, etc ssiii Marine Insurance. SECT. 1. Marine insurance defined 1 2. Mixed sea and land risks .... .3 3. Marine adventure and maritime perils defined . . 4 InsuraUe Interest. i. Wagering or gaming contracts are void .... 7 5. Insurable interest defined 9 6. When interest must attach. 11 7. Defeasible or contingent interest .... 12 8. Partial interest 13 9. Be-insurance .13 10. Bottomry - 14 11. Seaman's wages 15 12. Advance fireight 16 13. Charges of insurance .16 14. Quantum of interest ... .... 16 15. Assignment of interest ....... 18 Insurable Vdhie. 16. Measure of insurable value 19 Disclosure and Representostions. 17. Insarance is uherrimce Jidei 21 18. Disclosure by assured 22 19. Disclosure by agent effecting insurance .... 25 Xll CONTENTS. 20. Representations pending negotiation of. con tract 21. Assured need not disclose his opinion 22. When contract is deemed to be concluded PAGE 26 28 28 Tlie Policy. 2.3. Contract must be embodied in policy 24. What policy must specify 25. Signature of insurer 26. Voyage and time policies . 27. Designation of subject-matter 28. Valued policy . 29. Unvalued policy 30. Floating policy by ship or ships 31. Construction of terms in policy . 32. Premium to be arranged . 33. Double insui-ance Double Insurance. 40 Warranties, etc. 34. Nature of warranty . 35. When breach of warranty excused 36. Express warranties . 37. Warranty of neutrality 38. No implied warranty of nationality 39. Warranty of good safety . 40. Warranty of seaworthiness of ship 41. No implied warranty that goods are seaworthy 42. Warranty of legality .... 42 44 45 45 46 47 47 51 61 The Voyage. 43. Implied condition as to commencement of risk . 44. Abandonment of adventure by delay, etc. 45. Change of voyage 46. Departure on voyage. 47. Deviation ... 48. Several ports of discharge . 49. Delay in voyage. 60. Excuses for dgviatipn or delay 53 53 54 64 56 67 57 CONTENTS. XIU Assignment of Policy. SECT. PAGE 51. When and how policy is assignable^ 58 52. Assured who has no interest cannot assign ... 59 The Premium. 53. When premium payable 61 54. Policy effected through broker . . ... 61 55. Effect of receipt on policy ... ... 62 Loss and Abandonment. 56. Included and excluded losses 63 57. Partial and total loss 68 58. Actual total loss . . . . • . 69 59. Missing ship 70 60. Effect of transhipment, etc .70 61. Constructive total loss defined 71 62. Effect of constructive total loss . . ... 75 63. Notice of abandonment . . . . .76 64. Effect of abandonment '.79 Partial Losses (including Salvage and General Average'). 65. Particular average loss 81 66. Salvage charges 82 67. General average loss . . 84 Measure of Indemnity. 68. Extent of liability of insurer for loss 88 69. Total loss 89 70. Partial loss of ship 89 71. Partial loss of freight 91 72. Partial loss of goods, merchandise, etc 92 73. Apportionment of valuation 94 74. General average contributions 94 75. Liabilities to third parties 95 76. General provisions as to measure of indemnity . . 96 77. Particular average warranties 97 78. Cumulative losses 99 79. Suing and labouring clause 100 Eights of Insurer on Payment. 80. Bight of subrogation 102 81. Eight of contribution 105 6 XIT CONTHNTS. JRetwn of Premmm. SECT. 82. Enforcement of return SB. Return by agreement ■84. Return for failure of consideration . Mutual Insurance, as. Modifications in mutual insurance . Sujoplemenfal. SS. Ratification by assured . . . . SI. Implied obligations varied by agreement or usage ■88. Reasonable time, etc. a question of fact . 89. Slip as evidence .... SO. Interpretation of terms ■ . . . . •91. Savings . . Schedule I. Form of Lloyd's policy ... . . Rules for construction of policy .... Schedule II. Deductions in particular average on ship P.10E 106 106 107 110 111 112 113 113 114 115 118 122 131 Appendix I. — Statutes. 19 Geo. 2, c. 37 (wagering policies) 28 Greo. 3, c. 56 (name of assured) 31 & 32 Vict. 0. 86 (assignment of policy) 54 & 55 Vict. c. 39 (Stamps) .... 56 & 57 Vict. c. 71 (Sale of Goods) 57 & 58 Vict. c. 60 (Merchant Shipping) 133 134 135 136 140 141 Appendix II. — Notes. Note A. — ^Definitions of marine insurance Note B. — -Definitions of barratry . Note C. — Definition of average ; . . . Note D. — Definition of abandonment Note E. — Definition of piracy Note P. — History of marine insurance . Note G. — Rules of Practice of Association of Average Adjusters 142 143 145 146 149 151 153 Index 159 TABLE OF CASES CITED. A. PAGE Adams v. Mackenzie ... 68 Aitohison v. Lohre . .2,71, 82> 83, 89, 100, 101 Allison V. Bristol Mar. Ins. Co 16,33 AUkins v. Jupe ... 8, 109 Alps, The 67 Alsace Lorraine, The . . . 128 Anderson v. Morioe ... 11 V. Ocean Mar. Ins. Co 82 Anderson v. Pacific Mar. Ins. Co 26,28 Anderson v. Thornton . 27, 109 Annen v. Woodmau . . 108 Anon 151 Arrow Shipping Co. v. Tyne Improvement Commission- ers 105 Asfar V. Blundell ... 69, 70 Atkinson v. Great Western Ins. Co 144 Attorney-Qeneral for Hong Eong V. Kwok-a-Sing . . 150 Atwood V. Sellar .... 113 B. Bainbridge v. Neilson . . 78 Baines v. Holland . . 43, 44 Ballantyne v. Mackinnon . 66 PAGE , . . 9 . . 34, 35 Marine . . 96, 115 . . . 44 Barber v. Fleming Barker v. Janson . Baring Brothers Ins. Co. . . . Barnard v. Faber , Bates V. Hewitt .... 24 Bean v. Stupart .... 45 Beccard v. Smith . • . . 49 Bedouin, The . . . 24,28,67 Behn v. Burness ... 28, 45 Bell V. Humphries ... 13 Bensaude v. Thames and Mer-; sey Ins. Co 67 Benson v. Chapman . 68, 72, 102 Berridge v. Man on Ins. Co. . 8 Bhugwandass v. Netherlands Sea Ins. Co 29 Bicoard v. Shepherd ... 47 Birkley v. Presgrave ... 86 Birrell v. Dryer .... 45 Blackburn v. Vigors 22, 24, 25, 26 ' Blackburn i;.Haslam. 23,25,26 Blackett v. Boyal Exchange 99, 113 Blaokhurst v. Cockell . . 47 Boehm v. Bell . . 4, 10, 12, 108 Bold V. Kotherham ... 70 Bottomley v. Bovill ... 53 Bouillon V. Lupton . . 48, 58 Bradford v. Symondson . . 2, 13, 108, 109, 122 Brankelow v. Canton Ins. Office 63 Brigella, The .... 85,87 XVI TABLE OF CASES CITED. PAGE British Columbia Co. v. Nettleship 94 British Marine Mutual Ids. Co. V. Jenkins . . . 110, 111 Broomfield v. Southern Ins. Co 15 Brough V. "Whitmore . 20, 113, 121 Browning v. ProTincial Ins. Co 59,75 Bruce v. Jones . . 35, 40, 106 Buchanan v. Faber ... 34 Burger v. Indemnity Mutual Mar. Ins. Co 96 Burges v. Wickham ... 50 Burnand v. Kodoeanachi 35, 37, 103, 104, 143 Byas 1). Miller 112 Byrne «. Schiller .... 16 C. Cahill V. Davidson ... 62 Cammell v. Sewell ... 71 Carlton Steamship Co. ®. Castle Mail Packets Co. . 113 Carter v. Boehm . . 22, 23, 25 Castellain v. Preston . 2, 17, 18, 104, 143 Cater V. Great Western Ins. Co 94, 97 Chandler v. Blogg ... 96 Charles-worth v. Faber 14, 24, 32 Chavasse, Ex. p 5 China Traders Assn.y. Eoyal Exchange 14 Chippendale ». Holt ... 14 Clapham v. Langton ... 49 Clay V. Harrison .... 12 Col. Ins. of New Zealand u. Adelaide Ins. Co. ... 11 Company of African Mer- chants V. British Ins. Co. . 57 Company of South African Merchants v. Harper . . 37 PAGK Cory V. Patton 26,29 114r V. Burr . . 63,65 144 Cossman v. West . 6» Cousins V. Nantes . T Crocker v. Sturge . 14 Crooks V. Allan 85 Crowley v. Cohen . 17 CuUen V. Butler . 127 Cunard v. Hyde . 51 Currie v. Bombay Ins. Co 76, 101 lis D. Balby v. Ind. Life Ass. Co. . 14& Daniels v. Harris .... 5» DarrelU-. Tibbitts ... 103 Davidson v. Burnand . 66, 9& Davies v. National Ins. Co. of New Zealand . . . . 4, 3& Davis ■». Garrett .... 55 Dean v. Hornby .... 7ft De Cuadra ». Swann ... 49 De Hahn 5). Hartley . 43,44,45 Delany v. Stoddart ... 57 De Mattos v. North ... S' V. Saunders . 73, 97 Denoon v. Home and Colonial Ass. Co. 34, 36, 37, 91, 115, 129. Dentil. Smith. . . . 47,65 Devaux v. Salvador ... 96 De Wolf V. Archangel Ins. Co 52: Dickinson v. Jardine 84, 85, 103, 113. Difiori V. Adams .... 56 Dixon V. Sadler . 48, 49, 50, 63. V. Stansfeld ■ «. Wentworth Dora Forster, The . . . . Driefontein Gold Mines v. Jansen Dudgeon v. Pembroke 62 102 100 . . 52; 48, 49, 51, 121 TABLE OF CASES CITED. XVll PAOE . 97, 99 16, 18, 104 Duff c. Mackenzie Dufouroet ij. Bishop Earle v. Rowcroft . . . 144 Ebsworth v. Alliance Mar. Ins. Co 13, 17, 18 Edwards v. Aberayron Mutual Ins. Society . . . . 30, 111 Eglinton ». Norman ... 105 Elgood V. Harris .... 62 Elton V. Brogden .... 57 F. Falcke «. Scottish Ins. Co. . S3 Famworth v. Hyde 69, 72, 73, 77 Eawous V. Sarsfleld ... 48 Field Steamship Co. v. Burr 65, 90 Fisher v. Liverpool Mar. Ins. Co 29 Fisher v. Smith ... 61, 62 Fisk V. Masterman . . 109, 110 Fleming v. Smith . . 69, 72, 75 Fletcher v. Alexander . 86, 92 Flint V. Flemyng . . .114, 129 Foley V. United Mar. Ins. Co. 122 Forwood V. North Wales Ins. Co 68 Francis v. Sea Ass. Co. . . 5 Francis v. Boulton . . 69, 93 Gambles v. Ocean Ins. Co. > . 32 Oedge V. Eoyal Exchange Ass. Corpn 5, 8, 51 •General Ins. Co. of Trieste v. Cory 45 Gledstanes sj.Eoyal Exchange Ass. Corpn 38, 122 Qlenlivet, The 125 PAG I! Glover v. Black .... 33 Goodwin «j. Eobarts . .'• . 113 Gordon v. Eimmington . 125 Gorsedd Steamship Co. v. Forbes 107 Grainger v. Martin ... 72 Grant v. King 53 Great Indian Peninsular Rail- way V. Saunders ... 99 Green v. Brown .... 70 Greer v. Poole ... 65, 95, 116 H. Baabet, The 14 Hagedorn v. Whitmore . . 97 Hall V. Janson .... 16 Hamilton v. Pandorf . 64, 66, 125 Harris v. Scaramanga . . 85 Harrow er v. Hutchinson . . 23 Hart V. Standard Mar. Ins. Co. 45, 112, 121 Haughton v. Empire Mar. Ins. Co 48, 122 Haywood v. Eodgers ... 23 Henderson v. Shankland . 91, 95 Hickie v. Eodocanachi . . 80 Hill V. Patten 21 Hine v. Steamship Ins. Syndi- cate 61 Hobbs 11. Hannam ... 17 Hogarth «. Walker . . 20, 21 Home Mar. Ins. Co. v. Smith 30, 152 Hore v. Whitmore ... 45 Houlder v. Merchants' Mar. Ins. Co 123 Honstman «. Thornton . 77, 103 Hunter v. Potts .... 64 Hunter v. Northern Mar. Ins. Co 56 Hydarnes S.S. Co. v. Indem- nity Mutual Mar. Ass. Co. 121 Hyderabad (Deocan) Co. v. Willoughby .' . . .4,39,57 XVIU TABLE OF GASES CITED. Imperial Mar. Ins. Co. v. Fire Ins. Corpn 38 Inehnuwee, The. See Thames and Mersey Mar. Ins. Co. v. Hamilton. Inglis V. Stock .... 13 Inman v. Bischoff, ... 6, 66, 67 lonidea v. Pfloifie Mar. Ins. Co. . . 18,26,28,29,31,114 lonides v. Pender 22, 23, 27, 37, 145 V. Universal Mar. Ins. Assn 64 Iredale v. China Traders' Ins. Co 65,84 Irving V. Eiohardson . . 17, 35 V. Manning . 34, 37, 38, 71,89 J. Jackson v. Union Mar. Ins. Co 63,67 Jamieson, Be ... . 67, 72 Jardine ?;. Leathly '. . . 79 Johnson v. Sheddon ... 92 Johnston v. Hogg .... 127 Jones V. Neptune Ins. Co. . 123 V. Nicholson . . . 145 Joyce V. Kennard . . 3, 95, 143 E. Kaltenbaoh v. Mackenzie 69, 73, 75, 76, 77, 79, 149 Keith V. Protector Mar. Ins. Co 8 Kellner v. Le Mesurier . 5, 107 Kemp «. Halliday . . . 71 Kent V. Bird 2 Kidston v. Empire Ins. Co. 81, 97, 99, 101, 146 King V. Victoria Ins. Co. 4, 104, 105 King V. Walker .... 68 Knight of St. Michael, The 65, 125, 127 Knill V. Hooper .... 49 Koebel v. Saunders . . 51, 64 Laing v. Union Ins. Co. . . 23 Lane v. Nixon 50 Laurie v. West Hartlepool Indemnity Assn. ... 58 Laveroni v. Drury ... 64 Law V. HoUingworth ... 49 Le Cheminant v. Pearson 100, 120 Lee V. Southern Ins. Co. . . - 102 Letehford v. Oldham ... 129 Lewis «. Euoker . . . .37,92 Lidgett ». Seoretan . 32,36,37, 100, 123, 124 Lion Ins. Assn. v. Tucker . 110 Lishman v. Northern Mar. Ins. Co. ...;.. 114 Livie V. Janson .... 100 Lloyd V. Fleming .2, 10, 58, 60, 143 Lockyer v. Offley .... 144 Lohre v. Aitchison . . . 101 London Assurance v. Wil- liams 80 Lower Rhine Ins. Assn. v. Sedgwick 14 Luoena v. Crauford , 7, 8, 9, 10, 12, 15, 18, 143 Lysaght v. Coleman ... 94 Mackenzie v. Whitworth , 6, 32, 38, 34, 130, 152 Main, The. . .34, 35, 36, 37, 91 Manfield v. Maitland ... 9 Maori King, The .... 50 Marine Ins. Co. v. China Trans-Paoiflc Co. . . 91, 99 TABLE OF OASES CITED. 3t]X Marine Mutual Ins. Assn. Ltd. V. Young .... 110 Maisden v. Eeid ... 57, 120 Marten v. Nippon . . . 123 Mary Tkomat, The . 84, 86, 95 Mavro v. Ocean Mar. Ins. Co. 86 McSwinney v. Koyal Ex- change 33 Mead ». Davison . . . ' 29, 122 Mercantile Mar. Ins. Co. v. Titheriugton .... 124 Mercantile Steamship Co. v. Tyser 24 Metcalfe v. PaiTy .... 56 Meyer r. Ealli . . . 73,101 Middlewood v. Blakes . . 55 Midland Ins. Co. v. Smith . 104 Mildred v. Maspons ... 61 Miller v. Woodfall ... 80 Montgomery ■6. Indemnity Mutual Mar. Ins. . . 85, 87 Montoyac. London Assurance 64 Morgan v. Price .... 40 Morrison d. Universal Mar. Ins. Co. ... . 22, 23, 29 Moss V. Smith . . . . 2, 71, 74 Muirhead v. Forth Mutual Ins. Assn 36 Munroe, The 96 N. Navone v. Haddon ... 97 Naylor v. Taylor .... 57 Nesbitt V. Lushington . . 127 Newby v. Keed ... 40, 105 Nickells v. London and Pro- vincial Mar. Ins. Co. . . 53 Nidbe, The 95, 96 North British Ins. Co. v. Lon- don, etc. Ins. Co. 17, 18, 40, 42, 105 North of England Oil Cake Co. V. Archangel Mar. Ins. Co 19,60 North of England Ins. Assn. ■V. Armstrong . 35, 103, 104, Notara v. Henderson . . . 1 02: Nourse v. Liverpool Sailing Ship Assn. ..... 83 0. Ocean Iron Steamship Assn. ■ V. Leslie . . . 110, 111, 114 Ocean Steamship Co. v. An- derson 84 Oppenheim v. Fry ... 98 O'Reilly v. Eoyal Exchange Ass. Co 58. Padstow Ass. Assn., Be . . UK Page V. Fry 13- Palmer v. Blackburn . . 20, 113- V. Penning ... 53- B.Marshall ... 122 Palyart v. Leokie . . . . 108- Parker 1-. Budd .... 71 Parkin v. Tunno .... 53 Parkinson i>. Collier . . . 113 Paterson v. Harris . . . 125 Pawson V. "Watson . . 27, 43. Pearson v. Commercial Union Ass. Co 55, 57 Pellas V. Neptune Ins. Co. . 59* Philpott V. Swan ... 68, 72 Pickup v., Thames Ins. Co. . 49 Pink V. Fleming ... 64, 65 Pipon V. Cope 51 Pitman v. Universal Mar. Ins. Co 2, 89, 90, 91 Pomeranian, The . . . 102, 115 Powles V. Innes . . . 19, 60 Price ■». A 1 Small Damage Assn 81, 98, 128 Proudfoot V. Monteflore . 22, 24 Provincial Ins, Co. v. Leduc . 43, 44, 77 Puller V. Glover .... 57 XX TABLE OF CASES CITED. Quebec Mar. Ina. Co. ■;;. Oom- meroial Bank of Canada 3, 43, 44, 45, 48, 50 B. Balli V. Jansou .... 97 Eankin v. Potter . 4, 10, 34, 68, 69, 71, 72, 74, 75, 76; 77, 78, 79, 80, 91, 103, 147, 148 Bayner v. Preston . . . 5, 19 Eedmond v. Smith ... 52 Medsea, The 81 Eeg. ■». MoCleverty . . . 151 Keischer v. Borwick ... 63 Bhind v. Wilkinson ... 11 Bivaz V. Geruasi 22, 24, 25, 26, 27 Boberts v. Security Co. Ltd. 31, 63, 143 Boddick v. Indemnity Mar. Ins. Co 8, 21, 45 Bodocanachi v. Elliott 3, 72, 73, 74 Boss V. Hunter .... 58 Buabon Steamship Co. v. London Assurance . . 91, 99 Eoux V. Salvador 68, 69, 71, 72, 75 EusseU V. Erwin .... 128 V. Thornton ... 25 Buys V. Eoyal Exchange 77, 78 S. Sadler v. Dixon .... 49 Sailing Ship Blairmore v. Maoredle 68, 71, 72, 77, 78, 79, 89 Salacia, The 16 ■ Scaramanga Stamp ... 58 Scott V. Mannheim lus. Co. . 130 Scottish Mar. Ins. v. Turner . 80 Seagrave v. Union Mar. Ins. Co 9, 10, 37 Sea Ins. Co. u. Blogg ... 45 V. Hadden 80, 81, 104 Seaton v. Heath ... 21, 143 PAGE Sharpe v. Gladstone ... 83 Shee V. Clarkson .... 106 Shelbourne v. Law Invest- ment Ins. Co. . . . 3, 64, 96 Shepherd v. Henderson . 71, 73 Shoolbred V. Nutt ... 23 Sibbald ». Hill .... 27 Simon Israel and Co. v. Sedg- wick 53, 54 Simpson v. Thomson . 103, 104, 105, 148 Sleigh V. Tyser . . 45, 50, 115 Small V. V. K. Mar. Ins. Assn 18, 67, 145 Smith V. Pyman .... 10 South Staffordshire Tram- ways V. Sickness Ass. Assn. 32 Spalding «. Crocker . . . 116 Sparkes v. Marshall ... 11 Spence v. Union Mar. Ins. Co. 70, 93 Stalnbank v. Fenning . . 9, 14 Steamship Balmoral v. Mar- ten ... . 36, 82, 86, 95 Steel V. Lacey 46 Stephens v. Australasian Ins. Co 38,113 Stewart v. Merchants' Mar. Ins. Co 32, 98, 99 Stewart v. Greenock Ins. Co. 79, 80, 105 V. Steele .... 90 Stookdale v. Dunlop ... 9 Strang, Steel and Co. v. Scott 85 Stringer v. English Mar. Ins. Co 79 Sutherland v. Pratt . . . 11 . Svensden v. Wallace ... 84 Sweeting ». Pearce . . 61,113 Tasker v. Cunningham . 53, 54 Tate «. Hyslop. . . . 22,24 Tatham v. Burr . . 4, 96, 121 'TABLE OF CASES CITED. XXI PAGK Taylor v. Dunbar .... 64 V. Liverpool G. W. Steam Co 126 Thames and Mersey Mar. Ins. Co. t . Hamilton . 6, 7, 64, 65, 125, 127 Thames and Mersey Mar. Ins. Co. V. Pitts 128 Thompson v. Reynolds . . 35 V. Hopper. . . 63 Tobin V. Harford ... 37, 92 Todd V. Ritchie .... 145 Trinder v. Thames and Mersey Mar. Ins. Co. 46, 51, 63, 66, 78 53 103 49 Tudor Tunno v. Edwards TurnbuU v. Janson . V. Hull Under writers' Assn. . Turquand, Ex parte . Tyser v. Shipowners' Syndi Gate 67 113 31 Union Mar. Ins. Co. v. Ber- wick 96 Union Mar. Ins. Co. v. Martin 41 Universal Ins. Co. v. Mer- chants' Mar. Ins. Co. . . 61 Universe Ins. Co. v. Mer- chants' Mar. Ins. Co. . 62, 113 Usher v. Noble . . 16, 20, 93 Uzielli V. Boston Mar. Ins. Co 13,14,77 V. Vancouver, The. See Marine Ins. Co. V. China Trans- Pacific Co Vandyck v. Hewitt VoHigern, The PAGE 108 48 W. Waugh V. Morris . Way V. Modigliani Wells ». Hopwood Western Ins. Co., Ex parte West of England Fire Ins Co. V. Isaacs Westport Coal Co. v. McPhail 52 54 129 14 104 66, 67, 145 Westwood V. Bell .... 62 Wetherell v. Jones ... 5 Whincup V. Hughes . . . 109 Williams ». North China Ins. Co 37, 111, 112 Wilson V. Jones 4, 7, 9, 10, 13, 34 V. Martin .... V. Nelson .... V. Owners of Cargo, per Xantlio V. Runkin .... Wingate v. Foster Wolff V. Horncastlo . Woodside v. Globe Ins. Co. Woolridge v. Boydell . . 9 34 125 51 56 135 2,36 53 X. Xantlio, The . Xenos V. Wickham V. Fox Yates V. White . . 64 . 31, 61 35, 96, 101 18 TABLE OF CASES OVERRULED, ETC. Adams v. Mackenzie (1863), 13 C. B. (N. S.) 446; discussed. Sailing Ship Blairmoke v. Macbedie (1898), A. C. at p. 598. Alps, The (1893), P. 109 ; followed and approved, The Bedodin (1894), P. 1, 0. A. Anderson v. Morice (1876), 1 App. Cas. 713 ; distinguislied, Coloniai. Ins. Co. of New Zealand v. Adelaide Mak. Ins. Co. (1886), 12 App. Cas. at p. 135. Assemrasioni Oenerali v. SS. Bessie Morris (1892), 1 Q. B. 571 ; affirmed, (1892) 2 Q. B. 652, C. A. Atwood V. Sellar (1880), 5 Q. B. D. 286, C. A. ; discussed, Svensden V. Wallace (1885), 10 App. Cas. 404. Sarher v. Fleming (1870), L. E. 5 Q. B. 59 ; followed, Foley v. United Fire and Mae. Ins. Co. (1870), L. E. 5 C. P. 155. Barker v. Janson (1868), L. E. 3 C. P. 303 ; discussed, Lidgett v. Secketan (1871), L. E. 6 C. P. at p. 628. Beatson v. Eaworth (1786), 6 T. E. 531 ; explained, Mabsdes: v. -Keid (1803), 4 East, at p. 577. Blackburn -v. Vigors (1887), 12 App. Cas. 531; considered, Black- burn V. Haslam (1888), 21 Q. B. D. 144. Blackett v. Royal Exchange (1832), 2 C. & J. 244 ; distinguished, Stewaet v. Merchants' Mak. Ins. Co. (1885), 16 Q. B. D. 619, C. A. Booth V. Qair (1864), 33 L. J. C. P. 99 ; explained, Kidston v. Empire Ins. Co. (1866), L. E. 1 C. P. at p. 549. Gonwayv. Gray (1809), 10 East, 547 ; disapproved, Aubert v. Gray (1861), SB. &S. 163. Cory V. Patton (1872), L. E. 7 Q. B. 304 ; followed, Lishman v. Northern Mak. Ins. Co. (1875), L. E. 10 C. P. 179, Ex. Ch. Cvllen V. Butler (1816), 5 M. & S. 461 ; approved, Thames and Mersey Mar. Ins. Co. v. Hamilton (1884), 12 App. Cas. at p. 501. xxiv TABLE OF CASES OVERBUIED, ETC. De Mattos v. North (1868), L. E. 3 Ex. 185 ; followed, Bekbidge v - Man on Ins. Co. (1887), 18 Q. B. D. 346, C. A. JDcvaux V. r Anson (1839), 5 Bing. N. C. 519, 540 ; criticised, Thames AND Meksey Mar. Ins. Co. v. Hamilton (1884), 12 App. Gas. at p. 496, H. L. Dickinson v. Jardine (1868), L. E. 3 C. P. 639 ; discussed. The Maey Thomas (1894), P. at pp. 114, 118; The Knight op St. Michael (1898), P. at p. 34. Dixon V. Whitworih (1879), 4 0. P. D. 371; reversed, Dixon v. Whitwobth (1880), 4 Asp. Mar. Oas. 327, C. A., and W. N. 1880, p. 43. Eglinton v. Norman (1877), 3 Asp. Mar. Cas. 471 ; overruled, Arrow- Shipping Co. V. Tyne Commissioners (1894), A. C. 508, H. L. Farnworth v. Eyde (1865), 18 C. B. (N. S.) 835 ; reversed on one point, Fabnwokth v. Hyde (1866), L. E. 2 C. P. 204, Ex. Ch. ; see at p. 226. Farnworth v. Eyde (1866), L. E. 2 C. P. 204, Ex. Ch.; criticised, McAuthue, Ed. 2, p. 151 ; Lowndes, Ed. 2, p. 137. Fawcus V. SarsfieU (1856), 6 E. & B. 192 ; followed. Dudgeon v. Pembroke (1877), 2 App. Cas. 284. Fitzherhert v. Mather (1785), 1 T. E. 12 ; commented on, Blackburn V. Vigors (1887), 12 App. Cas. 531. Garston Sailing Ship v. Eickie (1885), 15 Q. B. D. 580 ; discussed. Hunter v. Northern Mae. Ins. Co. (1888), 13 App. Cas. 717. Oibson V. Small (1852), 4 H. L. C. 353; distinguished. Couch v. Steel (1854), 3 E. & B. at pp. 407, 408 ; followed. Dudgeon v. Pembroke (1877), 2 App. Cas. 284. Gladstone v. King (1813), 1 M. & S. 35 ; disapproved, Blackburn V. Vigors (1887), 12 App. Oas. at pp. 530, 540. Great Indian Peninsular By. Co. v. Saunders (1861), 1 B. & S. 41 ; 2 B. & S. 266 ; explained, Kidston v. Empire Ins. Co. (1866), L. E. 1 C. P. at p. 548. Eagedom v. Oliverson (1814), 2 M. & S. 485 ; followed, Cory v. Patton (1874), L. E. 9 Q. B. 577, Ex. Ch. Eamilton v. Mendes (1761), 2 Burr. 1198 ; discussed, Euys v. Eotal Exchange (1897), 2 Q. B. at p. 138. Eavelock v. Sancill (1789), 3 T. E. 277; discussed, Ceawley v. BuKR (1883), 8 App. Cas. at p. 399. Eicks V. Shield (1857), 7 E. & B. 633 ; discussed, Allison v. Bristol Mab. Ins. Co. (1876), 1 App. Cas. at p. 221. Eoldsworth v. Wise (1828), 7 B. & C. 794; discussed. Sailing Ship Blaiemobe v. Maobedie (1898), A. C. at p. 609. TABLE OF OASES OVERRULED, ETC. XX V Hurst V. Usborne (1856), 18 C. B. 144; doubted, Kankin v. Potteis (1873), L. E. 6 H. L. at p. 117. Hydarnes Steamship Co. v. Indemnity Mutual Mar. Lis. (1894), 2 Q. B. 500 ; reversed, (1895) 1 Q. B. 500, 0. A. Jackson v. Union Mar. Ins. Co. (1874), L. E. 10 C. P. 125 ; dis- tinguished, Inman Steamship Co. v. Bishoff (1882), 7 App. Gas. at p. 676; followed, Re Jamieson (1895), 1 Q. B. at p. 95, C. A. Kirchner v. Venus (1859), 12 Moore P. C. 361 ; explained, AlltsO'SI V. Bbistol Mar. Ins. Co. (1876), 1 App. Cas. 209, at p. 224. Kleinwort v. Shepard (1859), 1 E. & E. 447 ; discussed, Ckawley V. BuRE (1883), 8 App. Cas. at p. 396. Knight v. Faith (1850), 15 Q. B. 649 ; criticised, Eankin v. Potter (1873), L. E. 6 H. L. at pp. 102, 130 ; Teindbe v. Thames and Mersey Ins. Co. (1898), 2 Q. B. at p. 119, C. A. Laveroni v. Drury (1853), 22 L. J. Ex. 2 ; discussed, Hamilton v. Pandoef (1887), 12 App. Cas. at p. 523. Law V. Hollingsworth (1797), disapproved, Dixon v. Sadler (1839), 5 M. & W. at p. 408 ; disapproved with a qualification, Sadler V. Dixon (1841), 8 M. & W. at p. 900, Ex. Ch. Le Gheminant v. Pearson (1812), 4 Taunt. 367, 380; discussed, AiTOHisoN V. LoHRE (1879), 4 App. Cas. at p. 763. Livie Y. Janson (1 812), 12 Bast, 647 ; explained, Ioniues v. Univeesal Mab. Ins. Co. (1863), 14 C. B. (N. S.) at p. 294 ; Lidgett v. Secretan (1871), L. B. 6 C. P. at p. 625. Lohre v. Aitchison (1878), 3 Q. B. D. 558, C. A. ; reversed, Aitchison V. LoHEE (1879), 4 App. Cas. 755. Mason v. Sainshur-j (1748), 1 Ves. Sen. 98 ; explained, Simpson v. Thompson (1877), 3 App. Cas. at p. 293. Miss V. Smith (1850), 9 C. B. 94 ; approved, Aitchison v. Lohee (1879), 4 App. Cas. at p. 762. North Britain, The (1894), P. 77 ; approved, Tatham v. Buee(1898), A. C. 382, H. L. North of England Ins. Assn. v. Armstrong (1870), L. R. 5 Q. B. 244; doubted, Burnand v. Eodocanaohi (1882), 7 App. Cas. at p. 342. Parmeter v. Todhunter (1808), I Camp. 541 ; disapproved, Cuerie V. Bombay Native Ins. Co. (1869), L. E. 3 P. C. at p. 78. PiponY. Cope (1808), 1 Camp. 434; explained, Tkindek v. Thames AND Mersey Mae. Ins. Co. (1898), 2 Q. B. at p. 129, C. A. Pitman v. Universal Mar. Ins. Co. (1882), 9 Q. B. D. 192, C. A. ; discussed. Marine Ins. Co. v. China Steamship Co. (1886), 11 App. Cas. at p. 590. xxvi TABLE OF CASES OVERRULED, ETC. Powell V. Hyde (1855), 5 E. & B. 607 ; discussed, Crawley v. Bcjkb (1883), 8 App. Cas. at p. 396. Price v.A\ Ships' Small Damage Assn. (1889), 22 Q. B. D. 580, C. A. ; criticised, McAbthub, Ed. 2, p. 386. Proudfoot V. Monteflore (1866), L. R, 2 Q. B. 511, 521 ; approved, Blackburn v. Vigors (1887), 12 App. Gas. at p. 537. Randal v. Cochram, (1748), 1 Ves. Sen. 98 ; distinguished, Bubnand v. EoDOOANACHi (1882), 7 App. Gas., at p. 339. Rosetto V. Qurney (1851), 11 G. B. 176 ; approved, Fabnworth v. Hyde (1866), L. B. 2 C. P. 204, Ex. Ch. Roux V. Salvador (1836), 3 Bing. N. C. 266 ; discussed^ Pabnwobth V. Hyde (1865), 18 C. B. (N. S.) at p. 856 ; Tbindeb v. Thames AND Mebsby Mab. Ins. Co. (1898), 2 Q. B. at p. 119, G. A. Sailing Ship Oarston v. Eicleie (1885), 15 Q. B. D. 580 ; discussed, HuNTEB V. NoBTHEBN Mab. Ins. Co. (1888), 13 App. Cas. 717. Scottish Mar. Ins. Co. v. Turner (1853), 1 Maoq. H. L. 334; dis- cussed, Rankin v. Potter (1873), L. R. 6 H. L. at p. 100. Smith V. Reynolds (1856), 1 H. & N. 221 ; followed, Bebkidge v. Man on Ins. Co. (1887), 18 Q. B. D. 346, C. A. Sparhes v. Marshall (1836), 2 Bing. N. 0. 761 ; explained, Andebson V. MoBicE (1876), 1 App. Gas. at p. 735. StepJiens v. Australasian Ins, Co. (1873), L. R. 8 G. P. 18 ; discussed, Impeeial Mab. Ins. Co. v. Fire Ins. Coepn. (1856), 4 C. P. D. 166. Stribleyv. Imperial Mar. Ins. Co, (1876), 1 Q. B. D. 507 ; disapproved, Blackburn v. Vigors (1887), 12 App. Gas. at p. 540. Thompson v. Eopper (1856), 6 E. & B. 172 ; reversed, Thompson v. Hopper (1858), E. B. & B. 1038; discussed and explained, Dudgeon v. Pembroke (1877), 2 App. Gas. 284. Thompson v. Taylor (1795), 6 T. R. 478 ; followed, Foley v. United Mae. and Fieb Ins. Go. (1870), L. R. 5 C. P. 155. Thornely v. Edbson (1819), 2 B. & Aid. 513; discussed, Cossman v. West (1887), 13 App. Cas. at pp. 177, 178. Watson v. Clarh (1813), 1 Dow. 336, H. L. ; discussed, Pickup v. Thames and Mebsey Mar. Ins. Co. (1878), 3 -Q. B D 594 C. A. ' ' Weir V. Aberdeen (1819), 2 B. & Aid. 320; discussed, Quebec Mae. Ins. Co. v. Commercial Bank op Canada (1870), L. R. 3 P C 234. West India and Panama Tel. Co. v. Eome and Col. Mar. Ins. Co. (1880), 6 Q. B. D. 51, C. A, ; overruled, Thames and Mersey Mae. Ins. Go. v. Hamilton (1887), 12 App. Cas. 484, H. L. TABLE OF GASES OVERRULED, ETC. XXVll Wilson V. Rankin (1865), L. K. 1 Q. B. 162 ; followed, Dudgeon v. Pembroke (1874), L. E. 9 Q. T}. 581. Woodley v. Mitchell (1883), 11 Q. B. D. 47, C. A. ; overruled. The Xaktho (1887), 12 App. Oas. 503. Tates V. Whyte (1838), 4 Bing. N. C. 272 ; explained, Simpson v. Thomson (1877), 3 App. Cas. at p. 293. DIGEST OF THE LAW RELATING TO MAKINE INSUEANCE. Marine Insurance. § 1. — A contract of marine insurance is a contract of Marine indemnity whereby the insurer undertakes to indemnify d"fiYeT the assured in manner and to the extent thereby agreed, against marine losses, that is to say, the losses incident to marine adventure. Note. — For various deBnitions of marine insurance, and discussion thereof, see^osif, p. 142 ; for history of marine insurance, see^os^, p. 151. The formal instrument in which the contract is embodied is called the " policy." * The informal note or memorandum which is drawn up when the contract is entered into is called the " slip " or " covering note." 2 The party who undertakes to indemnify the other, that is to say, the promisor, is called the " insurer " or " underwriter " (so called because he subscribes or underwrites the policy). The party to be in- demnified is called the " insured," or, more commonly, the " assured." The consideration which the insurer receives for his undertaking !s called the " premium." But in the case of mutual insurance a guarantee or other arrangement may take the place of the premium.' ' From Latin pollioitatio, a promise, through Italian poUzza or French police. Oddly enough, in an English policy the promise to pay in case ■of loss is implied, not expressed. Continental policies contain an express promise to pay within so many days after notice of loss. ' See MoArthur, Ed. 2, p. 21, and §§ 22, 23, 89. ' As to premium, see §§ 53-55, and as to mutual insurance, § 85. B 2 DIGEST OF MARINE INSURANCE. Sect. 1. The term "loss" includes damage or detriment as well as actual loss of property.* The term " risk " is used in different senses, and must always be construed by the light of its context. Sometimes it is used to denote the perils themselves to which insurable property may be exposed, as when sea risks are contrasted with land risks, or when goods are insured against " all risks." Sometimes it is used to denote the risk run by the person whose property is exposed to danger. But, more commonly perhaps, it is used to denote the liability undertaken by the insurer in respect of his contract, as, for example, when goods are lost, and it is said that " the risk had not attached," that is to say, that the goods were not covered by the policy.^ Marine insurance, in legal theory, is essentially a contract of indemnity.^ The legal consequences and incidents of the contract are deductions from this cardinal principle. Hence arise its distinc- tive characteristics, such as the rules requiring interest, the necessity for full disclosure by the assured, the rules as to double insurance, the right of subrogation which arises on settlement of the loss, and the right to return of premium in certain events. But it has often been pointed out'that in practice marine insurance is not a perfect contract of indemnity.* For example, under an unvalued policy on goods, in the ordinary form, and without any special clause, the assured will probably receive less than his real loss,^ while under a valued policy he may receive an amount which either exceeds or falls short of his real loss.^ But this deviation in practice from true indemnity depends rather on the form of policies in actual use than on the nature of the contract itself; see Phillips on Insurance, § 3. The main principles of marine insurance law are well settled. ' As to loss, see §§ 57-67. For a useful discussion of the mercantile meaning of loss, see Mois v. Smith (1850), 19 L. J. 0. P. 225, 228. ^ Of. Bradford v. Symondton (1881), 7 Q. B. D. at p. 464, per Lord Bramwell. » AmovXd, Ed. 6, p. 3; MoArthwr, Ed. 2, p. 23; per Lord Mansfield, Kent V. Bird (1777), 2 Cowp. at p. 585 (wager policy) ; per Lord Blackburn' Lloyd V. Fleming (1872), L. E. 7 Q. B. at p. 302 (assignment after loss).' per Jessel, M.R., Pitman v. Universal Mar. Int. Co. (1882), 9 Q. B. D. at p. 204 (partial loss); per Lord Bsher and Lord Bowen, Castellain v Preston (1883), 11 Q. B. D. at pp. 386 and 397 (subrogation). * Aitchison y. Lohre (1879), 4 App. Gas. at p. 761. ' Arnould, Ed. 6, pp. 297, 298 ; McArthur, Ed. 2, pp. 24 and 68. In practice the expected profits are covered by special provision, see Owen's Notes and Clauses, Ed. 3, p. 79. • Cf. Woodtide v. Qhle Ins. Co. (1896), 1 Q. B. at p. 107. MARINE INSURANCE. 3 The difficulties that occur in practice arise chiefly out of the crabbed Sect. 1. and obscure language of the time-honoured Lloyd's policy, which was framed with reference to the conditions of commerce in a bygone era. New wine has continually to be put into the old bottle, with incon- venient results. See note to Sched. I., post, p. 121. § 2. — (1.) A contract of marine insurance may, by its Mixed sea express terms, or by usage of trade, be extended so as to rrsks."" protect the assured against losses on inland waters or on any land risk which may be interposed in, or subsidiary or incidental to, any sea voyage.^ (2.) Where a ship in course of building, or the launch of a ship, or any adventure analogous to a marine adven- ture, is covered by a policy in the form of a marine policy, the provisions of this Digest, in so far as appli- cable, apply thereto; but, except as by this section provided, nothing in this Digest applies to any contract of insurance other than a contract of marine insurance as by this Digest defined.'-^ Note. — As commerce has progressed, and insurance has developed, new forms of risks are included in marine policies. But in order to cover them, special and appropriate forms of words must, in the absence of any well-ascertained trade usage, be inserted in the policy. Thus woods may be insured " from Japan to London, via Marseilles and [or] Southampton ; " ■' wool may be insured " at and from Townsville to London, including risk of fire and flood, from sheep's back until ' McAHhnr, Ed. 2, p. 88. As to trade usage, which hitherto has been of very limited scope, see Rodocanaohi v. Elliott (1873), 42 L. J. C. P. at p. 254, per Lord Esher. " For form of launch and trial trip insurance, see Oaen's JSTotes and Clauses Ed. 3, p. 83. As to the words " so far as applicable," see Quebec Mar. Iris. Co. v. Gommeroial Bank of Canada (1870), L. K. 3 P. C. 234 (lake, river, and oanal insurance) ; Joyoe v. Kennard (1871), L. K. 7 Q. B. 78 (insurance of lighterman's liability) ; ShellouTne v. Law Invest. Ins. Co. (1898), 8 Asp. Mar. Cas. 445 (river insurance). ' Bodooanaohi v. Elliott (1873), L. E. 8 C. P. 649 ; affirmed L. K. 9 C. P. 518, Es. Oh. (goods detained in Paris during siege). 4 DIGEST OF MARINE INSUBANCE. Sect. 2. waterborne at Townsville ; " > and bullioa may be insured " at and from Boodini to London, including all risks of every description, from the mines by escort to railway station at Baicbur, thence by rail to Bombay, and thence to London." ^ These mixed sea and land risks may be compared, by way of analogy, with " through bills of lading," which are the invention of modern commerce. Compare also the definition of " policy of sea insurance," given by,§ 92 of the Stamp Act, 1891 (54 & 55 Vict. c. Z'd),post, p. 137. Marine § 3. — (1.) Subject to the provisions of this Digest, and mail- every lawful marine adventure may be the subject of defined*" ^ * Contract of marine insurance.* (2.) In particular there is a marine adventure where — {a.) Any ship goods or other movables are exposed to maritime perils. Such property is in this Digest referred to as " insurable property " : * (6.) The earning or acquisition of any freight, pas- sage money, commission, profit, or other pecuniary benefit, or the security for any ad- vances, loan, or disbursements is endangered by the exposure of insurable property to mari- time perils : ^ (c.) Any liability to a third party may be incurred by the owner of, or other person interested in or responsible for, insurable property, by reason of its exposure to maritime perils.^ • King v. Victoria Ins. Co. (1896), A. C. 250 P. C. ; see, too, Davies v. National Im. Go. of New Zealand (1891), A. C. 485. ' Syderdbad Co. v. WiUoughby (1899), 2 Q. B. 530. ' Amould, Ed. 6, p. 688; Wilson v. Jones (1867), L. K. 2 Ex. 139, Ex. Oh. * Arnoidd, Ed. 6, pp. 18-29, and as to " movables," see § 91, post. " McArthur, Ed. 2, pp. 59, 65 ; of. Banltin v. Potter (1873), L. E. 6 H. L. 83 (chartered freight on homeward voyage insured as to outward voyage) ; Frice v. Maritime Ins. Co. (1900), 5 Com. Cas. 332 (advances). » McArthur, Ed. 2, p. 59 ; Boehm v. Bell (1799), 8 T. B. at p. 161 (damages and costs for illegal capture) ; Tatham v. Burr (1898), A. C. at p. 385 (liability for running down another ship), and see §§ 14, 75. MARINE INSURANCE. 5 (3.) " Maritime perils " mean the perils consequent Sect. 3. on, or incidental to, the navigation of the sea, that is to say, perils of the seas, fire, war perils, pirates, rovers, thieves, captures, seizures, restraints and detainments of princes and peoples, jettisons, barratry, and any other perils, either of the like kind, or which may be desig- nated by the policy. Note. — Strictly speaking, it is the risk or adventure of the assured, and not the property exposed to peril, which is the subject of insurance. Ex hypothesi, the ship or goods may be lost. What is really insured is the pecuniary interest of the assured in or in respect of the pro- perty exposed to peril, in other words, the risk or adventure.' Lord Eshcr has sought to reconcile the underlying facts with popular language, by drawing a distinction between the subject insured and the subject naatter of insurance.^ The Netherlands Com. Code, Art. 268, provides simply that " the subject matter of an insurance may be any interest appreciable in money, and not excepted by land." See, too, German Com. Code of 1897, art. 778. If an insurer, with his eyes open, insures an unlawful adventure, the policy is obviously a mere " honour policy,'' for ex turpi causa non oritur actio.' Speaking generally, an adventure is illegal if it is prohibited by statute, or contrary to good morals or public policy ; * and illegality in any part of the adventure taints the whole of it. (Arnould, Ed. 6, p. 691). The lawfulness of an English adventure or insurance must be determined by English law.** For example, if two foreign states are at war, there is nothing unlawful in sending an English ship to run a blockade, though the ship may be liable to confiscation by the block- ading belligerent.' So, too, as a general rule, English law takes no cognizance of foreign trade or revenue laws.^ But a distinction must ' A good illustration of this principle is furnished by the rule that there may be a total loss of goods when the adventure is wholly frustrated, though the goods themselves remain in specie. See § 61, post, p. 73. " Bayner v. Preston (1881), 18 Ch. D. at p. 9, C. A. ' Cf. Gedge v. Royal Exchange Asa. Corpn. (1900), 2 Q. B. at p. 220. ' Wetherell v. Jones (1832), 3 B. & Ad. at pp. 225, 226. ' Cf. Eellner v. Le Meturier (1803), 4 Bast, at pp. 402, 403. • Arnould, Ed. 6, p. 713, Ex. p. Chavasse (1865), 31 L. J. (Bank.) 17. ' Wesilake, Private International Law, Ed. 3, § 213 ; Lotmies, Ed. 2, p. 102 ; cf. Francis v. Sea Ass. Co. (1898), 8 Asp. Mar. Cas. 418. 6 DIGEST OF MARINE INSURANCE. Sect. 3. be drawn between the lawfulness of the adventure and the implied warranty of legality by the assured (see § 42, post). If insurer and assured like to insure an illegal venture, the contract is an honour contract ; but where the assured does not disclose the illegality of the venture, the contract is binding neither in law nor honour. Again, if there be anything in foreign law or international relations which increases the particular risk, and is not a matter of common know- ledge, it must be disclosed to the insurer before the contract is entered into, for the nature of the risk and the amount of premium charged will necessarily be affected thereby. Cf. § 18, post. The terms of subseot. (2) are inclusive, not exhaustive. As the ■conditions of maritime commerce change, new dangers and matters require to be covered by insurance. For example, shipments of live •cattle, which are insured against mortality and all other risks, have to be covered by special provisions, as such risks are not contemplated by ihe old form of policy. The subjeet-matter, says Lord Blackburn, " is generally described very concisely as being so much ' on ship,' ' on goods,' ' on freight,' ■* on profit on goods,' ' on advances on coolies,' ' on emigrant money,' and so on." i See further, § 27, post. The insurer, as a rule, is not liable for damages consequent on delay, even though the delay be caused by a peril insured against (see § 56 (3), post, p. 63). But policies may be effected to protect the assured against the cancelling clause in charter parties, and to protect the owner of perishable goods. Subsect. (3). — Lloyd's policy, after enumerating the ordinary perils, proceeds with the words " and of all other perils, losses, and misfortunes that have or shall come to the hurt, detriment, or damage of the said goods," etc. But these general words have always been interpreted to refer to perils of a like kind with those already enu- merated.2 Perils of a dissimilar kind may be insured against (see, e.g., the note to § 2), but they must be covered by express terms.' On the other hand, a policy may be confined to some only of the specified perils. In that case a so-called warranty is added, excluding particular perils, e.g. " warranted free from capture, seizure, and deten- tion, and all the consequences of hostilities." — (See Owen's Notes and Clauses, Ed. 3, p. 28, et seq.) » Mackenzie v. Whitworfh (1875), 1 Ex. D. at p. 40, 0. A. " ArnoiM, Ed. 6, p. 789; Jfc2lrt7mr, Ed. 2, p. 136; Thames and Mersey Ins. Co. V. Eamilton (1882), 12 App. Gas. at p. 495. =• See, e.g., Inman v. Bisclmff (1882), 12 App. Cas. at p. 686 (abatement clause in charter party) ; Thames and Mersey Ins. Co. v. Hamillon (1887), 12 App. Cas. 484, at p. 491 (donkey engine explosion), which gave rise to the " Inchmaree clause." INSURABLE INTEREST. 7 The result of maritime perils is to cause " marine damage," which. Sect. 3. says Lord Herschell, does not mean only damage which has been caused by the seas, " but dimage of a character to which a marine adventure is subject. Such an adventure has its own perils, to which either it is exclusively subject or which possess in relation to it a special or peculiar character. To secure an indemnity against them is the object of marine insurance."' As to the narrower expression " perils of the seas," see Sched. I. rule 7, post, p. 124. Insurable Interest. § 4. — (1.) Every contract of marine insurance by way Wagering of gaming or wagering is void. conterct"^ (2.) A contract of marine insurance is deemed to be "''/"i.'J: . ^ ' [8 & 9 Vict. a gaming or wagering contract — c. 109, and 19 Geo. 2 (a.) Where the assured has not an insurable interest c. 37.] as defined by this Digest : ^ (&.) Where the policy [is on a British ship or goods and effects laden thereon, and] is made " interest or no interest," or " without further proof of interest than the policy itself," or " without benefit of salvage to the insurer," or subject to any other like term : [Provided that where there is no possibility of salvage, a policy may be effected without benefit of salvage to the insurer.] ^ jjoTE. — This section appears to reproduce the effect of the 19 Geo. 2, c. 37, §§ 1 to 3, as read with the 8 & 9 Vict. c. 109. Subsect. (1).— See the Gaming Act, 1845 (8 & 9 Vict. c. 109), s. 18, which provides that " all contracts or agreements, whether by parole or in writing, by way of gaming or wagering, shall be null and void." > Thames and Mersey Ins. Co. v. Hamilton (1887), 12 App. Cas. at p. 498. » MeArthur, EJ. 2, p. 24; Cousins v. Nantes (1811), 3 Taunt. 513 (presumption of interest and averment in pleading) Ex. Oh. ; Wilson v. Jones (1867). L. E. 2 Ex. at p. 141, per Willes, J. See §§ 4-15. ' Cf. Lueena v. Crauford (1806), 2 B. & P. at p. 310, and note, post. 8 DIGEST OF MARINE INSUBANCE. Sect. 4. As to subsect. (2) (J), which reproduces the effect of §§ 1-3 of the Marine Insurance Act, 1745 (19 Geo. 2, c. 37), set out post, p. 133, the following points may be noted : — (1.) The statute is confined in terms to British ships, and goods and effects laden thereon. Therefore a p.p.i. policy on a foreign ship is not illegal if, as a fact, ths/insurer has a lawful interest and can prove it. As, however, such a policy bears the mark of wagering on the face of it, the Lords' Select Committee thought that the provision should be generalized. (2.) The statute speaks of ships, and goods and effects laden thereon. But a wide construction has been put on these terms, and the scope of the Act has been extended to policies on profits, and com- mission on ships and goods, effected, " without benefit of salvage." ' (3.) The scope of the Act is not confined to the exact terms pro- hibited. Any similar terms avoid the policy. Thus a policy on cash advances, " full interest admitted," is void.^ (4.) A distinction must be drawn between p.p.i. policies and policies " without benefit of salvage," that is to say, in modern language, " without benefit of abandonment." The nature of an insurance may be such that, in case of loss, there could be nothing to abandon to the insurer, and it seems that such a policy may lawfully be effected " without benefit of salvage." Nine judges, in giving their opinion to the House of Lords in Lucena v. Crauford^ say that the 19 Geo. 2, c. 37, " which prohibited insurances without benefit of salvage, was not to be understood as prohibiting the insurance of things not capable of salvage, but only as prohibiting the insertion of a clause to that effebt in a policy upon things which were capable of salvage.'' Re- insurance seems to be a case in point. See § 63 (10), post. (5.) The statute further contains two more or less obsolete excep- tions, viz. policies on privateers, and policies on ships in the Spanish trade. (6.) The statute does not extend to Ireland.* (7.) It is an open question whether an honour policy (e.g. a p.p.i. policy on disbursements) can constitute a breach of a warranty to keep a certain proportion of the value of a ship uninsured." • Be Mattos v. North (1868), L. E. 3 Ex. 185 ; Allkins v. Jupe (1.877), 2 C. P. D. 375 ; see at p. 388 as to possibility of salvage in such a case. " Berridge v. Man on Ins. Co. (1887), 18 Q. B. D. 316, C. A ; see, too, Gedge v. Boyal Excliange (1900), 2 Q. B. 214. = Lucena v. Crauford (1806), 2 B. & P. at p. 310 ; 6 E. B. at p. 694. * Keith V. Protector Mar. Ins. Co. (1882), 10 L. E. Ir. 51. ' Roddich v. Indemnity Mar. Ins. Co. (1895), 2 Q. B. 380, 0. A. IN sun ABLE INTEREST. 9 § 5.— (1.) Subject to the provisions of this Digest, Sect. 5. every person has an insurable interest who, at the time ins^ie of loss, is interested in a marine adventure.^ interest denned. (2.) In particular a person is interested in a marine adventure where he stands in any relation (legal or equitable) to the adventure, in consequence of which he benefits by the safety or due arrival of insurable property, or is prejudiced by its loss, or by damage thereto, or by the detention thereof, or incurs, any liability in respect thereof.^ (3.) A prospect or possibility of loss or gain, which, at the time of loss, is not founded on any right or liability (legal or equitable) in, or in respect of, the subject-matter insured, is not insurable.^ Note. — Three questions, often confused, must be kept distinct, viz. : 1. Has the assured an insurable interest ? 2. Is the subject-matter in respect of which his interest arises sufficiently described in the policy ? 3. What is the quantum of his interest ? The definition of insurable interest has been continuously expand- ing, and dicta in some of the older cases, which would tend to narrow it, must be accepted with caution. The essence of interest is (a) that there should be a physical object exposed to sea perils, and (6) that the assured should stand in some relationship, cogcizable by law, to that object in consequence of which he either benefits by its preserva- tion, or is prejudiced by its loss, or mishap thereto. It appears to have been held that a person who had bought goods at sea under a verbal contract, which was unenforceable by reason of the Statute of Frauds, had not an insurable interest.* But would this • Arnould, Ed. 6, p. 55, Wilson v. Jones (1867), L. E. 2 Ex. 139, Ex. Ch. ' Arnould, Ed. 6, p. 101; as to equitable assignee of freight, see Wilson V. Martin (1856), 11 Ex. Oh. 684. ' Luoena v. Crauford (1806), 2 B. & P. 269 ; 6 E. K. 623, H. L. ; Seagrave v. Union Mar. Ins. Co. (1866), L. E. 1 C. P. 305, at p. 320 (cargo) ; Barher v. Fleming (1869), L. E. 5 Q. B. at p. 71 (freight) ; and see, e.g., Manfield v. Maitland (1821), 4 B. & Aid. 582 (loan to shipowner) ; Stainbanh v. Fenning (1851), 11 0. B. 51 (invalid bottomry bond). ' StocMale v. Dunhp (1840), 6 M. & W. 224. 10 DIGEST OF MARINE INSURANCE. Sect. 5. be the case now that it is established that the statute affects the remedy only and not the right ? It is clear, since Wihon v. Jones (1867), L. R. 2 Ex. 139 (insurance by shareholder in an Atlantic Cable Company on the Successful laying of its cable), that interest is not confined to rights in the nature of property or arising out of contract, for the assured had no property in the cable nor any contract respecting it. But is not subsect. (2) still too narrow ? Suppose A is offered an appointment abroad on the condition that his acceptance of the offer is received by return of post. Why should he not insure the safe arrival of the letter, although he has no legal rights in respect of it after it is posted ? Subsect. (2) is, therefore, framed as being inclu- sive, not exhaustive. Interest can hardly be defined exhaustively, and probably the criterion proposed by Lawrence, J., a century ago, cannot be improved upon : " Interest," he says, " does not necessarily imply a right to the whole or a part of a thing, nor necessarily or exclusively that which may be the subject of privation ; but the having some relation to or concern in the subject of insurance, which relation or concern, by the happening of the perils insured against, may be so affected as to pro- duce a damage, detriment, or prejudice to the person insuring. . . . To be interested in the preservation of a thing, is to be so circumstanced with respect to it as to have benefit from its existence, prejudice from its destruction." ^ Elsewhere, speaking of liability to third persons, he says, " Did they mean to game, or~ was there not a loss against which they might indemnify themselves by insurance ? " ^ " The general rule," says Willes, J., "is clear, that to constitute interest 'insurable against a peril, there must be an interest such that the peril would, by its proximate effect, cause damage to the assured."^ Fre'noh law drew a distinction between " frSt acquis " and " fret si faire," the former being insurable, the latter not.^ English law, draws no such distinction. Thus chartered freight on homeward voyage may be insured against loss by perils on the previous outward voyage.^ ' Lucena v. Crauford (1806), 2 B. & P. at p. 302, cited and approved by Lord Blackburn in Lloyd v. Fleming (1872), L. E. 7 Q. B. at p. 302. = Boehm v. Bell (1799), 8 T. R. 162 (prize insured by captors). ' Beagrave v. Union Mar. Int. Go. (1866), L. E. 1 C. P. at p. 326. ' Code de Commerce, Art. 347 ; but it is believed that this rule has now been modified. » ItanUn v. PolUr (1873), L. E. 6 H. L. 83, at p. 114. INSURABLE INTEREST. 11 § 6, — (1.) The assured must be interested in the Sect. 6. subject-matter insured at the time of the loss.^ Wh^ Provided that where the subject-matter is insured, j|J^^/^''' " lost or not lost," it is immaterial that the assured may attach. not have acquired his interest until after the loss, if at the time of effecting the contract of insurance he was not aware of the loss.^ (2,) Where the assured has no interest at the time of the loss, he cannot acquire interest by any act or election after he is aware' of the loss.^ (3.) "Where the buyer of goods has insured them, he has an insurable interest, notwithstanding that he might, at his election, have rejected the goods, or have treated them as at the seller's risk, by reason of the latter's delay in making delivery or otherwise.* Note. — The section relates only to tlie existence of interest as a condition to effective insurance. A policy founded on interest may, of course, be assigned after loss.^ It has been argued that the rule contained in the proviso to sub- sect. (1) only applies to the case of a partial loss, but that is not so. Suppose a man buys a cargo while at sea. It turns out that before the purchase was completed the cargo had perished. As a rule, the con- tract is void, and, therefore, the buyer has no insurable interest ; but there is such a thing as an emptio spei, as opposed to the purchase of a thing itself.^ In the old form of pleading, interest was averred as existing during the risk and at the time of the loss. But if interest was traversed, it was sufficient to prove interest at the time of the loss (^Bulleii and' • Bhind V. Wilkiriton (1810), 2 Taunt, at p. 243 ; Anderson v. Morice (1876), 1 App. Cas. 713. ' Sutherland v. Pratt (1843), 11 M. & "W. 296, and post, p. 122. ' Anderson v. Morice (1876), 1 App. Cas. 713, H. L. * See Col. Ins. of New Zealand v. Adelaide Ins. Co. (1886), 12 App. Cas. 128, P. C. ' Sparhes v. Marshall (1836), 2 Bing. N. C. 761, and see further, Sohed. I. rule 1, post, p. 122. ° See Chalmers' Sale of Goods Act (1893), § 5, and notes thereto. 12 DIGEST OF MARINE INSURANCE. Seot. 6. Leake, Prec. of Pleading, Ed. 3, p. 611). Until interest was acquired, the policy could not attach. Suppose A makes a contract for the purchase of a cargo of corn, to he loaded on a certain ship, and insures his purchase. Part of the cargo is put on board, and then burnt. If, on the true construction of the contract, it appears that the property and risk in the corn were not to pass to A till the complete cargo was loaded, he has no insurable interest, and cannot acquire one.^ In the case provided for by subsect. (3), the assured has an actual interest, defeasible only at his own option. Suppose A buys goods by sample, to be shipped from abroad, and insures them. Goods which are inferior to sample are shipped, and then partially sea-damaged on the voyage. A may accept the goods, and claim on the policy. If A rejects the goods, presumably he could not claim on the policy, but could he assign the policy to the seller, and then reject the goods ? Probably not; but various complications may be suggested which still await dtcision. Defeasible or contin- gent interest. § 7. A defeasible interest is insurable, as also is a contingent [or inchoate] interest. Note. — Where captors of a ship insured her, but the Prize Court afterwards restored her to her owners, it was held that the premium was not returnable, for the risk had attached. The interest in this case may be regarded either as defeasible or contingent.^ In Lucena v. Cravford (1806), 2 B. & P. pp. 294, 295, seven of the judges, in their opinion to the House of Lords, say, " Inchoate rights, founded on subsisting titles, unless prohibited by positive laws, are insurable. Freight, respondentia, and bottomry are of this descrip- tion." And then, after discussing various ancient definitions of insur- ance, they go on to say : " These definitions clearly embrace a contingent interest which is subject to the perils of the sea, and for the loss of which a compensation may be made." Ke-insuranoe is a good example of a contingent interest. In Claij v. Harrison (1830), 10 B. & C. 99, the seller stopped goods in transitu after partial loss. Held that the buyer could not recover on his policy, as his interest was defeated by the seller's resumption of possession. But how far would that case be followed, ' As to when the risk passes from seller to buyer under a contract of sale, see Chalmer^ Sale of Goods Act, ] 893, §§ 20 a;nd 32, and notes thereto. » Boehm V. Bell (1779), 8 T. E. 154. INSURABLE INTEREST.' 13 now that it is established that stoppage ia transit does not, as a rule, Sect. 7. rescind the contract ? ^ The facts, too, were peculiar. § 8. A partial interest of any nature is insurable. Partial interest. Note. — ^An undivided interest in a parcel of goods shipped f.o.b. is insurable.^ So, too, a shareholder may insure his interest in the adventure of a company engaged in laying a submarine cable ; ^ and a "hotchpot" interest in cargo may be insured.* " I do not see," says Heath, J.,, " why a joint tenant or tenant in common hds not such an interest in the entirety as will entitle him to insure." ° By § 5 of the Merchant Shipping Act, 1894 (57 & 58 Vict. c. CO), ships are divided into sixty-four shares, and any number of persons not exceeding five may be registered as joint owners of a ship or any share therein. But a part owner has no implied authority to insure on behalf of the other part owners.'' Lloyd's policy (jpost, p. 118) is expressed to enure for the benefit of all to whom the subject-matter appertains " in part or in all ; " but these general words must be restrained by the circumstances of the particular insurance. ance. § 9. — (1.) The insurer under a contract of marine Ee-insur- insurance has an insurable interest in his risk, and may ' re-insure in respect of it.'' (2.) Unless the policy otherwise provides, the original assured has no right or interest in respect of such re- ' See Chalmers' Sale of Goods Act, 1893, § 48, and notes. ' Inglis V. Stock (1885), 10 App. Oas. pp. 263, 274 (390 tons of sugar sent off to satisfy two contracts, for 200 tons each, without any appropria- tion to either contract). ' Wilson V. Jones (1867), L. E. 2 Ex. 139, Ex. Ch. * Miworlh V. Alliance Mar. Ins. Co. (1873), L. E. 8 C. P. at p. 613. = Page v. Fry (1800), 2 B. & P. 240, 243 (cargo). « Bell V. Humphries (1816), 2 Start. 345 ; Amould, Ed. 6, p. 160. ' Uzielli V. Boston Mar. Ins. Go. (1884), 15 Q. B. D. at p. 16 ; and of. Bradford v. Symondson (1881), 7 Q. B. D. at p. 463, C. A. » McArthur, Ed. 2, p. 332. 14 DIGEST OF MARINE INSURANCE. Sect. 9. Note. — Ee-insurance, that is to say, an insurance effected by an insurer to cover wholly or in part the risk he has undertaken, must be distinguished from double Insurance, that is to say, a second insurance effected by or on behalf of an assured on a risk already covered, as to which see § 33. At common law re-insurance was valid, but it was prohibited in 1745 by the 19 Geo. 2, c. 37, § 4, unless the insurer was dead or insolvent. The prohibition was removed in 1864 by the 27 & 28 Vict. c. 56, § 1 (since repealed), and re-insurance is now expressly recognized by § 92 of the Stamp Act, 1891 (54 & 55 Vict. c. 39), post, p. 137. The common form of a re-insurance policy runs thus — " being a re-insurance subject to all clauses and conditions of the original policy or policies, and to pay as may be paid thereon.'' Then follow the exceptions, if any.' As to specifying in policy that it is a re-insurance and as to notice of abandonment, see §§ 27 and 63, post. Bottomry. § 10. The lender of money on bottomry or respon- dentia has an insurable interest in respect of the loan.^ Illustrations. 1. The master of a damaged British ship requires money for neces- sary repairs. A merchant abroad advances the money, taking a bond mortgaging the ship, and making the money repayable whether she arrives or not. The merchant has no insurable interest, for the master has no authority to give such a bond, or do more than hypo- thecate the ship for the advances.' ' As to construction of this provision, see Uzielli v. Boston Mar. Ins. Co. (1884), 15 Q. B. D. 0. A. (re-insurer not liable for expenses under sue and labour clauses) ; Ex p. Western Ins. Co. (1892), 2 Ch. 423 (" pay as paid" — payment by original insurer not condition precedent); Chip- pendale V. Molt (1895), 65 L. J. Q. B. 104 (re-insurer not bound by improper payment by original insurer); Crocker v. Sturge (1897), 1 Q. B. 330 (re-insurance of portion of risk — construction of " final port ") ; China Traders Assn. v. Boyal Exchange (1898), 2 Q. B. 187, 0. A. (right of re- insurer to discovery of ship's papers) ; Lower Rhine Ins. Assn. v. Sedgvnck (1899), 1 Q. B. 199, 0. A. (lapse of original policy, and issue of new one) ; Charlesworth v. Faber (1900), 5 Com; Cas. 408 (continuation clause ex- ceeding twelve months' limit for time policy). ' See McArthur, Ed. 2, pp. 59, 62, 214 ; and § 7. ' StainbanJc v. Fenning (1851), 11 C. B. 51 ; Carver's Carriage by Sea, Ed. 3, § 312 ; but see The Badbet (1899), P. 295, per Bucknill, J. INSUBABLE INTEREST. 15 2. Policy on bottomry bond in old form. The ship becomes a Sect. 10. constructive total loss. The assured cannot recover, for the bond ~"~" stands good unless there is an actual total loss.* Note. — By the law of the sea the master may, in case of necessity, and under certain restrictions, raise money on the seciirity of the ship, freight, and cargo.^ The condition of a loan on bottomry or respon- dentia is that the money is not repayable if the ship or cargo does not arrive. Consequently it is the lender, and not the borrower, who must insure.'' As to specifying the nature of the interest in the ijolicy, see § %T,post. As to the general law of bottomry, see Carver's Carriage by Sea, Ed. 3, §§ 310-319. § 11. [A seaman, as well as the master, lias an Seaman's insurable interest in respect of his wages.] wages. Note. — This provision is in the form in which the Lords Select Committee settled it, but the law is doubtful at present. The master of a ship could always insure his wages, but formerly at any rate a seaman under the rank of master could not {Amould, Ed. 6, p. 45). "Wages of seamen," said the judges in an old case, "are in their nature insurable, though universally prohibited to be insured on principles of policy."* But when this was laid down the doctrine prevailed that " freight was the mother of wages," and if freight was not earned the seaman was not entitled to his wages. This doctrine was abandoned in 1854, and § 183 of the Merchant Shipping Act of that year (17 & 18 Vict. c. 104) provided that the right to wages should not be dependent on the earning of freight, but that in all cases of wreck or loss of the ship, proof that the seaman had not exerted himself to the utmost to save the ship and cargo should bar his claim to wages. This provision is now reproduced in § 157 of the Merchant Shipping Act, 1894 (57 & 58 Vict. c. 60). On the principle cessante ratione cessaf ipsa lex, it may be that seamen's wages are now insurable in England, but the effect of the statute still awaits decision. ' Broomfield v. Southern Ins. Co. (1870), L. K. 5 Ex. 192. Modern forms provide for constructive total loss. « Abbott. on Shipping, Ed. 12, pp. 110, 121. ' For forms of insurance on bottomry, see Owen's Notes and Clauses, Ed. 3, p. 143, and for modern forms of bottomry and respondentia bonds, see ibid. pp. 209, 211. * LucetM V. Crau/ord (180G), 2 B. & P. at p. 29J, H. L. IG DIGEST OF MARINE INSURANCE. Sect. 12. § 12. In the case of advance freight, the person Advance advancing the freight has an insurable interest, in so "'^ ■ far as such freight is not repayable in case of loss.^ Note. — By English law advance freight, as such, is not repayable in case of loss; the shipowner therefore has not an insurable interest in it, but the person advancing it has.^ But by special contract it may be repayable,' and then the positions are reversed. Though advance freight may not be repayable in case of loss, the shipowner may be liable in damages to the cargo owner if the loss is occasioned by his negligence or fault, and in estimating the damages the amount advanced for freight must be taken into account.* An advance to a shipowner by a shipper or charterer in respect of a voyage may fall into three categories : (a) It may be advance freight not repayable in case of loss ; (6) it may be advance freight specially repayable in case of loss ; or (c) it may be a mere loan repay- able in any event. In the last case It is not at risk, and therefore not insurable.^ As to the tests for detennining within which category a given advance falls, see Co/Tver's Carriage by Sea, Ed. 3, §§ 562, 566. By the law of most foreign countries, prepaid freight is repayable in case of loss.'' Charges of § 13. The assured has an insurable interest in the charges of any insurance which he may effect.'' insurance. Note. — Ordinarily the charges of insurance consist of the premium, the broker's commission, and the stamp. Quantum § 14. — (1.) A Carrier or other bailee who is responsible of interest. » Arnmld, Ed. 6, p. 62 ; MeArthur, Ed. 2, p. 65 ; of. Smith v. Pyman (1891), 1 Q. B. at pp. 744, 745, C. A. ' Allison V. Bristol Ins. Co. (1876), 1 App. Cas. 208, 238, H. L., reviewing the cases. ' Ibid, at p. 221, citing Hall v. Janson (1855), 4 E. & B. 500. * Bufomcet v. Bishop (1886), 18 Q. B. D. 373. » The Salacia (1862), Lush. 578, at p. 582. « Byrne v. SoUller (1871), L. R. 6 Ex. at p. 325. ' MeArthur, Ed. 2, p. 68 ; 'Fhillips on Insurance, § 1221 ; Uslier v. Noble (1810), 12 East. 639. As to the premium in case of re-insurance, see Arnould, Ed. 6, p. 104. INSURABLE INTEREST. 17 for insurable property has an insurable interest to the Sect. 14. extent of his responsibility/ (2.) Where the subject-matter insured is mortgaged, the mortgagor has an insurable interest in the full value thereof, and the mortgagee has an insurable interest in respect of any sum due or to become due under the mortgage.^ (3.) Where a mortgagee insures for the benefit of the mortgagor as well as for himself, he has an insurable interest in respect of the full value, though he effect the insurance in his own name only.^ (4) Where a consignee, having an interest in the consignment, insures for the benefit of other persons in- terested as well as for himself, he has an insurable interest in respect of the full value of his and their interests in the consignment, though he effect the insurance in his own name only.* (5.) The owner of insurable property has an insurable interest in respect of the full value thereof, notwith- standing that some third person may have agreed, or be liable, to indemnify him in case of loss.^ (6.) Nothing in this section affects the provisions of this Digest relating to double insurance, or the right of subrogation.^ > Crowley v. Gohsn (1832), 3 B. & Ad. 478; and Ebsworth v. Alliance Mar. Ins. Co. (1873), L. R. 8 C. P. at p. 641 ; but see ibid, at p. 612. ' Arnould, Ed. 6, pp. 84, 118 ; Irving v. Ricliardion (1831), 2 B. & Ad. 193 ; North British Ins. Go. Y. London, Ac, Ins. Co. (1877), 5 Oh. D. at pp. 583, 584, 0. A. » Ebsworth v. Alliance Ins. Go. (1873), L. E. 8 C. P. 596, at pp. 608 and 641 ; Castellain v. Preston (1883), 11 Q. B. D. at p. 398, C. A. * Ebsworth V. Alliance Ins. Co. (1873), L. E. 8 0. P. 596. 5 Hobbs V. Hannam (1811), 3 Camp. 93. « See §§ 33, 80, and 81. 18 DIGEST OF MABINE INSURANCE. Sect. 14. Note.— In Small v. U. K. Mar. Assn. (1897), 2 Q. B. 311, C.A., a policy was effected by ships-husbands for the mortgagee, at the instance of the mortgagor, who was part owner and master. The mortgagee was held entitled to recover, although the loss was occasioned by the barratry of the mortgagor. Subsect. (4) adopts the judgment of Bovill, C. J., and Denman, J., in Ebsworth v. Alliance Mar. Ins. Co., L. E. 8 C. P. 596. The correctness of the rule in the text is assumed by Bowen, L.J.,' who, in a later case, says : " A person having a limited interest may insure either for himself, and to cover his own interest only, or he may insure, so as to cover not only his own limited interest, but the interest of all others who are interested in the property," and then proceeds to discuss various instances.^ Subsect. (5) generalises a case where the charterer had agreed to indemnify the shipowner. Obviously a cargo owner may insure his- cargo, though if it is lost through the negligence of the shipowner, he may have his remedy by damages.' Lloyd's policy in terms expresses that it is effected by J. S. " as well in his own name as for, and in the name and names of, all and every other person to whom the same doth, may, or shall appertain." * The pro- vision, of course, is confined to interests londflde intended to be covered- Where different interests are concerned, says Blackburn, J., it is common practice for the broker to enter into the policy in his own name, " but on behalf of and to protect the interest of different con- stituents." = A policy is often effected by J. S. " and [or] as agent ; " see post, p. 118. Assign- § 15. Where the assured assigns or otherwise parts interest, ^it^i ^^^ interest in the subject-matter insured, he does ' ' Castellain v. Preston (1883), 11 Q. B. D. at p. 398, C. A. ' As to the complications which might arise in the case of double insur- ance, see McArthur, Ed. 2, p. 63, n. ; but see a solution sugge^ed by Mellish, L.J., in North British Ins. Co. v. London Ins. Co. (1877), 5 ,Ch. D. at p. 583. ' Of. Dufomcet v. Bishop (1886), 18 Q. B. D. 373, and Yates v. Wliii'e (1838), 4 Bing. N. C. 272. As to the insurer's right of subrogation consequent on payment, see § 80, post. * Perhaps some light is thrown on this ancient formula by the statement that a trustee may insure in his own name, " as the law does not regard the use or trust of a chattel " (Lunena v. Crauford (1806), 2 B. & P. at p. 290 ; 6 E. E. 676 in H. L.). » lonides V. Faeifle Ins. Co. (1871), L. E. 6 Q. B. at p. 678; cf. Leslie's Case (1889), 22 Q. B. D. 724. mSUBABLE VALUE. 19 not thereby transfer to the assignee his rights under the Sect. is. contract of insurance, nnless. there be an express or implied agreement with the assignee to that effect.^ But the provisions of this section do not apply to a transmission of interest by operation of law. XoTE. — As to the converse case of an assignee ingaring for Ms assignor, see § 14. In Bayner v. Preston, cited below. Lord Esher says : " Where the subject-matter of the insurance is sold during the running of the policy, no interest nnder the policy passes unless it is made part of the contract of sale, so that it will be considered in a court of equity as an assignment." Where there is such an agreement, it may be ^ven effect to either by an assignment of the policy, or by the assignor holding the policy as fiustee for the assignee. The ordinary cases of transmission of interest by act of law are death and bankruptcy, but the subn^ation of the insurer to the rights of the assured on payment of the i- 'aim may perhaps be regarded as coming under this category. As to assignment of policy, see § 51, post, and as to assignment of interest, see § 52, post. Insurable Value. § 16. Subject to any express provision or valuation Measnre of in the policy, the insurable value of the subject-matters raine. insured must be ascertained as follows : — (1.) In insnrance on ship, the insurable value is the value, at the commencement of the risk, of the ship, including her outfit, provisions and stores for the officers and crew, money advanced for seamen's wages, and other disbursements (if any) incurred to make the ship fit for the voyage or period of time covered by the policy. ' Jrnouii, Ed. 6, p. 115 ; Lowndes, 'EA. 2,-p. S ; Poides y. Irnies (ISiV), 11 M. & W. 10 (sale of shares in a ship) ; North of England Oil Cake Co. v. Archangel Mar. Ins. Co. (1875), L. E. 10 Q. B. 249 (sale of cargo); Bayner v. Preston (1881), 18 Ch. D. at p. 12, C. A. 20 DIGEST OF MARINE INSURANCE. Sect. 16. plus the charges of insurance upon the whole ; ^ The insurable value, in the case of a steam- ship, includes also the machinery, boilers, coals, and engine stores, and in the case of a ship engaged in a special trade, the ordinary fittings requisite for the trade : ^ (2 ) In insurance on freight, whether paid in advance or otherwise, the insurable value is the gross amount of the freight at the risk of the assured, plus the charges of insurance : * (3.) In insurance on goods or merchandise, the in- surable value is the prime cost of the property insured, plus the expenses of shipping and the charges of insurance upon the whole : * (4.) In insurance on any other subject-matter or interest, the insurable value is the amount at the risk of the assured when the policy attaches, plus the charges of insurance.® Note. — A clear delimitation of insurable value is necessary, (o) to fix the measure of indemnity in the case of an unvalued policy, (6) to fix the measure of indemnity in the few cases in which a valued policy can he opened up, and (c) to furnish an approximate standard for fixing the value in a valued policy. Though marine insurance is universally admitted to be a contract of indemnity (see note to § 1), there are two opposing theories as to what is the nature of the indemnity to be aimed at. According to some, the assured ought to be put in the same position as if he had ' McArtliur, Ed. 2, p. G7 ; Lowndes, Ed. 2, p. 56 ; Brough v. Wliilmore (1791), 4 T. R. 206 (stores and provisions for crew). ' See MoArthur, Ed. 2, p. 67, and as to fittings, see Hogarth v. WaVcer (1900), 2 Q. B. 283, C. A. » McArtliur, Ed. 2, p. 68 ; Fdlmer v. Blackburn (1822), 1 Bing. 61 ; Eeport of Commission on Unseaworthy Ships, 1874, vol. 2, p. xvi. * MoArthur, Ed. 2, p. 68 ; Usher v. Nchle (1810), 12 East, 639, as to. charges' of insurance, see at p. 616. " McArthur, Ed. 2, p. 69. DISCLOSURE AND REPRESENTATIONS. 21 not undertaken the adventure. According to others, he ought to be Sect. 16. put in the same position as if the adventure had been carried to a successful issue.' English law steers a halting course between these two theories, but with a strong leaning towards the former. According to modern practice, unvalued policies are practically confined to goods and to freight payable on arrival. Other interests are almost invariably insured by valued policies. When the amount to be insured on goods cannot be fixed till the receipt of what are known as " closing particulars," provision is usually made that, in the event of loss before declaration, the declaration shall be on the basis of invoice cost and charges, plus a certain agreed percentage for anticipated profits. See Owen's Notes and Clauses, Ed. 3, p. 79. As regards " ship," it is to be noted that Lloyd's policy expresses the insurance to be upon "the body, tackle, apparel, ordnance, munition, artillery, boat and other furniture of and in the good ship ." In a recent case ^ it was held that in the case of a ship employed in the grain trade, separation cloths and dunnage mats Tjf ere part of the furniture of the ship. It appears that a policy on " hull and machinery " covers less than a policy on " ship ; " e.g., it may not cover coals and stores.^ As to measure of indemnity, see further, §§ 68-79. Disclosure and Representations. ' § 17. A contract of marine insurance is a contract insurance based upon the utmost good faith, and, if the utmost J^^^'^'^'.'" good faith be not observed by either party, the contract may be avoided by the other party.^ Note. — The general principle is stated in this section because the special sections which follow are not exhaustive. Insurance is a contract uherrimce fidei, and the obligation is bind- ing upon both parties alike, though necessarily the question usually arises with reference to the .conduct of the assured. " Good faith," ' McArthur, Ed. 2, p. 67, citing Bemcke, Principles of Indemnity. ^ Hogarth v. Walker (1900), 2 Q. B. 283, C. A. ; but of. Hill v. Fallen (1807), 8 East, 373, as to whaling outfit. » Boddielc v. Indemnity Mutual Mar. Im. Co. (1895), 2 Q. B. at p. 386, C. A. * Arnould, Ed. 6, pp. 5, 513, 548 ; Pothier, Traite d'Assurance, §§ 280 to 290 ; of. Seaton v. Heath (1899), 1 Q. B. at p. 792, 0. A. 22 DIGEST OF MABINE INSURANCE. Sect. 17. says Lord Mansfield, "forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of that fact, and from his believing the contrary. . . . The policy would be equally [void] against the underwriter if he concealed ; as if he insured a ship on her voyage which he privately knew to be arrived, an action would lie to recover the premium." ' The contract is often said to be rendered void by concealment or misrepresentation, but it is clear that it is only voidable at the option of the party prejudiced, and that the ordinary rules of law as to voidable contracts apply to insurance.^ Disclosure § 18. — (1.) Subject to the provisions of this section, y assure . ^^^ assured milst disclose to the insurer, before the contract is concluded, every material circumstance which is known to the assured, and the assured is deemed to know every circumstance which, in the ordinary course of business, ought to be known by him. If the assured fails to make such disclosure the insurer may avoid the contract.^ (2.) Every circumstance is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk.* (3.) In the absence of inquiry the following circum- stances need not be disclosed, namely : — (a.) Any circumstance which diminishes the risk : ® (b.) Any circumstance which is known or presumed ' Carter v. Boehm (1765), 3 Burr. 1905. =■ Morrison v. Univereal Ine. Co. (1873), L. R. 8 Ex. 187,' Ex. Ch. ' Arnould, Ed. 6, p. 548 ; Parsons on Insurance, vol. i. p. 467 ; lonides v. Pender (1874), L. E. 9 Q. B. at p. 537, per Blackburn, J. As to facts which assured ought to know, see Proud/oot v. Montefiore (1867), L. E. 2 Q. B. 511, 519 ; BlacMmrn v. Vigors (1887), 12 App. Gas. at pp. 537, 541. ' Eivaz v. Gerussl (1880), 6 Q. B. D. at p. 229, per Lord Esher ; Tate v. Hyslop (1885), 15 Q. B. D. at p. 379, per Lord Bowen. » Arnould, Ed. 6, pp. 579, 591 ; Carter v. Boehm (1766), 3 Burr, at p. 1910, per Lord Mansfield. BISCLOSURE AND REPERSENTATIONS. 23 to be known to the insurer. The insurer is Seot. 18. presumed to know matters of common notoriety or knowledge, and matters which an insurer in the ordinary course of his business, as such, ought to know : ^ (c.) Any circumstance as to which information is waived by the insurer : ^ {d.) Any circumstance which it is superfluous to disclose by reason of any express or implied warranty.^ (4.) Whether any particular circumstance, which is not disclosed, be material or not is, in each case, a question of fact.* (5.) The term " circumstance " includes any com- munication made to, or information received by, the assured.^ Illustrations. 1. Insurance on ship. Lloyd's List contains an entiy tliat a ship of a similar name had stranded. The broker, after enquiry, comes to the conclusion that the entry must relate to another ship, and does not disclose the information to the insurer. The insurer, not having seen the entry, may avoid the contract.^ 2. Policy on goods which are grossly over-valued. The assured does not disclose the over-valuation. The insurer may avoid the contract.^ » Arnould, Ed. 6, p. 579 ; Garter v. Soehm (1766), 3 Burr, at p. 1910 ; narrower v. Hutchinson (1870), L. K. 5 Q. B. at p. 590. ' Arnould, Ed. 6, p. 587 ; Phillips on Insurance, § 568 ; Carter v. 5oe7m (1766), 3 Burr, at pp. 1910, 1911 ; cf, Laing v. Union Ins. Co. (1895), 11 Times L. E. 359. ' Arnould, Ed. 6, p. 588; Shoolbred v. Nutt (1782), Marshall on Insurance, Ed. 4, p. 366; Haywood v. Badgers (1804), 4 East, 590; 1 Parsons on Insurance, p. 485. ' lonides v. Pender (1874), L. E. 9 Q. B. 531. ■> Blackburn v. Haslam (1888), 21 Q. B. D. 144. « Morrison v. Universal Mar. Ins. Co. (1873), L. E. 8 Ex. 197, Ex. Ch. ' lonides v. Pe»(Jer (1874), L. E. 9 Q. B. 531 (fraud). 24 DIQEST OF MARINE INSUBANGE. Sect. 18. 3. Assured effects a series of consecutive policies on sliipments to be declared. The goods declared on the earlier policies are systemati- cally under-valued, so as to conceal the fact that the earlier policies are more exhausted than they appear to be. The insurer may avoid the latter policies on the ground of non-disclosure.* ■4. Insurance on chartered freight. If the charter contains a cancelling clause, this must be disclosed.^ 5. Insurance on goods, including risk of craft. The assured does not disclose that he gets his lighterage done on cheaper terms in con- sideration of the lighterman limiting his liability as a common carrier. The insurer may avoid the contract.^ 6. Insurance on chartered freight, one-third dimioishing each month. The slip sufficiently discloses that this is a time charter, which may contain the common cesser clause.'' 7. Policy on goods. The plaintiff's shipping agent at Smyrna hears that the vessel on which the goods were shipped has stranded. Instead of telegraphing, he informs plaintiff of this by letter, so that plaintiff may have time to insure. Before receipt of the letter the plaintiff insures the goods. The insurer may avoid the contract.^ Note. — Non-disclosure by the assured is commonly referred to as concealment, but the expression non-disclosure is preferable. Aliud est celare, aliud tacere. The duty of the assured to disclose material facts is a positive, not a negative, duty. Mere silence, and even innocent silence, as to a material fact may entitle the insurer to avoid the contract." It has been suggested that if the master of a ship, or a ship's agent, innocently omits to disclose a material fact to his employer, who accordingly cannot disclose it to the insurer, the con- tract will stand, but the House of Lords appear to have repudiated this notion.' If insurance be undertaken by an agent for the insurer, the ordinary rules of agency appear to apply, but special rules apply to the agent of the assured ; see next section. ' Bivaz V. Gerussi (1881), 6 Q. B. D. 222, C. A. (fraud). " Mercantile Steamship Co. v. Tyaer (1881), 7 Q. B. D. 73. » Tate V. Hyilop (1885), 15 Q. B. D. 368, C. A. A common carrier is responsible as an insurer, and not merely for negligence. * Tlie Bedouin (1894), P. 1, C. A. ; of. Charlem.ortlt v. Faher (1900), 5 Com. Cas. 408 (continuation clause). » Proudfoot V. Montifiore (1867), L. E. 2 Q. B. 511. « See Bates v. Sewitt (1867), L. K. 2 Q. B. 595, at p. 607 (failure to disclose that a merchant ship had formerly been a Confederate cruiser). ' Blaclihurn v. Vigors (1887), 12 App. Cas. at pp. 536, 510. DISGLOSURE AND BEPBESENTATIONS. 25 Subseot. (2), Riuaz v. Qerusi, cited in illustration 3, was a case of Sect. 18. fraud, but it was laid down generally that a circumstance might bo material, though it had no direct bearing on the particular risk. An apparently well-founded rumour, though it turns out afterwards to be incorrect, must be disclosed (Arnould, Ed. C, p. 574). The rule which e.xempts from disclosure circumstances covered by an implied warranty (^Arnould, Ed. C, p. 588) apjjears to be of doubtful policy. It seems still to be a moot point whether expert evidence is admis- sible to prove the materiality of a fact which has not been disclosed.' § 19. Subject to the provisions of the preceding section Disclosure as to circumstances whicli need not be disclosed, where effecting insurance is effected for the assured by an agent, the '"^^ranoe. agent must disclose to the insurer — (a ) Every material circumstance which is known to himself, and an agent to insure is deemed to know every circumstance which in the ordinary course of business ought to be known by, or to have been communicated to, him : ^ (b.) Every material circumstance which the assured. is bound to disclose, unless it come to his knowledge too late to communicate it to the agent.* lUiistratioiis. 1. 'J'irae policy on sliip. The bioker who effects the insurance omits to disclose a letter in his possession from the captain saying that the ship has been ashore, and that she is being repaired. This is not done dishonestly. The insurer may avoid the contract.' 2. Plaintiff, in Glasgow, employs a broker there to ro-insure an ' See notes to Carter v. Boehm, 1 Smith, I.. C. Ed. 10, p. 874; Boscoe's Nisi Prius, Ed. 17, p. 177. " Blaekburn v. Vigors (1887), 12 App. Cas. at p. 541 ; Blachbnrn v. Easlam (1888), 21 Q. B. U. 144. » Slaehburn v. Vigors (1887), 12 App. Oas. at p. 537. « Bussell V. Thornton (1850), 4 H. & N. 788; affirmed G H. & N. 140, Ex. Ch. 26 DIGEST OF MARINE INSURANCE. Sect. 19. overdue ship. The Glasgow broker employs a broker in London to effect the rc-insurance. The Glasgow broker does not communicate either to the plaintiff or to the London broker information which he has received tending to show that the ship was lost. The insurer may avoid the contract.' Note. — The knowledge of an agent to insure, who does not effect the particular insurance, is immaterial,^ but if an agent to insure employs a sub-agent, all material facts knowu to the agent must be communicated to the sub-agent.^ If before the contract is made the assured hears of a loss, but has not time to oommunicate with his agent, the contract would stand. The assured must use "due diligence" to communicate with bis agent.^ Represen- § 20. — (1.) Every material representation made by pending ^^^ assured or his agent to the insurer during the "oiTovAva^ negotiations for the contract, and before the contract is conchided, must be true. If it be untrue the insurer may avoid the contract* (2.) A representation is material which would in- fluence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk.® (3.) A representation may be either a representation as to a matter of fact, or as to a matter of expectation or belief.' (4.) A representation as to a matter of fact is true. 1 Blacltlmn v. Haslam (1888), 21 Q. B. D. 144. ' Blackburn v. Vigors (1887), 12 App. Cas. 530. ' Blaclthurn v. Baslam (1888), 21 Q. B. D. 144. • Cory v. Potton (1872), L. R. 7 Q. B. at p. 308. ' ArnQuld, Ed. 6, pp. S19, 520; Anderson v. Pacific Mar. Ins. Co. (1872), X. E. 7 C. P. at p. 68, per Willes, J. ; lonidee v. Pacific Ins. Co. (1871), L. E. 6 Q. B. at p. 683, per Blackburn, J. " Arnould, Ed. 6, p. 518; Bivaz v. Oerussi (1880), 6 Q. B. D. at p. 229. " Arnould, Ed. C, p. 514. DISOLOSUBE AND REPRESENTATIONS. 27 if it be substantially correct, whether it be literally Sect. 20. correct or not.^ (5.) A representation as to a matter of expectation or belief is true if it be made in good faith.^ (6.) A representation may be withdrawn or corrected before the contract is concluded.^ (7.) Whether a particular representation be material or not is, in each case, a question of fact.* Illustrations. 1. Insurance on ship. The assured falsely inforras the insurer that he has partially insured the ship elsewhere on certain terms. The insurer, relying on this, gives a policy on similar terms. The insurer may avoid the contract.'' 2. Policy on goods at sea. The assured represents to the insurer that the ship sailed from Baltimore for London on the 12th January. As a fact she sailed on the 1st January. The insurer may avoid the contract." 3. Policy on goods to he shipped from abroad. The assured, mis- taking the old ship "Socrates" for a new ship called the "Socrate," informs the insurer that the goods are to be shipped on the new ship. The insurer may avoid the contract.'' Note. — Sibbdld v. Hill,^ where the contract was avoided, though the representation had no direct bearing on the particular risk, was a case of fraud, but according to Bivaz v. Qerussi,^ it seems that the rule would apply whether there was fraud or not. Lord Esher, in a later case, says : " The assured is not bound to tell the insurer what the law is. He is bound to tell him, not every fact, but every material fact, nis other obligation is this, that if he is asked a question — whether • Arnould, Ed. 6, pp. 518, 521; Fawson v. Watson (1778), 2 Cowp. 785. As to a warranty see § 31 (2). ■ Arnould, Ed. 6, p. 524. » Arnould, Ed. 6, pp. 538, 544. ' Bivaz V. Geruisi (1880), 6 Q. B. D. at p. 229, C. A. = Sibhald v. Hill (1814), 2 Dow. H. L. 263. « Anderson v. Thornton (1853), 8 Bxch. 425. ■ lonides v. Pender (1871), L. E. 6 Q. B. 674, 683. « Bihhald v. fliH(1814), 2 Dow. H. L. 263. » Rivaz V. Oerussi (1880), 6 Q. B. D. 222, 229. 28 DIGEST OF MABINE INSURANCE. Sect. 20. a material fact or not'— by the underwriters, he must answer it truly. If he answers it falsely, with intent to deceive, though it may not be a material fact, it will vitiate the policy." ' Arnould, Ed. 6, pp. 514, 530, specifies a further class of repre- f entation, viz. a communication of information which the assured has received from others, but it is submitted that this supposed third case must always fall within one of the two classes specified in subsect. (3). See, however, next section. The cases seem generally to assume that it is sufiScient if a repre- sentation as to expectation or belief is made in good faith, but there is an obiter dictum by Blackburn, J., that the assured must have reasonable ground for his belief.^ Tnis section deals with represeatations made during the- nego- tiation of the contract. A representation expressed in^ or implied from the terms of, the policy itself, constitutes a warranty or con- dition.' The policy is the final expression of the contract, and extrinsic evidence is inadmissible to contradict its terms. See Arnould, Ed. 6, p. 538. As to the rule, or supposed rule, that a misrepresentation made to the first underwriter is presumed to be made to subsequent under- writers, see Arnould, Ed. 6, p. 544. Assured & gi. The assured, or his agent, is not bound to give need not .... , . , . disclose his his Opinion to the insurer on any matter relating to the opinion, i x i ' adventure.' Note. — If the assured chooses to give his opinion, he must, of course, give it honestly.^ When con- § 22. A Contract of marine insurance is deemed to be deemed to concluded when the proposal of the assured is accepted duded' ^^ *^® insurer, whether the policy be then issued or not ; and for the purpose of showing when the proposal was accepted, reference may be made to the slip or covering ' The Bedouin (1894), P. at p. 12, C. A. = lonides v. Pacifia Ins. Co. (1871), L. K. 6 Q. B. at pp. 683, 684. » Behn v. Barne'ss (1863), 32 L. J. Ex. 204, 205, Ex. Ch. * Andereon v. Facijio Ins. Co. (1872), L. E. 7 C. P. 65. = Of. The Bedouin (1894), P. at p. 12, per Lord Esher. TEE POLICY. 29 note or other customary memorandum of the contract. Sect. 22. although it be unstamped.^ IfoTE. — " In effecting marine insurance," say the Court of Exchequer Chamber, " the matter is coQsidered merely as negotiation till the slip is initialled, but when that is done the contract is con- sidered to be concluded. It was proved to be the usage of under- writers to issue a stamped policy in accordance with the slip, notwith- standing anything that might happen after the initialling of the slip." ^ The slip in insurance may be compared with the noting of a bilL of exchange, or of a captain's protest. The noting has no legal effect per se, but it is the foundation of the subsequent protest. In Cory V. Patton,^ the proposal of the agent of the assured was accepted by the insurer subject to the ratification by the assured of an increased premium, and it was held that a material fact which came to the knowledge of the assured after the acceptance, but before the ratification, need not be disclosed, for the ratification related back to the acceptance. As to ratification by assured, see § 86, jiost, and see further, notes to §§ 23, 24, 89. The Policy. § 23. Subject to the provisions of any statute, a Contract . . {} . • ' • 1 • '^ ^ . . t must be contract 01 marine insurance is inadmissible in evidence embodied unless it is embodied in a marine policy in accordance [s/^^'ss' with this Digest. The policy may be executed and Vict. c. 39, issued either at the time when the contract is concluded, or afterwards.* Note.— No action can be maintained in England upon the implied promise to grant a policy when the slip is initialled.^ It is otherwise where revenue laws do not interpose." ' Amould, Ed. 6, p. 259; lonides \. Pacific Mar. Ins. Co. (1871), L. E. 6 Q. B. at p. 68 1. See further, § 89, as to slip as evidence. ". Morrison v. Univereal Mar. Ins. Co. (1873), L. R. 8 Ex. at p. 199. 3 Cory V. Patton (1874), L. E. 9 Q. B. 577, Ex. Ch. * See McArthur, Ed. 2, pp. 21, 29, and notes to next section. As t» issuing a policy after notice of loss, see Mead v. Davison (1835), 3 A. & E. 303. 5 Fislier v. Liverpool Mar. Ins. Co. (1874), L. K. 9 Q. B. 418 Ex. Oh. " Bhugwandass v. Netherlands Sea Ins. Co. (1888), 14 App. Oas. 83 P. C. (Rangoon foreign policy). 30 DIGEST OF MARINE ■ INSURANGE. Sect. 23. ' When a stamped policy has been duly issued, then reference may lie made to the slip or covering note for the purpose of showing when the contract was concluded, or for the purpose of rectifying or avoiding the policy, see §§ 22, 24, 89. § 24. A marine policy must specify — What (1.) The name of the assured, or of some person who specify. effects the insurance on his behalf : ^ c?5?,°an Irving v. Bichardeon (1831), 2 B. & Ad. 193. " Thompson v. Beynolds (1857), 26 L. J, Q. B. 93 ; cf. Xenos v. Fox (1868), L. E. 3 O. P. at p. 636 to like effect. ' Bruce v. Jones (1863), 32 L, J. Ex. 132; discussed McArthur, Ed. 2, p. 73. * Barker v. Janson (1868), L. K. 3 C. P. 303; cf. The Main (1894), P. 320 (freight). ' North of England Ins. Assn. v. Armstrong (1870), L. K. 5 Q. B. 244 ; but Lord Blackburn has thrown doubts on this case in Burnand v. Bodocanachi (1882), 7 App. Cas. at p. 342, and see at p. 335. 36 DIGEST OF MARINE INSURANCE. Sect. 28. partial I0S.1, and on the second policy for the total loss, without deduct- ing what was paid on the first policy .^ 7. A policy for £1000 is effected on freight valued at £2000. Only half the intended cargo is put on board, the rest of the ship being used for emigrants. The ship is lost. The insurer is only liable for £500.2 8. Policy on freight valued at £5500. The ship is detained by an accident, and, during this delay, there is a great fall in freights. When a full cargo is loaded, the freight comes to £3250, of which £925 is paid in advance. The ship is lost. The valuation stands, and the assured is entitled to receive £5500, less £1611, which is the propor- tion of the prepaid freight to the gross freight.^ 9. Policy for £1000 on ship valued at £3750, with warranty that one-fifth shall remain uninsured. The real value of the ship is £5000. For the purpose of determining whether the warranty has been broken by a subsequent insurance, regard must be had to the policy value, and not to the real value.* 10. A ship is insured against fire by a valued time policy. While the policy is running, she is so injured by stranding that the cost of repairing her would exceed her repaired value. After this she is destroyed by fire. The insurer must pay the full amount insured.^ 11. Policy on ship valued at £33,000. Her real value is £40,000. The ship incurs certain general average and salvage expenses, which are adjusted abroad on her real value. The assured can only recover 33-40ths of the adjustment from the insurer." Note. — An unvalued policy is commonly spoken of by lawyers as an " open policy," but as that term is applied in mercantile language to a floating policy, it seems better to adhere to the term " unvalued policy." In 1761 the validity of valued policies was contested on the ground that in substance they were wagering policies. Lord Mansfield dis- posed of this contention, and the validity of valued policies has never since been questioned. He pointed out that the effect of the valuation was merely to fix the insurable value of the goods or other ' lAdgelt v. Secretan (1871), L. E. 6 C. P. 616. == Denoon v. Some and Colonial Ass. Co. (1872), L. E. 7 C. P. 341. ^ The Main (1894), P. 320. The assured must, of course, also deduct any sum which he has received on any other policy. * Muirhead v. Forth Mutual Ins. Assn. (1894), A. 0. 72 H. L. » Woodside v. Glohe Ins. Co. (1896), 1 Q. B. 105. ' Steamship " Balmoral " v. Marten (1900), 2 Q. B. 748. TEE POLICT. 37 subject-matter insured, 'jnst as if the parties admitted it at the Sect 28. trial." 1 — Speaking of a total loss, the judges in Irving t. Manning say, " In an open policy the compensation must be ascertained by evidence ; in a valued policy the agreed total value is conclusive." * It is com- monly said that the valuation is conclusive " for the purposes of the policy." It would probably be more correct to say that it is conclu- sive for all purposes relating to the insurable value of the subject- matter insured by a given policy.^ For other purposes it is not conclusive, and in some cases not even relevant. Notwithstanding the valuation, the interest of the assured may be disproved, or short interest may be shown, or it may be shown that the whole or part of the subject-matter insured was not at risk.* In lonides ▼. Pender ' it was held that non-disclosnre of an excessive valuation was ground for avoiding a policy ; but that was a gross case of fraud. Xon-disclosure of an over-valuation made in good faith would presumably be immaterial.' But grossly excessive valuation, if not disclosed, would, of course, always be evidence of fraud. As to mistake, see § 91, post. For auseful discussion of ther English law of valuation, see Beport of Comuussion on XJnseaworthy Ships, 1874, vol. 2, p. xvi., and a memorandum by Mr. Justice WiUes, p. 426. Under the Continental Codes the policy valuation is only ■prima facie evidence of the real value. § 29. An unvalued policy is a policy which does not Uiiralned specify the value of the subject-matter insured, but '"* "^' subject to the limit of the sum insured, leaves the * Zescis V. -Backer (1761), 2 Barr. 1167, see at p. 1171 (partial loss) ; cf. IAd3M V. Secretan (1871), L. E. 6 C. P. at p. 627, per Willes, J. * Irving v. Manning (1847), 1 H. of L. Cas. at p. 307. ' Cf. Bumand v. Jtodocanaehi (1882), 7 App. Cas. at p. 335, per Lord Selbome. * As to disproving interest entirely, see Seagrave v. Union Ins. Co. (1866), Ij. E. 1 C. P. 316-320 ; as to short interest, see Denom v. Home and Colonial Agg. Co. (1872), L. E. 7 C. P. 35] ; Williams v. NoHh China Im. Co. (1876), 1 C. P. D. 757, C. A. ; and as to part of the subject-matter not being at risk, see Tobin v. Harford (1865), 34 L. J. C. P. 57, Ex. CJ. ; The Main (1894), P. 320. = lonides v. Pender (1874), L. E. 9 Q. B. 531. « See The Main (1894), P. 320, 325, where the unreported case> Company of South African Merchants v. Harper, is discussed. 38 DIGEST OF MARINE INSUBANCE. Sect. 29. insurable value to be subsequently ascertained, in the manner herein-before specified.' Floating ■ § 30. — (1.) A floating policy is a policy which describes ship or the insurance in general terms, and leaves the name of ^'''P"" the ship or ships and other particulars to be defined by subsequent declaration.^ (2.) The subsequent declaration or declarations may be made by indorsement on the policy, or in other customary manner.^ (3.) Unless the policy otherwise provides, the de- clarations must be made in the order of despatch or shipment. They must, in the case of goods, comprise all •consignments within the terms of the policy, and the value of the goods or other property must be honestly stated, but an omission or erroneous declaration may be rectified even after loss or arrival, provided the omission or declaration was made in good faith.* (4.) [Subject to any express provision in the policy], where a declaration of value is not made until after motice of loss or arrival, the policy must be treated as an (unvalued policy as regards the subject-matter of that •declaration.^ Note. — The legality of the practice under floating policies was affirmed in England in 1794 (Arnould, Ed. 6, p. 337). When two > Arnowld, Ed. 6, p. 318; Mc Arthur, Ed. 2, p. 67; Irving v. Manning (1847), 1 H. L. C. at p. 307. As to insurable value, see § 16 ; and as to measure of indemnity, see §§ 69-72. ' Amould, Ed. 6, p. 337 ; McArthur, Ed. 2, p. 77. » Ibid. * Ibid. ; and Stephens v. Anstrdlatiom Ins. Co. (1872), L. K. 8 C. P. 18 ; Imperial Mar. Ins. Co. v. Fire Int. Corporation (1879), 4 C. P. D. 166 ; of. Davies v. National Ins. Co. of New Zealand (1891), A. C. at p. 491 (form of policy requiring double declaration). " MeArthur, Ed. 2, p. 78 ; Gledstanes v. Moyal Exchange Ass. Corpora- tion (1864), 34 L. J. Q. B. 30, 35. Special clauses as to valuation in event of loss before declaration are now frequently inserted. TEE POLICY. 39 or more floating policies, effected with different insurers, are open. Sect. 30. it is said that " the assured has a right to declare on any of the policies a loss on board any ship he pleases that comes within the terms of that policy." 1 That may have been the law formerly, but floating policies are now commonly effected " to follow and succeed," that is to say, the prior policy must be exhausted before the next policy is declared on {MoArthur, Ed. 2, p. 78). § 31. — (1.) A policy may be in the form in the First Construe- Schedule to this Digest. 'i:^J,^ (2.) Unless the context of the policy otherwise P°i'<=y- requires, the terms and expressions mentioned in the First Schedule to this Digest must be construed as having the scope and meaning in that schedule assigned to them.^ Note. — It would be beyond the scope of this Digest to attempt to reproduce the many decisions which interpret particular teims in particular policies. But the rules in the schedule record the interpreta- tion which has been put on the more important terms and expressions in the common Lloyd's policy. This may assist the parties to see the scope and effect of the ordinary printed contract, and to add to or alter its terms to meet their special requirements. 32. — (1.) Where an insurance is effected at a premium Premium to be arranged, and no arrangement is made, a reasonable arranged. premium is payable. (2.) Where an insurance is effected on the terms that an additional premium is to be arranged in a given event, and that event happens but no arrangement is made, then a reasonable additional premium is payable.* Note. — This section is not covered by express decision, but it ' Arnovld, Ed. 6, p. 340 ; note that in the cases cited the declaration was made before loss, and see the cases cited for subsect. (3). ' See Lloyd's policy set out, poet, p. 118, and the main rules for its construction, post, p. 122. ' Cf. Hyderabad (Deccan) Co. v. WiVoughby (1889), 2 Q. B. at p. 535 (deviation clause). insurance. 40 DIGEST OF MARINE INSURANCE. Sect. 32. accords with the mercantile understanding, and follows the analogy of " reasonable price " in the case of contracts of sale.* PoUcies are often effected on the terms that a given departure or deviation from the conditions of the policy shall be " held covered at a premium to be arranged." Double Insurance. Double § 33. — (1.) Where two or more policies are effected by or on behalf of the assured on the same adventure and interest or any part thereof, and the sums insured exceed the indemnity allowed by law, the assured is said to be over-insured by double insurance.^ (2.) Where the assured is over-insured by double insurance — (a.) Tlie assured, unless the policy otherwise provides, may claim payment from the insurers in such order as he may think fit, provided that he is not entitled to receive any sum in excess o-f the indemnity allowed by law ; * Q).) Where the policy under which the assured! claims is a valued policy, the assured must give credit, as against the valuation, for any sum received by him under any other policy without regard to the actual value of the subject-matter insured ; * (c.) Where the policy under which the assured claims is an unvalued policy he must give credit, as against the full insurable value, for any sum received by him under any other policy ; ^ ' Clialmen' Sale of Goods Act, 1893, § 8, and notes thereto. = Arnould, Ed.' 6, p. 327 ; McArthur, Ed. 2, p. 73 ; North Brithli Ins. Co. V. London and Globe Ins. Co. (1877), 5 Ch. D. at p. 583, C. A. = Arnould, Ed. 6, p. 328 ; Newly v. Beed (1763), 1 W. BI. 416, Lord Mansfield ; Morgan v. Price (1849), 4 Exch. 621. * Arnould, Ed. 6, p. 332 ; Bruce v. Jones (1863), 1 H. & C. 769. ' Arnould, Ed. 6, p. 329 ; Park on Insurance, p. 423. DOUBLE INSURANCE. 41 {d.) If the assured receives any sum in excess of Sect. 33. the indemnity allowed by law, he is deemed to hold such sum in trust for the insurers, according to their right of contribution among themselves.^ Note. — The following case may be put in illustration. " Suppose a merchant to have £3000 by one policy, and £2000 by another, on QottoD, and that the insurable value of his cotton on board is £4000, and the loss on it £400, the merchant can recover the whole £400, and a return of premium on £1000, just as if he had one policy for £5000 ; but he may at his option claim from one policy three-fifths aud from the other policy two-fifths of this total ; or he may claim from either policy as if the other did not exist." ^ For further illustrations, see the illustrations to § 23 ; and see also § 81 (contribution between insurers), which supplements this section. There is very little English authority on the rules relating to double insurance, but the theory on which they rest is well explained ia Lowndes on Insurance, Ed. 2, pp. 33-35. Insurance is a contract of indemnity, and the assured is entitled to indemnity, but not to a gambling profit. Correlatively the insurer must not make a profit where he runs no risk, hence the rules as to return of premium detailed in § 84. The English rule that the same subject-matter may be differently valued in different policies, while the valuation in a policy is conclusive for the purposes of that policy, gives rise to curious anomalies in working out the rules of double insurance under valued policies ; see § 28. There appears to be no decision as to overlapping policies. Suppose a ship is insured from A to B, and thirty days while there after arrival, and is also insured at and from B to C. If she is lost at B. during the thirty days she is doubly covered.^ The question of mortgagor and moitgagee, among others, is discussed by Mellisb, L. J., in an important case on a fire policy, where both merchant and wharfinger insured the same goods against fire. The goods were destroyed by fire, and it was held that the loss must be wholly borne by the wharfingers' insurers, as the wharfinger was liable ' Tiiis is consequential. - Loicndes, Ed. 2, p. 35 (unvalued policy). ' See the point raised in argument in Union Mar. Ins. Co, v. Martin (1866), 35 L. J. C. P. 182, where the second policy superseded the first. 42 DIGEST OF MARINE INSURANCE. Sect. 33. to the merchant. The Lord Justice says : " The rule is perfectly established in the case of a marine policy that contribution only applies where it is an insurance by the same person having the same rights, and does not apply where different persons insure in respect of different rights. Where different persons insure the same property in respect of their different rights, they may be divided into two classes. It may be that the interest of the two between them makes up the whole property, as in the case of tenant for life and remainderman. Then if each insures, although they may use words apparently insuring the whole property, yet they would recover from their respective insurers the value of their own interests, and of course these values added together would make up the value of the whole pi'operty. Therefore it would not be a case of either subrogation or contribution, because the loss would be divided between the two companies in pro- portion to the interests which the respective persons assured had in the property. But then there may be cases where, although two different persons insured in respect of different rights, each of them can recover the whole, as in the case of mortgagor and mortgagee. But whenever that is the case, it will necessarily follow that one of these two has a remedy over against the other, because the same property cannot in value belong at the same time to two different persons. Each of them may have an interest which entitles him to dnsure for the full value, because in certain events — for instance, if the other person became insolvent— it may be he would lose the full value of the property, and therefore would have in law an insurable interest, but yet it must be that if each recover the full value of the property from their respective " ofSces with whom they insure, one ofBce must have a remedy against the other. Whenever that is the case, the company which has insured the person who has the remedy over succeeds to his right of remedy over, and then it is a case of subrogation." ' Warranties, etc. Nature of § 34. — (1.) A Warranty, in §§ 35 to 42, relating to warran y. ^yg^pj-g^^^jeg^ means a promissory warranty, that is to say, a warranty by which the assured undertakes that some particular thing shall or shall not be done, or that some condition shall be fulfilled, or wherebv he affirms ' North British Ins. Co. v London and Globe Ins. Co. (1877), 5 Ch. D. at p. 583. WABRANTIES, ETO. 43 or negatives the existence of a particular state of Sect. 34. facts.^ (2.) A warranty may be expressed or implied.^ (3.) A warranty, as above defined, is a condition whicb must be fully and exactly complied with, whether it be material to the risk or not. If it be not so com- plied with, the insurer may avoid the contract [as from the date of the breach of warranty, but without prejudice to any liability incurred by him before such date].^ Illustrations. 1. A ship is warranted to sail from ■ L. with " fifty hands or upwards.'' She sails from L. with a crew of forty-six only, but after- wards takes on six more hands. The insurer is not liable.* 2. A ship is insured from New York to Qaebec, whilst there, and thence to London, and is warranted to sail from Quebec on or before the 1st of November. The ship sails from New York too late to arrive at Quebec by the 1st of November, and is lost before reachiog that port. The insurer is liable.^ 3. Policy on ship, with warranty not to be in Grulf of St. Lawrence after the 15th of November. After the 15th of November the ship is wrecked in the Gulf. The assured gives notice of abandonment, and the insurer, with knowledge of the facts, accepts the notice. The insurer is liable, notwithstanding the breach of warranty." Note. — The use of the term " warranty " as signifying a condition precedent is inveterate in marine insurance, but it is unfortunate, because in other branches of the law of contract the term has a different meaniog. It there signifies a collateral stipulation, the breach of which gives rise merely to a claim for damages and not to a right to avoid the contract. ' Arnould, Ed. 6, p. 599 ; Mamhall on Insurance, p. 353. " Arnould, Ed. 6, p. 648 ; cf. Quebec Mar. Ins. Co. v. Commercial Bank of Canada (1870), L. B. 3 P. 0. 234. » Arnould, Ed. 6, pp. 602, 604; McArthur, Ed. 2, p. 36; Lowndes, Ed. 2, p. 93 ; Pawson v. Watson Q778), 2 Cowp. 785 ; Be Halm v. Earthy (1786), 1 T. E. 343. * De Eahn v. Hartley (1786), 1 T. E. 343; 1 E. E. 221. 5 Baines v. Holland (1855), 10 Exoh. 802. 6 Provincial Ins. Co. v. Leduc (1874), L. K. 6 P. C. 224. 44 DIGEST OF MABINE INSUBANCE. Sect. 34. Again, in marine insurance the term is used to denote two wholly different kinds of conditions. First, it is used to denote a condition to be performed by the assured. Secondly, it. is used to denote a mere limitation on, or exception from, the general words of the policy. In the case of a promissory warranty, e.g. that a ship should sail on or before a particular date, the insurer may avoid the contract if the warranty is not strictly complied with. But take the case of the warranty " free from capture and seizure." The assured does not undertake that the ship or cargo shall not be captured. There is merely a stipulation that the policy shall not apply to such a loss. The bracketed words of subseot. (3) represent the American rule.* The point is said by Arnould not to have been decided in England.^ In the analogous case of deviation the rule is clear. The policy is only avoided from the time of deviation. It is often said that breach of a warranty makes the policy void. But this is not so. A void contract cannot be ratified, but a breach of warranty may be waived.' A breach of warranty in insurance law appears to stand on the same footing as the breach of a condition in any other branch of contract. When a breach of warranty is proved the insurer is discharged from further liability," unless the assured proves that the breach has been waived. When § 35. — (1.) Non-compliance with a warranty is excused w'arranty wlien, by reason of a change of circumstances, the war- excused. ranty ceases to be applicable to the circumstances of the contract, or when compliance with the warranty is rendered unlawful by subsequent legislation.® (2.) Where a warranty is broken, the assured cannot avail himself of the defence that the breach has been remedied, and the warranty complied with, before loss.^ ' Phillips on Insurance, § 771. ^ Arnould, Ed. 6, p. 601 ; but see Lowndes, Ed. 2, p. 93, citing Baine» V. Holland (1855), 10 Exch, 802, which seems in point. " See Quebec Mar. Int. Co. v. Commercial Sank (1870), L. B. 3 P. C. at p. 244; Provincial Ins. Co. v. Ledua (1874), L. K. 6 P. C. at p. 243; and see Owen's Notes and Clauses, Ed. 3, p. 120. * Barnard v. Faher (1893), 1 Q. B. 340, 0. A. (fire policy). » Arnould, Ed. 6, p. 605 ; MaArthur, Ed. 2, p. 37. " De Hahn v. Hartley (1786), 1 T. R. 343 (express warranty); Quebec Mar. Ins. Co. v. Bank of Canada (1870), L. E. 3 P. 0. 234 (implied warranty). WARRANTIES, ETC. 45 Note. — The cases, in terms, assume that there is no distinction Sect. 35. between the effects of an express and implied warranty. Suppose a ship is warranted to sail on or before a particular day, but owing to the outbreak of war she has to wait for convoy. Pro- bably in that case the policy never attaches, and the section is right as it stands.^ § 36. — (1.) An express warranty may be in any form Express of words from which the intention to warrant is to be "'*''''*''''^'- inferred.^ (2.) An express warranty must be included in, or written upon, the policy, or must be contained in some document incorporated by reference into the policy.^ (3.) An express warranty does not exclude an implied warranty, unless it be inconsistent therewith.* Note. — The following are instances of express warranties which in recent years have been the subject of judicial interpretation : — " Warranted — per cent, uninsured." '' " Warranted, no iron or ore in excess of registered tonnage." ° " Warranted, no St. Lawrence between October 1 and April 1." <■ " Sailing on or after March 1st." * § 37. — (1.) Where a ship is expressly warranted Warranty " neutral," she must be neutral at the commencement IrSxty. ' See Eore v. Whilmore (1778), 2 Cowp. 784 (effect of embargo). ^ Arnould, Ed. 6, p. 60J ; of. De Hakn v. Hartley (1786), 1 T. E. 343 ; Behn v. Burness (1863), 32 L. J. Ex. 204, 205. = Arnould, Ed. 6, p. 600, and Bean v. Stupart (1778), 1 Dougl. 11. * Quehec Mar. Ins. Co. v. Bank of Canada (1870), L. R. 3 P. C. 234 ; Sleigh v. Tyeer (1900), 2 Q. B. 333 (seaworthiness). ' Roddick v. Indemnity Mutual Ins. Co. (1859), 2 Q. B. 380 (subsequent honour policy) ; General Ins. Co. of Trieste v. Cory (1897), 1 Q. B. 335 (insolvency of insurer). " Eart V. Standard Mar. Ins. Co. (1889), 22 Q. B. D. 499, C. A. ("iron" includes steel). ' Birrell v. Dryer (1884), 9 App. Cas. 345. « Sea Ins. Co. v. Blogg (1898), 1 Q. B. 27, affirmed 2 Q. B. (1898), 398, C. A. (what is a "sailing"?). As to sailing warranties, see further, McArthur, Ed. 2, p. 37; Lowndes, Ed, 2, p. 94. 46 DIGEST OF MARINE INSUBANCE. Sect. 37. of the risk, and it is an implied term of the warranty that [so far as the assured can control the matter], she shall continue neutral during the risk.^ (2.) Where a ship is expressly warranted " neutral " there is an implied condition that [so far as the assured can control the matter], she shall be properly docu- mented, that is to say, that she shall carry the necessary papers to establish her neutrality, and that she shall not falsify or suppress her papers, or use simulated papers. If any loss occurs through breach of this condition the insurer may avoid the contract.^ (3.) Where goods or other movables are expressly warranted " neutral " there is an implied condition that they shall be neutral-owned throughout the risk, and properly documented, and shall be shipped [by a neutral ship] to a neutral destination, and that [so far as the assured can control the matter] the ship shall continue neutral throughout the risk.^ Note. — In an old case a ship not properly documented was held unseaworthy ; but the case seems to come under this section,* The implied conditions may of course be negatived or varied by the terms of the particular express warranty. The conditions of maritime commerce and var have altered so much in recent years that it would be misleading to attempt to deduce any rules from the numerous decisions at the beginning of the last century as to the effect of the warranty to sail with convoy.'' No implied § 38. There is no implied warranty as to the nation- warranty of nation- ality. ' Arnould, Ed. 6, pp. 621, 622. " Arnould, Ed. 6, p. 680. As to documents, see Arnould, Ed. 6, p. 681, and Trinder v. TJiamea and Mersey Mar. Ins. Co. (1898), 2 Q. B. at p. 128, per Ck)llins, L.J. ; and as to simulated papers, see Arnould, Ed. 6, p. 685. ^ Arnould, Ed. 6, pp. 621, 622. Qu. if the Declaration of Paris affects the rule that the goods must be shipped by a neutral ship ? * Steel V. Laeey (1810), 3 Taunt. 285. '^ See Arnould, Ed. 5, pp. 620, 698 ; also Owen's Declaration of War, p. 386. WAIiltANTIES, ETC. 47 ality of a ship, or that her nationality shall not be Sr«rr, 38. •■[lunged during thtj risk.' In lie III, r, iHiiiUk, cit(!(l below, Lu»b, J., point* out that tho fact that there wa* no dcciHiim on any duch Implied warranty wa« very ^ooil evidence that uo «uch warranty cxiiited. 'i'he facts were aK fullowH ; — Policy on u parcel of gold f)hlp[i<:d on the kh. Dutchman, which was a Britinh «hi|>. Next day the (diip wan transferred to IluBiiian ownerB. In coimequunui! of damage to tho Hliip the gold had to bo landed in 'I'lirkcy, and dcjioHitod with the Iludsiian con«ul. In Turkigh territory all rnatterM relating to Hliip[)ir)j; have to be decided by tiio consular court of the coiintry to which tho iiLit> belongs. The JtuisHian Oon- gular court made the Hbippertt pay salvage cIhuhoh, which would not have bcfcn payable by Mnglish law, aw a condition to releasing the sold. Ill-Id, that the risk had not boon varied, and that the assured was entitled to u-.cmw.v these charges as a loss by perils of the seas. l'l ; Blaohhunt v. Ooahell (1789), :i T. B. im (slil|i;. » Ariiould, ICil. (i, p. 'i-lS; McArthur, I'M. 2, p. 18; Loiondet, Ed. 2, p. 08; lltroard V. Shepherd (ISdl), l-I Mooro 1'. C. at p. 198. 48 BIGEST OF MARINE INSUSANCE. Sect. 40. be reasonably fit to encounter the ordinary perils of the port^ (3.) Where the policy contemplates a voyage in different stages, during which {he snbject-matter insured will be exposed to different degrees or kinds of peril, or the ship will require different kinds of equipment, the ship must be seaworthy at the commencement of each stage, and it is sufGlcient if at the commencement of each stage she is seaworthy for the purpose of that stage.^ (4.) A ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the seas of the adventure insured.^ (5.) In a time policy there is no implied warranty that the ship shall be seaworthy at any stage of the adventure, but where, with the privity of the assured, the ship is sent to sea in an unseaworthy state, the insurer is not liable for any loss attributable to unseaworthiness.* Illustrations. 1. Policy on ship from Montreal to Halifax. At the time the ship sailed there was a defect in her boiler. The defect did not appear in the river, but disabled her when she got out to sea. She put back to port, and the defect was repaired. Afterwards she proceeded on her voyage, and was lost in bad weather. Held, that she was unseaworthy at the commencement of the voyage, and that the insurer was not liable.^ ' Qtiebeo Mar. Ins. Co. v. Commercial Bank of Citnada (1S70), L. K. 3 P. C. at p. 241 ; of. Baughton v. Empire Mar. Ins. Co. (1866), L. E. 1 Ex. 206 (overlapping policies). = Bouillon V. Lupton (1864), 33 L. J. C. P. at p. 48 ; Qudiec Mar. J««. Co. V. Commercial Bank of Canada (1870), L. E. 3 P. C. at p. 241 ; The Vortigem (1899), 8 Asp. Mar. Cas. 523, C. A, = Dixon V. Sadler (1839), 5 M. & W. at p. 414; Bouillon v. Lupton (1864), 33 L. J. 0. P. at p. 43. « MoArthur, Ed. 2, p. 15 ; jPVitoous v. Sarsfield (1856), 6 E. & B. 192 ; Dudgeon x. Pembroke (1877), 2 App. Cas. 284, H. L. " Quebec Mar. Ins. Co. v. Commercial Bank of Canada (1870), L. E. 3 P. C. 234. WARRANTIES, ETC. 49 2. Steamer, built for inland navigation in Trinidad, is insured from Sect. 40. the Clyde to Trinidad. In a rather heavy sea in the Atlantic she breaks asunder and is lost. With the exercise of reasonable care she might have been made more fit for the ocean transit. The insurer is not liable.* 3. Voyage policy on freight. The ship, being badly damaged, has to put into a port of distress, and the cargo is sent on in a substituted ship, which is lost. There is, it seems, no implied warranty that the substituted ship is seaworthy.^ 4. Time policy on ship. As she is nearing port the master impru- dently, and through bad seamanship, throws his ballast overboard. Before the ship reaches port she is struck by a squall and capsized. The insurer is liable.' 5. Time policy on ship lying in her owner's yard. She is sent to sea in an unseawortby condition, and lost. The owner did not know she was unseaworthy. The insurer is liable.* 6. Policy on freight from Rangoon to London. The ship encounters heavy weather, and only eleven days after leaving Rangoon has to put back for repairs. This does not shift on to the assured the duty of proving that she was seaworthy when she sailed, but it is a question to be considered by the jury in finding whether she was seaworthy or unseaworthy.^ Note. — The implied warranty, unless expressly waived, attaches to every voyage policy, whether on ship, freight, cargo, or any other interest.^ The warranty applies only to the commencement of the voyage, or, as the case may be, of each distinct stage of the voyage. At one time it was thought that the omission to employ a pilot, where pilotage was compulsory, constituted unseaworthiness, but that doctrine was subsequently disapproved.^ ' Turnbull v. Janson (1877), 3 Asp. Mar. Cas. 433, C. A. dliter if all reasonable means had been used, Clapham v. Langton (1864), 5 B. & S. 729, Ex. Ch. ■' De Cuadra v. Swann (1864), 16 C. B. N. S. 771, 3rd plea. 3 Dixon V. Sadler (1839), 5 M. & W. 414, affirmed 8 M. & W. 895. This would equally apply lo a voyage policy, ibid. * Dudgeon v. Fembrolte (1877), 2 App. Cas. 284. » Piehup V. Thames Ine. Co. (1878), 3 Q. B. D. 594, C. A. « Enill v. Hooper (1857), 26 L. J. Ex. 377, 379 (policy on salvage of abandoned ship); Beccard v. Smith (1861), 14 Moore P. C. at p. 494 (goods). ' Law V. HoUingwoHh (1797), 7 T. B. 160; disapproved, Dixon v. Sadler (1839), 5 M. & W. at p. 408 ; Sadler v. Dixon (1841), 8 M. & W. at p. 900, Ex. Ch. E 50 DIGEST OF MARINE INSUBANGE. Sect. 40. Lord Wensleydale, speaking of a voyage policy, says that a ship is seaworthy when she is in a fit state, "as to repairs, equipment, and crew, and in all other respects, to encounter the ordinary perils of the voyage insured at the time of sailing upon it."i The state of seaworthiness is a relative, not an absolute state. It must be determined with reference to the particular voyage and adventure in contemplation. " There is seaworthiness for the port, seaworthiness in some cases for the river, and seaworthiness in some cases (as in a case which has been put forward of a whaling voyage) for some definite, well-recognized, and distinctly separate stage of the voyage." 2 So, too, a ship may be seaworthy in herself, but not seaworthy for the purpose of the particular adventure, e.g. carrying deck cargo.' On the other hand, if the insurer knows the nature of the risk it is sufiScient if every reasonable precaution be taken.^ It is usual to pay "innocent shippers" as a matter of honour, though the ship be unseaworthy.^ There is no implied warranty that the lighters in which the goods are landed shall be seaworthy." Questions of seaworthiness frequently arise in cases between shipper and shipowner;' but such cases must be applied with caution to insurance law. A ship might, it is conceived, be seaworthy as between shipowner and insurer on ship, though unseaworthy as between ship- owner and shipper of a particular cargo, e.g. frozen meat, which requires special freezing apparatus, though that does not affect the safety of the ship.' Again, the warranty as to goods may apply at a different time from the warranty on ship, as in the case where goods are shipped at an intermediate port (of. Lowndes, Ed. 2, p. 99). ' Dixmi V. Sadler (1839), 5. M. & W. at p. 414. ' Quebec Mar. Ins. Co. v. Commercial Bank of Canada (1870), L. E. 3 P. 0. at p. 241. ' Daniels v. Harris (1874), L. K. 10 C. P. 1 (policy on wine stowed on deck). * Surges v. Wiclcham (1863), 33 L. J. Q. B. 17 (river steamer sent across the sea to her destination). » See McArthur, Ed. 2, p. 15 ; but see Sleigh v. Tyser (1900), 2 Q. B. at p. 336, where shipper was partly to blame. « Lane v. Nixon (1866), L. E. 1 C. P. 412. ' See Carver's Carriage by Sea, Ed. 3 (1900), §§ 17-22. » Cf. The Maori King (1895), 2 Q. B. 550, 558, C. A. WARRANTIES, ETC. 51 § 41. In a policy on goods or other moveables there Sect. 41. is no implied warranty that the goods or moveables are no implied seaworthy.i T?*"'^ ■' that goods ave sea- NoTE. — Under a voyage policy the shipper, equally with the ship- worthy. owDcr, is responsible for the seaworthiness of~ the ship. See note to last section. Though the shipper does not warrant the seaworthiness of goods in- sured, the insurer is not liable for any loss occasioned by vice propre? § 42. There is an implied warranty that the adventure wan-anty insured is a lawful one, and that [so far as the assured " ^^^ '*^" can control the matter] the adventure shall be carried out in a lawful manner.^ Illustrations. 1. Time policy on ship. The master, with the connivance of the owner, engages in smuggling. The ship is arrested in England. The insurer is not liable.^ 2. Policy on freight, from a British port abroad to Liverpool. The master, unknown to his owner, stows a part of the cargo (timber) on deck, and sails without a certificate from the clearing oflScer, thereby contravening the statute 16 & 17 Vict. c. 107. The timber is lost by perils of the seas. The assured can recover.^ 3. Policy for £400, insurer to pay for a total loss if ship does not arrive at Yokohama by a certain date. The ship does not arrive in time. As a fact, the assured had no interest in ship or cargo, and the policy was a wagering policy, but the insurer did not know this. The policy cannot be enforced." > Arnoidd, Ed. 6, p. 650 ; Eoehel v. Saunders (1864), 33 L. J. C. P. 310 (cocoa-nut oil). ' Koebel v. Saunders (1864), 33 h. 3. 0. P. 310 ; and see § 56, 'post. ' Arnould, Ed. 6, p. 686; MoArtlmr, Ed. 2, p. 19; Dudgeon v. Pemhr'olte (1874), L. E. 9 Q. B. at p. 586. * Pipon V. Cope (1808), 1 Camp. 434, as explained, Trinder v. Thames and Mersey Ins. Co. (1898), 2 Q. B. at p. 129, 0. A. If the master smuggles without the owner's connivance it is barratry, Cory v. Burr (1883), 8 App. Gas. at p. 399. s Wilson v. Banldn (1865), L. E. 1 Q. B. 162, Ex. Ch. Miter, if the owner was privy to the illegality ; Cunard v. Hyde (1860), 29 L. J. Q. B. 6 (policy on goods). « Qedge v. Boyal Exchange (1900), 2 Q. B. 214, at p. 222. 52 DIGEST OF MARINE INSURANCE. Sect. 42. Note. — " Where a voyage is illegal an insurance upon such a voyage is invalid. Thus during the war policies on vessels sailing in contra- vention of the Convoy Acts were held void, so too when the voyage was against the Bast India Company Acts, or the general Navigation Act (6 Geo. 4, c. 109), which statutes were made with reference to the general policy of the realm." ' A contract to do a thing which cannot be done without a violation of the law is void, whether the parties know the law or not. But if a contract is capable of being performed in a legal manner, it is necessary to show clearly the intention to perform it in an illegal manner in order to avoid it.^ An insurance on enemies' goods or against British capture is illegal, but this rule does not apply to an insurance aga'nst seizure by a foreign government of the property of its own subjects where the policy is effected before the outbreak of hostilities.^ See further, notes to §§ 3 and 4, ante, and Owen's Declaration of War, p. 405. Tlie Voyage. Implied § ^3. — (1.) Where the subject-matter is insured by arto'"™- * ^oy^g^ policy "at and from " or "from " a particular mencement place, it is not necessary that the ship should be at that place when the contract is concluded, but there is an implied condition that the adventure shall be commenced within a reasonable time, and that if the adventure be not so commenced the insurer may avoid the contract.* (2.) [The implied condition may be negatived by showing that the delay was caused by circumstances known to the insurer before the contract was concluded,, or by showing that he acquiesced in the delay.] ^ > Redmond v. Smith (1844), 7 M. & Gr. at p. 474. " Waugh v. Morris (1873), L. E. 8 Q. B. 202. ^ Driefontein Oold Mines v. Jansen (1900), 2 Q. B. 339 (gold belonging, to Transvaal company insured from Tranavaal mines to England). * Be Wolf V. Archangel Ins. Co. (1874), L. E. 9 Q. B. 451 (summer risk turned into winter risk). ^ This seems fair, but is a somewhat doubtful proposition. See ibid.. at p. 457, and see Arnould, Ed. 6, p. 409, aa to usage. THE VOYAGE. 53 Note. — As to tke attachment of a policy in ordinary form under Seot. 43. " from " and " at and from " risks, see further, Eules 2 and 3 in Sohed., post, p. 122. § 44. — Where the assured abandons the adventure Abandon- 11 » . . ment of insured, the contract of marine insurance is determined.^ adventure by delay, Note. — The abandonment of the adventure by not commencing ^^'^' the voyage withia a reasonable time appears to be distinct from the implied condition that the risk shall not be altered by delay or otherwise. As to frustration of adventure, see § 61. § 45. — (1.) Where the destination of the ship is Change of changed from the destination contemplated by the policy, "'°^^^^- there is said to be a change of voyage. The destination of the ship is deemed to be changed as soon as the determination to change it is made.^ (2.) Unless the policy otherwise provides, where there is a change of voyage the insurer may avoid the contract as from the time of change, that is to say, as soon as the determination to change it is made ; and it is immaterial th^t the ship may not in fact have left the course of voyage contemplated by the policy when the loss occurs.** Illustration. Policy on ship at and from Cadiz to Liverpool. Afterwards, with- out the assent of the insurer, the destination of the ship is changed to ' Grant v. King (1802), 4 Esp. 175 (delay of six months, policy not avoided) ; Palmer v. Fenning (1833), 9 Bing. 460 (delay of four months in case of a yacht, policy avoided); cf. Parkin v. Tunno (1809), 11 East, 22 (abandonment of voyage in consequence of war perils); Nichells v. London and Prov. Mar. Ins. Co. (1900), Times, November 17 (abandonment of voyage under apprehension of hostilities) ; Owen's Declaration of War, p. 39. 2 Amould, Ed. 6, pp. 453, 458 ; McArthur, Ed. 2, p. 84 ; Woolridge v. Boydell Q.11S), Dougl. 16; Tudor, Mar. Gas. Ed. 3, p. 125 ; Sottomley v. Bovill (1826), 5 B. & 0. 210; Simon Israel and Co. v. Sedgmeh (1893), 1 Q. B. 303, C. A. " Ibid.; and Taslcer v. Cunningham (1819), 1 Bligh H. L. 87; 20 E. K. 33. 54 DIGEST OF MARINE INSURANCE. Sect. 45. Newfoundland. The ship is stranded and burnt in the bay of Cadiz. The insurer is discharged from liability.^ Note. — Three different states of fact must be distinguished. First, the ship may sail on a voyage not contemplated by the policy. In that case the risk does not attach. Thus, if a ship be insured from the Mersey to any port or ports west of Gibraltar, and she sails from Liverpool for Carthagena, which is east of Gibraltar, the policy does not attach, and a clause authorizing change of voyage cannot there- fore come into operation.^ Secondly, a ship may start on the voyage insured, but afterwards change her destination. In that case the risk, attaches, but may afterwards be avoided. Thirdly, a ship may proceed from the terminus a quo to the terminus ad quern, but sail thither by an improper track. In that case there is a deviation.^ Departure § 46. Where the place of departure is specified by on voyage, ^.j^^ policy, and the ship does not sail from that placie, the adventure is abandoned.* Note. — By usage, it is said, an intermediate voyage may be inter- posed, but the evidence of such a usage would have to be clear.^ Suppose a ship is insured from London to New York. If she starts from Liverpool it is a wholly different risk. Unless the ship starts from the terminus a quo, it is clear that the risk cannot attach. See further, post, p. 122, as to attachment of risk. DeviatioD. § 47. — (1.) Where a ship, without lawful excuse or justification, deviates from the voyage contemplated by the policy, the insurer may avoid the contract as from the time of deviation, and it is immaterial that the ship may have regained her route before any loss occurs.® (2.) There is a deviation from the voyage contem- plated by the policy : — 1 Tasher v. Cunningham (1819), 1 BUgh H. L. 87, 102. ' Simon Israel and Co. v. Sedgwick (1893), 1 Q. B. 303, C. A. ' As to distinction between deviation and change of voyage, see further, Arnould, Ed. 6, p. 452. * Arnould, Ed. 6, p. 452 ; Way v. Modigliani (1787), 2 T, K. 30. ^ Arnould, Ed. 6, p. 409. « Arnould, Ed. 6, pp. 451, 462 ; McArtlmr, Ed. 2, pp. 18, 84. TEE VOTAOE. 55 {a.) Where the course of the voyage is specifically Sect. 47 designated by the policy, and that course is departed from ; ^ (6.) Where the course of the voyage is not specifically designated by the policy, but the usual and customary course is departed from ; ^ (c.) Where the course of the voyage is not prescribed by the policy or by custom, but the course which would be taken by a prudent master, navigating the ship in a seamanlike manner, is departed from [with the privity of the assured].^ (3.) The intention to deviate is immaterial; there must be a deviation in fact to enable the insurer to avoid the contract.* Illustrations. 1. Policy on ship from L. to J. There are two tracks to J., one going north and the other south of the island of D. Sometimes one track and sometimes the other is the best, and the master ought to exercise his own discretion in each case. The owners direct him to call at a port in the north of the island of D. He therefore takes the northern course, and his ship is captured. This is a deviation.^ 2. Time policy iagainst fire on ship " lying in the Victoria Docks with liberty to go into dry dock and light the boiler once or twice during the currency of the policy." The ship goes up to the dry dock, and, after leaving it, delays in the river to replace her paddle wheels. It is usual and also cheaper to put on the paddle wheels in the river. This is a deviation." ' Arnould, Ed. 6, p. 463. ■■ Davis V. Qarreit (1830), 6 Bin Generalised from Bouillon v. Lwpton (1863), 15 0. B. (N. S.) 113 (delay to make ship seaworthy for a particular stage of the voyage). ^ Arnould, Ed. 6. p. 508 ; but qu. if the rule be too widely stated, see O'Beilly v. Boyal Exchange Ass. Co. (1815), 4 Camp. 246. " Scaramanga Stamp (1880), 5 0. P. D. 295, C. A. ; Arnould, Ed. 6, p. 507. * Boss V. Hunter (1790), 4 T. E. 33. = Arnould, Ed. 6, p. 500 ; and see § 49. " Lloyd V. Fleming (1872), L. K. 7 Q. B. 299 (action by executor of assignee after loss). As to policy prohibiting assignment, see Parsons on Insurance, p. 60; Laurie v. West Hartlepool Indemnity Assn. (1899), Times L. E. v. 15, p. 486 (mutual association). ASSIGNMENT OF POLICT. 59 (2.) Where a marine policy has been assigned so as Sect. 51. to pass the beneficial interest in such policy, the assignee of the policy is entitled to sue thereon in his own name ; Pi & 32 and the defendant is entitled to make any defence §§i'& 2.]' [arising out of the contract] which he would have been entitled to make if the action had been brought in the name of the person by or On behalf of whom the policy was effected. (3.) A marine policy may be assigned by indorse- ment thereon or in other customary manner, [and a policy indorsed in blank may be assigned by delivery]. (4.) Nothing in this section affects the assignability of a marine policy as a chose in action according to general law.^ Note. — Some American policies require the insurer's assent to assignment. Subsect. (2) reproduces § 1 of the Policies of Marine Insurance Act (31 & 32 Vict. c. 86), set out post, p. 135. That Act in terms only applies to policies on ship, freight, or goods ; but it would pro- bably be held to extend to all marine policies. The words " arising out of the contract " are inserted to give effect to Fellas v, Neptune Ins. Co. (1879), 5 C. P. D. U, 0. A. where it was held that a set-off was not a defence against an assignee. Where a policy was effected by an agent in his own name, the person for whose benefit it was effected could always sue on it in his own name.^ The difficulty arose in the case of an assignee. Subsect. (3) reproduces the efiect of § 2 of the Act, which in addition prescribes an optional form of indorsement. The form is inserted in the schedule (seepost, p. 136). - At present the endorsement itself is only optional. The bracketed words represent the ordinary practice in the case of policies on goods. § 52. Where the assured has parted with or lost his Assured interest in the subject-matter insured, and has not before nVinterest cannot " See Judicature Act, 1873 (36 & 37 Vict. c. 66, § 25 (6) ) ; Parsons on *^^'S"- Insurance, p. 52. - Browning v. Provincial Ins. Co. (1874), L. K. 5 P. C. at p. 272. 60 DIGEST OF MARINE INSURANCE. Sect. 52. or at the time of so doing, expressly or impliedly agreed to assign the policy, any subsequent assignment of the policy is inoperative, and the policy is deemed to have lapsed. Provided that this section does not apply to the assignment of a policy after loss.^ Illustrations. 1. A, B, and G each own a third share of a ship. A and B jointly insure their shares in a policy for £500. Afterwards B sells his share to 0, hut no arrangement is made as to the policy. The ship is lost. On this policy only A's share (£250) can be recovered.^ 2. A, who is abroad, insures a cargo to London, including all risk of craft. While the cargo is afloat, A's agent sells the cargo to B, but A retains the policy, as the cargo is not to be paid for till arriv-al. Part of the cargo is damaged while being landed in B's lighters. After A's interest has ceased he assigns the policy to B. B cannot recover on the policy.' Note. — After loss, the right to indemnity accrues and is fixed, iind this right can be assigned. "It is every day's practice, where a ship has sustained damage, to sell the injured hull for the benefit of whom it concerns, and then sue on the policy. If it can he made out that the loss is total, the sale is for the benefit of the underwriters, who pay the total loss. If the loss proves partial only, it is for the benefit of the assured; but no one ever thought of faying that the sale of the damaged hull put an end to the li^ht to recover an indem- nity for the partial loss." * As to the time at which the risk passes from seller to buyer under a contract of sale, see Chalmers' Sale of Goods Act, 1893, §§ 20 and 32, and notes thereto. Prima, facie, property and risk pass to;!ether. ' North of England Oil Cake Co. v. Archangel Mar. Ins. Co. (1875), li. E. 10 Q. B. 249, and authorities cited for § 15. As to proviso, see Lloyd V. Fleming (1872), L. E. 7 Q. B. 299. ' Powles V. innes (1841), 11 M. & W. 10. " North of England Oil Cake Co. \. Archangel Mar. Ins. Co. (1875), L. E. 10 Q. B. 249. ' Lloyd V. Fleming (1872),L. E. 7Q. B, at p. 302, per Lord Blaokburo. THE PREMIUM. 61 The Premium. § 53. Unless otherwise agreed, the duty of the assured Sect. 53. or his agent to pay the premium, and the duty of the wh^ insurer to issue the policy to the assured or his agent, ''a^abi'e'" are concurrent conditions, and the insurer is not bound to part with the policy until payment or tender of the premium.^ Note. — The term "agreed" includes a binding usage, for usage is binding as being an implied term of the agreement. Payment, it is to be noted, is not a technical term. It includes a settlement in account when that is the agreed way of doing business. See also note to next section. § 54. — (1.) Unless otherwise agreed, where a marine Policy policy is effected on behalf of the assured by a broker, through the broker is directly responsible to the insurer for the '"^■'''''"■■ premium, and the insurer is directly responsible to the assitred for the amount which may be payable in respect of losses, or in respect of returnable premium.^ (2.) Unless otherwise agreed, the broker has, as against the assured, a lien upon the policy for the amount of the premium and his charges in respect of effecting the policy ; * and where he has dealt with the person who employs him as a principal he has also a lien on the policy in respect of any balance on any insurance account ' ArnouU, Ed. 6, pp. 195, 196; cf. Xenoi v. Wiclcham (1863), 33 L. J. C. P. at p. 18, per Blackburn, J. As to correcting error in premium by subsequent indorsement on policy, see Mildred v. Maspong (1883), 8 App. Gas. at p. 878. As to issue of policy, see note to § 25, ante. " See Arnovld, Ed. 6, pp. 193, 191; and Universal Ins. Co. v. Merchants Mar. Ins. Co. (1897), 2 Q. B. at pp. 97, 98 (premium) ; cf. Hine v. Steamship Ins. Syndicate (1895), 7 Asp. Mar. Gas. 558, G. A. ; Sweeting v. Pearce (1859), 29 L. J. 0. P. 265 (losses). ' Arnould, Ed. 6,. pp. 211, 214; McArihur, Ed. 2, p. 40; Fisher v. Smith (1878), 4 App. Gas, 1, H. L. ; and cf. Mildred v. Maspons (1883), 8 App. Gas. at p. 879. 62 DIGEST OF MARINE INSURANCE. Sect. 54. which may be due to him from such person, unless when the debt was incurred he had reason to believe that such person was only an agent.^ niusfration. A instructs B, a broker at Hartlepool, to insure his ships. B employs C, another broker at Liverpool, to effect the^ insurances. has a lien on the policies for the premiums and charges, even though A may have paid B.^ Note. — In a case on a company's policy which, instead of reciting payment of the premium, contained a promise by the assured to pay it, it was held that the ordinary custom applied, and the broker, not the assured, was liable to the insurer for. the premium. ' Collins, J., there says, " A Lloyd's policy contains a recital that the premium has been paid ; but supposing that the recital were made in a policy not under seal, so as not to amount to an estoppel, then upon the contract of insurance there would be an obligation upon the person insured to pay the premium. But that obligation is treated as discharged, although, it is not discharged in fact ; it is considered to be discharged by reason of a fiction based upon a custom which has received judicial sanction.' It is a well-recognized practice in marine insurance for the broker to treat, himself as responsible to the underwriter for the premium; by a fiction he is deemed to have paid the underwriter, and to have borrowed from him the money with whifch he pays.'' Effect of § 55- Where a marine policy, effected on behalf of the poUcv*"" assured by a broker, acknowledges the receipt of the premium, such acknowledgment is, in the absence of fraud, conclusive as between the insurer and the assured, but not as between the insurer and broker.* ' As to lien for general balance, see Arnould, Ed. 6, p. 212 ; Westwood V. Sell (1815), 4 Camp. 349 ; of. Cahill v. Davidson (1857), 3 0. B. (N. S.) 106. The lien is confined to insurance business, Dixon v. Stansfeld (1850), 10 C. B. 398 ; and of. Mgood v. Harris (1896), 2 Q. B. 491, as to effect of bankruptcy on a set-off. " Fisher v. Smith (1878), 4 App. Cas. 1, H. L. ' Universo Ins. Co. v. Mereliants Mar. Ins. Co. (1897), 1 Q. B. 205, affirmed 2 Q. B. (1897) 93, C. A. * Arnould, Ed. 6, p. 197, and note to § 54. LOSS AND ABANDONMENT. 63 Note. — The acknowledgment is not conclusive as between the Sect. 55. insurer and the broker.^ Probably then it is not coaclusive as between insurer and assured,, where the latter effects the policy directly. But it ought to be conclusive in favour of an assignee for value without notice.^ Loss and Abandonment. § 56. — (1.) Subject to the provisions of this Digest, and included unless the policy otherwise provides, the insurer is liable Ix^^H' for any loss proximately caused by a peril insured against, l^^^^'- but, subject as aforesaid, he is not liable for any loss which is not proximately caused by a peril insured against.^ (2.) The insurer is not liable for any loss attributable to the misconduct of the assured, but, unless the policy otherwise provides, he is liable for any loss proximately caused by a peril insured against, even though the loss would not have happened but for the misconduct or negligence of the master or crew.* (3.) Unless a different intention appears from the terms of the policy, the insurer is not liable for any loss ' Taylor on Evidence, § 774. ' See further, note to last section, and cf. Roberts v. Security Co. Ltd. (1897), 1 Q. B. Ill (accident policy). ' Arnould, Ed. 6, p. 727; Broom's Legal Maxims, Ed. 7, p. 175; Carver's Carriage by Sea, Ed. 3, §§ 87-90 ; Jackson v. Union Mar. Ins. Co. (1874), L. E. 10 0. P. at p. 148, Ex. Ch. (freight) ; Cory v. Burr (1883), 8 App. Cas. at p. 398 (barratry) ; Beiseher v. Borwich (1894), 2 Q. B. at p. 550, 0. A. (collision) ; Trinder v. Thames and Mersey Mar. Ins. Co. (1898), 2 Q. B. at p. 124, 0. A. (negligent navigation) ; Branhelow v. Canton Ins. Office (1899), 2 Q. B. 178, 186, 0. A. (loss of freight due to form in which bills of lading were given). * McArthur, Ed. 2, p. 143 ; Arnould, Ed. 6, p. 731 ; Tliompson v. Sopper (1858), E. B. & E. at p. 1047, Ex. Oh. (act of assured himselO ; Dixon V. Sadler (1839), 5 M. & W. 405 (bad seamanship of master) ; Trinder v. Thames and Mersey Ins. Co. (1898), 2 Q. B. 114, 0. A. (negligent navigation by master and co-owner). 64 DIGEST OF MARINE INSURANCE. Sect. 56. proximately caused by delay, although the delay be caused by a peril insured against.^ (4.) Unless the policy otherwise provides, the insurer is not liable for any loss caused by ordinary wear and tear, ordinary leakage and breakage, inherent vice or nature of the subject-matter insured, or any other ordinary and normal operation of natural causes, or for any loss caused by rats or vermin, [or for any injury to machinery not caused by maritime perils].^ Illv^trations. 1. Policy on goods, which consist of hides and tobacco. Sea- water is shipped during a storm, which wets the hides. The hides become putrid, and the fumes from them spoil the flavour of the tobacco. The damage to the tobacco is proximately caused by perils of the seas.' 2. Insurance on cargo warranted "free from all consequences of hostilities." During the American war the Confederates extinguish the light on Cape Hatteras. Owing to the absence of the light, the ship runs on to the rocks and is wrecked. The proximate cause of loss is the perils of the seas, and the insurer is liable.* 3. Policy on ship, warranted free from capture and seizure. The master engages in smuggling, and in consequence she is seized by the ' Taylor v. Dunbar (1869), L. B. 4 C. P. 206 (cargo of meat) ; Pinh v. Fleming (1890), 25 Q. B. D. 356 :(cargo of fruit) ; of. Shdboume v. Law Investment Corpn. (1898), 2 Q. B. at p. 629 (collision, delay during repairs). See note, post, as to freight. 2 McArthur, Ed. 2, p. 141 ; The Xanfho (1887), 12 App. Oas. at p. 509 (wear and tear, sea damage); Thames and Mersey Mar. Ins. Co. v. Hamilton (1887), 12 App. Gas. 484 (donkey engine explosion); Koelel v. Saunders (186i). 33 L. J. 0. P. 310 (vice propre). As to rats, see Hunter v. Fotts (1815), 4 Camp. 203 ; Laveroni v. Drury (1852), 22 L. J. Ex. 2 ; but see Hamilton v. Fandorf (1887), 12 App. Cas. 518, where the action of the rats was not the proximate cause of loss. ' Montoya r. London Assurance (1851), 6 Exoh. 451. ' lonides v. Universal Mar. Ins. Assn. (1863), 82 L. J. C. P. 170. Most of the cargo was destroyed by the sea, but a small part was saved, and a further part could have been saved but for the action of the Confederates, who prevented its being landed. Held, as to this, part, that the warranty exempted the insurers from liability. LOSS AND ABANDONMENT. 65 Spanish revenue authorities. The proximate cause of the loss is Sect. 56. the seizure, not the barratry of the master. The insurer is not liable.^ 4. Policy on a parcel of gold shipped by a Russian ship to Turkey. The ship is stranded in Turkey, and the gold taken charge of by the Russian Consul. As the ship is Russian, the Russian Consular Court has jurisdiction, and that court awards salvage charges against the gold which would not be payable by English law. The assured has to pay these charges to get his gold. This is a loss by perils of the seas, for which, the insurer is liable.^ 5. Policy on goods shipped in a French ship. The ship is injured by collision, and the master, not having the funds requisite for the necessary repairs, gives a bottomry bond on ship, freight, and cargo. The ship and freight not being sufScient to satisfy the bond, the assured has to pay the amount deficient to get his goods. The insurer is not liable. The loss is not caused by perils of the seas, but by the •want of funds on the part of the master.^ 6. Policy on cargo of fruit warranted free from average " unless damage be consequent on collision." The ship gets into collision and has to go into port for repairs. The cargo has to be landed and re- shipped, and it is damaged partly by handling and partly by the delay. The collision is not the proximate cause of the damage, and the insurer is not liable.* 7. Policy on ship and machinery, including donkey-engine. Owing to a valve being kept closed, which ought to have been kept open, water is forced into, and splits open, the chamber of the donkey- j)ump. The insurer is not liable for this accident, for it is not caused by perils of the seas, or by any peril covered by the ordinary form of policy.^ 8. Policy on freight from New South Wales to Valparaiso. The ■cargo consists of coal. The coal heats, and is in imminent danger of taking fire. Half of it has to be landed at Sydney. The rest is carried on and delivered. This is a partial loss of freight caused by fire (or other like perils) within the meaning of the policy.^ ' Cory V. Burr (1883), 8 App. Oas. 393. « Dent V. Smith (1869), L. K. 4 Q. B. 414. ' Greer v. Foole (1880), 5 Q. B. D. 272. * Pink V. Fleming (1890), 25 Q. B. D. 396, C. A. ; cf. Field Steamship ■Co. V. Burr (1899), 1 Q. B. 579, 0. A. = Thames and Mersey Ins. Go. v. Hamilton (1887), 12 App. Oas. 484, 495. (The Inchmaree case.) « The Knight of St. Michael (1898), P. 30 ; cf. Iredale v. China Traders Ins. Co. (1900), 2 Q. B. at p. 518, C. A. The insurer on goods is not liable if the combustion is caused by vice jaropre. F 66 DIGEST OF MARINE INSUBANGE. Sect. 56. 9. Cargo of rice. Eats gnaw a hole in a pipe which, passes through tihe cargo, and sea-water escapes through the hole and damages the rice. The sea damage is the proximate cause of the loss, not the rats.^ 10. Time policy on ship. The ship starts on a voyage with a short quantity of coal, and engages the services of a trawler to tow her to her port of discharge. The owner of the trawler gets judgment for salvage services, which assured has to pay. The ship met with no extraordinary weather, and might in time have sailed to her port. The loss is not due to the perils of the seas, but to the improper deficiency of coal.^ Note. — No principle of marine insurance law is better established, than the rule causa proxima, non remota, spectatur. But though the rule is universally admitted, lawyers have never attempted to work out any philosophical theory of cause and effect, and probably it is as well for commerce that they should not have made the attempt.' The numerous decisions on the rule are rough and ready applications of it to particular facts. As might be expected, many of the decisions are difiBcult to reconcile. But the apparent inconsistencies may be regarded as depending rather on inferences of fact than on matters of law. Subsects. (2) to (4) embody important deductions from the general rule of proximate cause laid down in subsect. (1). As Collins, L.J., points out, a man may lawfully stipulate against the consequences of his own negligence,* and he may stipulate against the consequences of his servants' negligence or misconduct. In the case of negligent or unskilful navigation, it now appears to be settled that the loss is regarded as caused proximately by perils of the seas, and only remotely by the negligence or unskilfulness of the master or crew. But when the loss is consequent on the wilful act or default of the assured, that act or default must be regarded as proximately causing the loss. Dolus circuilu non purgatur.^ Where, however, a » Samilton v. Pandorf (1887), 12 App. Cas. 518 (bill of lading case, but the principle was said to apply to insurance). Of. Davidson v. Bm-ti,- a/nd (1869), L. E. 4 0. P. 117 (pipe left open, and water flows in as ship is loaded). ' Ballantyne v. Mackinnon (1896), 2 Q. B. 455, C. A. ; see at p. 461 as to "inherent vice." =■ Inman v. .Biscfto/ (1882), 7 App. Cas. at p. 683. * Westport Coal Co. v. MePliaU (1898), 2 Q. B. at p. 132. " Cf. Trinder v. Tliames & Mersey Mar. Ins. Co. (1898), 2 Q B at p. 127, C. A. LOSS AND ABANDONMENT. 67 ship is lost through the barratry of the master, who is a part owner. Sect. 56. the co-owBers are entitled to recover.^ Compare the language of sect. 506 of the Merchant Shipping Act, 1894 (57 & 58 Vict. c. 60), which authorises insurances effected " against the happening, without the owners' actual fault or privity " of certain events in respect of which the liability of owners is limited under that Act. As a rule, the insurer is not liable for damage caused by delay, though the delay result from a peril insured against. But difficult cases arise with regard to freight, especially as regards time charters. Where the adventure is frustrated by a peril insured against, and freight is thereby lost, the insurer is liable.^ Thus, where a ship was delayed by the operation of perils of the seas, and the charterer justi- fiably refused to load, it was held to be a loss of freight by perils of the seas.^ On the other hand, in the City of Paris case,* a policy was effected " on freight outstanding." The ship was hired to the Admiralty, and the charter-party provided that if the ship became inefficient the charterers might make such abatement out of the freight as they thought fit. The ship struck on a rock and became inefficient for a time. The charterers made an abatement from the freight. Held, that the insurers were not liable, as the loss was not proximately caused by the perils of the seas, but by the action of the Admiralty. The line between the principles laid down by these cases is difficult to draw with certainty, and, as the result, special clauses are often inserted to protect the insurer or the assured, as the case may be, from the consequences of d^lay.^ The bracketed words at the end of subsect. (4) are awkward. They were inserted to cover the decision in the Inchmaree case (illustration 7), where it was held that a donkey-engine explosion at sea had nothing to do with any maritime peril. The accident might just as well have happened on dry land, and therefore the insurer was not liable. So, too, a distinction must be drawn between the actual • Wedport Coal Co. v. McPhail (1898), 2 Q. B. at p. 132 ; and see Small V. TJ. K. Mar. Ins. Assn. (1897), 2 Q. B. 311, C. A. (mortgagor and mortgagee). ' 2 See Re Jamieson (1895), 2 Q. B. at p. 95. ' Jaclceon v. Union Mar. Ins. Co. (1874), L. B. 10 C. P. 125, Ex. Ch. ,- see, too. The Alps (1893), P. 109 ; and Tlie Bedouin (1894), P. 1, 0. A., also cases of chartered freight. * Inman v. Bischoff (1882), 7 App. Gas. 670. , = See, e.g., Bensaude v. Thames and Mersey Ins. Co. (1897), A. C. 609, H. L. ; Turnhull v. Bull Underwriters' Association (1900), 2 Q. B. 402 (warranty, free from any claim consequent on loss of time). 68 DIGEST OF MARINE INSURANCE. Sect. 56. operation of a peril insured against, and the apprehension of its opera- tion. As Willes, J., says in one case, the insurer is not liable for a loss caused by the prudence of the master or owner.i " It has often been observed," says Blackburn, J., " that a sale by the master is not one of the underwriter's perils, and is only material as showing that there is no longer anything which can be done to save the thing sold for whom it may concern." ^ Partial and § 57. — (1.) A loss may be either total or p^irtial. Any loss other than a total loss^ as hereinafter defined, is a partial loss.* (2.) A total loss may be either an actual total loss, or a constructive total loss.* (3.) Unless a different intention appears from the terms of the policy, an insurance against total loss includes a constructive, as well as an actualj total loss.^ (4.) Where the assured brings an action for a total loss and the evidence proves only a partial loss, he may, unless the policy otherwise provides, recover for a partial loss.^ Note. — A loss must be either total or partial. A total loss of part is a partial loss. For example. If 100 bags of seed be insured, and 10 be destroyed by perils insured against, this is a partial loss. Cf. Arnould, Ed. 6, p. 1017. An apparent, but not a real, exception to this rule occurs when two or more distinct interests are covered by a single valuation. This is provided for by §§ 73 and 77 (1). Prima facie, and the presumption is a strong one, an insurance against total loss covers a constructive, as well as an actual, total loss. But the presumption may be rebutted, see Mc Arthur, Ed. 2, p. 312.. ' Philpott V. Swann (1861), 10 C. B. (N. S.) at p. 282. " Banlcin v. Potter (1873), L. E. 6 H. L. at p. 122. ' McArthur, Ed. 2, p. 242 ; Arnould, Ed. 6, p. 1016. * Arnould, Ed. 6, pp. 951, 988 ; Boux v. Salvador (1836), 3 Bing. N. C. at p. 285, Ex. Ch. » Adams v. Mackenzie (1863), 13 C. B. (N. S.) 446; Sailing Sliip Blairmore v. Macredie (1898), A. C. at p. 598 ; and see Forwood v. North Wales Ins. Co. (1880), 9 Q. B. D. 732, C. A. as to by-laws of a mutual society. « Arnould, Ed. 6, p. 1163 ; Benson v. Chapman (1849), 2 H. L, C. 696 ; King v. Walker (1864), 2 H. & 0. 384. LOSS AND ABANDONMENT. 69 § 58.— (1.) Where the subject-matter insured is Sect. 58. destroyed, or irreparably damaged, or where the assured ActJi^ is irretrievably deprived thereof, there is an actual total '"'''' '"='■ loss.^ (2.) Insurable property is deemed to be irreparably damaged where it is so damaged as to cease to exist in specie, or as that it cannot be rendered capable of arriving at its destination in specie. Insurable property ceases to exist in specie when it no longer answers to the denomi- nation under which it was insured.^ (3.) In the case of an actual total loss no notice of abandonment need be given.^ Illustrations. 1. Hides are insured from Valparaiso to Bordeaux. In conse- quence of sea damage they arrive at Eio in a state of incipient putridity, and are sold there. Their state is such that they would be ■wholly putrid if carried on to Bordeaux. This is an actual total loss.* 2. Insurance on goods in barges, as interest may appear. A cargo of rice valued at £450 is declared. The barge is sunk, and the rice rernains under water for two tides. The rice is so damaged that the consignee refuses to accept it. Afterwards it is kiln-dried at a cost of £60, and then sold for £110. The rice still remains in specie, so this is only a partial loss.'' 3. A ship is deserted in a sinking condition. She is towed into port by salvors and sold, by order of the Court, for less than the salvage costs. This is an actual total loss." ■ Arnould, Ed. 6, pp. 951, 988 ; MeAHhur, Ed. 2, p. 145 ; Fleming v. Smith (1848), 1 H. of L. Cas. at 535; Cossman v. West (1887), 13 App. Cas. 160 ; Bankin v. Potter (1873), L. E. 6 H. L. at p. 127. = McArihur, Ed. 2, p. 146 ; Boux v. Salvador (1836), 3 Bing. N. C. 266, 287, Ex. Ch. ; Asfar v. Blundell (1896), 1 Q. B. at p. 127, C. A. = Kaltenhaeh v. Maclcemie (1878), 3 0. P. D. at p. 471, C. A.; of. BanJcin v. Bolter (1873), L. R. 6 H. L. at p. 106. * Boux V. Salvador (1836), 3 Bing. N. C. 266, Ex. Ch. ; of. Farnworth v. Hyde (1865), 18 C. B. (N. S.) 835, as dealt with L. R. 2 C. P. at p. 226. ' Francis v. Boulion (1895), 65 L. J. Q. B. 153. '' Cossman v. West (1887), 13 App. Gas. 160, P. C. reviewing the cases. 70 DIGEST OF MARINE INSURANCE. Sect. 58. 4. Insurance on " profit on charter " warranted free from all average. The assured, having' chartered a ship for a lump sum, puts her up as a general ship. The bill of lading freight exceeds the char- tered freight, but in consequence of sea damage to cargo only a portion of it becomes payable, and the portion payable is less than the charter freight which assured has to pay. This is a total loss of profit on charter.! Note. — Where by a peril insured against the goods of different owners are damaged and become so inextricably mixed as to be in- capable of identification (e.g. marks obliterated), the loss is partial, not total.^ See further, the note to § 61. Missing § 59. Where the ship concerned in the adventure is * '^' missing, and after the lapse of a reasonable time no news of her have been received, an actual total loss may be presumed.^ Note. — Under' the Continental Codes, arbitrary limits of time are fixed, after the expiration of which a missing ship may be presumed to be lost. Effect of § 60. Where, by a peril insured against, the voyage unent, etc. is interrupted at an intermediate port or place, under such circumstances as, apart from any special stipulation in the contract of affreightment, to justify the master in landing and re-shipping the goods or other movables, or in transhipping them, and sending them on to their destination, the liability of the insurer continues, not- withstanding the landing or transhipment.* Note. — The English rules as to transhipment are not very well ■settled. In the United States, and under some of the foreign codes, it is the duty of the master to tranship whenever it is reasonable to do so. • Aefar v. Blundell (1896), 1 Q. B. 123, C. A. Semble an actual total loss. ' Bpenee v. Union Ins. Co. (1868), L. E. 3 C. P. 427. = Green v. Sroten (1744), 2 Stra. 1199 ; Mc Arthur, Ed. 2, p. 109. * Arnould, Ed. 6, p. 358; McArthur, Ed. 2, p. 263; of. Bold v. Eotherham (1846), 8 Q. B. at p. 808 LOSS AND ABANDONMENT. 71 ^ Concerning the master's authority or duty to tranship as between Sect. 60. shipper and shipowner, see Carver's Carriage by Sea, Ed. 3, §§ 294, 304. The extent of his powers is determined by the law of the flag.' § 61. — (1.) In the case of damage to a ship, tlieie is Constmc- a constructive total loss where she is so damaged by a loIscUfined. peril insured against, that the cost of repairing the damage would exceed the value of the ship when repaired.^ In estimating the cost of repairs, the expense of future salvage operations, and any future general average contribution to which the ship would be liable (if repaired) must be taken into account.^ (2.) Where the assured is deprived of the possession of his ship or goods by a peril insured against, and (a) it is uncertain whether he can recover the ship or goods, as the case may be, or (b) the cost of recovering them would exceed their value when recovered, there is a constructive total loss.* (3.) In any case, other than that of a ship, there is a constructive total loss when the adventure insured is wholly frustrated by a peril insured against, and in par- ticular there is a constructive total loss where the subject- matter insured is so damaged or affected by a peril ' Carver's Carriage by Sea, Ed. 3, § 204 ; and see Cammell v. Sewell (1860), 29 L. J. Ex. 350, Ex. Ch. (power to sell). 2 McArtJiur, Ed. 2, pp. 147, 149 ; Arnould, Ed. 6, p. 1031 ; Moss v. Smith (1850), 19 L. J. C. P. 225, 228, approved AitcMson v. Lohre (1879), 4 App. Cas. at p. 762; Banhinv. Potter (1873), L. R. 6 H. L. at p. 116. In applying this test the real value and not the policy valuation is to be regarded, Irving v. Manning (1847), 1 H. of L. Cas. 287. 3 Kemp V. Ealliday (1866), L. E. 1 Q. B. 520, Ex. Ch. Conversely, freight which has been earned is not to be taken into account, Parher v. Budd (1896), 2 Com. Cas. 138 ; see further McArthur, Ed. 2, p. 148. * See Arnould, Ed. 6, pp. 1041, 1058; Shepherd v. Henderson (1881), 7 App. Cas. at pp. 69-71 ; Sailing Ship Blairmore v. Macredie (1898), A. C. 598 ; Boux v. Salvador (1836), 3 Bing. N. C. at p. 286 (goods). 72 DIGEST OF MARINE INSURANCE. Sect. 61. insured against, that, having regard to cost, it is unreason- able that the adventure should be prosecuted to its termination.^ (4.) For the purpose of determining what is reasonable, regard must be had to the course which would be pursued by a prudent uninsured owner under the circumstances of the case.^ Illustrations. 1. A ship is damaged by sea perils and puts into a foreign port. The master, after communicating with the owners, has her repaired at a cost exceeding her repaired value. After her arrival in London the owners give notice of abandonment. This is iheffectual. There is only a partial loss.^ 2. Policy on freight valued at £2000. The ship strikes on a rock. The master puts into Pernambuco, and, instead of abandoning as ha might have done, repairs the ship at a cost exceeding her repaired value, borrowing the money on bottomrj^ The ship arrives with her cargo. On arrival the ship is sold to satis&iiithB.daim of the lender on bottomry, and the freight also is paid tp him. The owner cannot repudiate the acts of the master, and, as freight has been earned, there is no loss of freight.* \ 3. Ship of a special class and size is vaRied at £17,000. In con- sequence of sea damage she puts into Maiufitiiis, where she is sold for , £1400. Her cost four years before th^ 'insurance was £20,000. The cost of repairing her would have )jetin £SL0,500, and her selling value when repaired would have been £7,500:/ but a ship of that class and size, fitted for the particular trade, cou^d not be built or bought for £10,500. The assured can only claim for a partial loss.^ ' McArlhur, Ed. 2, pp. 150, 152; Farnworth v. Hyde (1866), L. E. 2 C. P. 204, Ex. Ch. (see damage to goods) ; BodocanacM v. FlUott (1874), L. E. 9 0. P. 518, Ex. Ch. (goods in besieged town) ; Bankin v. Potter (1873), L. E. 6 H. L. 83, at pp. 102, 104 (freight) ; cf. lie Jamieeon (1895), 2 Q. B. at p. 95, C. A. (freight). ' Sailing Ship Blairmore v. Macredie (1898), A. C. 593; Boux v. Salvador (1836), 3 Bing. (N. S.) at p. 286 (goods). But perhaps the test is. not applicable to freight, see Philpot v. Swan (1861), 11 C. B. (N. S.) at p. 282, per Willes, J. ; cf. Banlcin v. Potter (1873), L. K. 6 H. L. at p. 155. ' Fleming v. Smith (1848), 1 H. L. Oas. 513. • Benson v. Chapman (1849), 2 H. L. C. 696, 723. ' Grainger v. Martin (1862), 2 B. & S. 456, affirmed 4 B. & S. »,■ Ex. Ch. LOSS AND ABANDONMENT. 73 4. Policy on goods. The ship becomes a constructive total loss, Sect. 61 and the goods have to be landed in a damaged condition. There is a constructive total loss of the goods if the cost of landing, ware- housing, conditioning, reshipping, and forwarding them to their destination (tninus the original freight) would exceed their value on arrival .1 5. Insurance on goods from Bombay to London with liberty to send them through France. On arrival in Paris they are detained in consequence of the siege, and it is uncertain what will become of them. The assured may treat this as a constructive total loss.^ 6. Policy on cargo of salt. The ship meets with bad weather, and is towed into a port of refuge by salvors. The salt is landed in a damaged condition, and is sold under a decree of the Court for salvage coats. This is a partial loss, not a constructive total loss.* Note. — For further illustrations, see § 63, and compare § 58. There is a constructive total loss, says Mr. McArthur, " when the subject insured, though existing in specie, is justifiably abandoned, on account of its destruction being highly probable, or because it cannot be preserved from actual total loss unless at a cost greater than its value would be if such expenditure were incurred." * The cases habitually refer to the "prudent uninsured owner" test. But as decisions multiply that test becomes of diminishing importance, because the decisions tend to settle as a matter of law the course which a prudent uninsured owner would be bound to take. This, perhaps, is fortunate, because the test is not an easy one to apply. The questjon is, not what the particular owner, if uninsured, would do, but what a man of average prudence ought to do under similar circumstances. Constructive total loss lies midway between actual loss on the one hand, and partial loss on the other. It is in effect a hybrid loss, and • FamwoHh v. Hyde (1866), L. B. 2 G. P. 204, Ex. Ch. Average adjusters are agreed that this case is commercially wrong so far as relates to the deduction of freight ; McArthur, Ed. 2, p. 151 ; Lowndes, Ed. 2, p. 137; Gow on Insurance, p. 157. " Sodocanachi v. Elliott (1873), L. K. 8 C. P. 649 ; affirmed L. E. 9 C. P. 520, Ex. Oh. = De Mattos v. Saunders (1872), L. E. 7 C. P. 570 ; cf. Meyer v. RalU (1876), 1 C. P. D. 358. * McArthur, Ed. 2, p. 146. For further definitions of constructive total loss, see Kaltenbach v. Mackenzie (1878), 3 C. P. D. at 473 and 479, per Lord Esher; Sheplierd v. Henderson (1881), 7 App. Caa. at p. 70, per Lord Blackburn. 74 DIGEST OF MARINE INSURANCE. Sect. 61. its dual character has complicated the decisions. In some instances ) notice of abandonment has been given as a matter of precaution, and a case is treated as one of constructive total loss when the facts would have justified its being treated as an actual total loss. In other instances due notice of abandonment has not been given, and the case has to be treated as a partial loss, though the facts show a total con- structive loss. Again, when there is a warranty P.P.A., and the loss is heavy, juries sometimes struggle to bring the case within the line of constructive total loss. The result is that the outlines of the la;w are somewhat blurred. Take the case of a consignment of tobacco as a normal instance.. If it is so sea-damaged as no longer to answer to the description of tobacco, there is an actual total loss. If by any process' the tobacco could be reconditioned, so as to mate it saleable as tobacco, but the cost of the operation is prohibitive, there is a constructive total loss. If a portion only of the consignment is spoilt, or if the whole of it is damaged, but not so damaged that it cannot be made into saleable tobacco and forwarded to its destination at a reasonable cost, there is a partial loss. In the majority of cases the distinction between actual total loss and constructive total loss corresponds with the distinction which has been drawn between physical impossibility and mercantile impos- sibility .^ A merchant trades for profit, not for pleasure, and the law will not compel him to carry on business at a loss. A commercial operation is regarded as impracticable, from the mercantile point of view, when the cost of performing it is prohibitive. The same general principle as to loss by frustration of the adven- i ture seems to cover goods, freight, and profits. See the application of the rule to goods criticized, Lowndes, Ed. 2, p. 238, but it is settled law. " It is well established," says Lord Bramwell, " that there may be a loss of the goods by a loss of the voyage in which the goods are being transported, if it amounts, to use the words of Lord Ellen- borough, to a destruction of the contemplated adventure." ^ With the object of avoiding the uncertaintyi and complication of the English rule, the laws of most foreign countries arbitrarily detail certain facts which authorize the assured to abandon and claim for a total loss. Thus, in the United States, unless the policy otherwise provides, there is a constructive total loss if the damage to a ship exceeds 50 per cent, of her repaired value. (Phillips on Insurance, ' Moss V. Smith (1850), 19 L. J. C. P. at p. 228, per Maule, J. ; cf. Banlcin v. Potter (1873), L. E. 6 H. L. at p. 101. ■- BodocanaeU v. Elliott, L. E. 9 0. P. at p. 522, Ex. Gh. LOSS AND ABANDONMENT. 75 § 1539.) la France, among other .conditions, the assured may abandon Sect. 61. when the damage to the subject-matter insured amounts to three- fourths of its value. (Code de Commerce, art. 369.) Mr. Justice Willes in 1867 furnished a memorandum on con- structive total loss and valuation to the Royal Commission on Unseaworthy Ships.' It may still be usefully referred to. See, too, a valuable paper read to the International Law Association by Mr. T. G. Carver, Q.C., in which he discusses the English and foreign laws as to constructive total loss, and suggests the following defini- tions : — (o) Where, by a peril insured against, a ship is so damaged or so placed that the cost of recovering and making her fit for the same service as before will probably exceed her value when recovered and repaired, there is a constructive total loss of the ship. (6) Where, by a peril insured against, the owner of an Insured subject is deprived of the possession or control and use of it indefinitely, or for a period which is unreasonable, having regard to the adventure on which it is insured, there is a constructive total loss of the subject.^ §62. Where there is a constructive total loss the Effect of assured may either treat the loss as a partial loss, or tive total abandon the subject-matter insured to the insurer and ''''^• treat the loss as if it were an actual total loss. The assured iliust make his election within a reasonable time.^ Note. — As Cotton, L.J., puts it, "A constructive total loss is when the damage is of such a character that the assured is entitled, if he thinks fit, to treat it as a total loss." * The section, of course, does not apply to a case where by the terms of the policy the assured is only entitled to claim for an actual total loss, see § 57 (3), ante. ' Report, 1874, Vol. II., App. No. Ivii., p. 426. ' International Law Association, 18th Eeport, 1899, pp. 106, 172. ' Arnould, Bd. 6, pp. 951-953; Boux v. Salvador (1836), 3 Bing. N.C. at pp. 286, 287, Ex. Ch. ; Fleming v. Smith (1848), 1 H. of L. Cas. 513 ; Jlanhin v. Potter (1873), L. R. 6 H. L. at pp. 118, 131, 135, and Kaltetibaeh v. Maehenzie (1878), 3 0. P. D. 467, 479, 0. A., where abandonment and notice of abandonment are distinguished. As to election, see ibid., and Browning v. Provincial Ins. Go. (1873), L. R. 5 P. C. 263. * Kattenhach v. Macleertzie (1878), 3 0. P. D. at p. 479. abandon ment. 76 DIGEST OF MARINE INSURANCE. Sect. 63. § 63. — (1.) Subject to the prpvisions of this section. Notice of where the assured elects to abandon the subject-matter insured to the insurer he naust give notice of abandon- ment. If he fails to dp so the loss can only be treated as a partial loss.^ (2.) Notice of abandonment may be given in writing, or by word of mouth, or partly in writing and partly by word of mouth, and may be given in any terms which indicate the intention of the assured to abandon the subject-matter insured unconditionally to the insurer.^ (3.) Notice of abandonment must be given with reasonable diligence after the receipt of reliable informa- tioa of a constructive total loss, but where the information is of a doubtful character the assured is entitled to a reasonable time to make inquiry.^ (4.) Where notice of abandonment has been given by the assured it cannot be withdrawn without the consent of the insurer.* (5.) "Where notice of abandonment is properly given, the rights of the assured are not prejudiced by the fact that the insurer refuses to accept the abandonment.^ (6.) The acceptance of an abandonment may be either express or implied from the conduct of, the insurer. ' Arnould, Ed. 6, pp. 953-970 ; McArthur, Ed. 2, p. 153. As to origin of notice of abandonment, see Kdltenhach v. Mackenzie (1878), 8 0. P. D. at p. 471, C. A., where the whole subject is discussed. " Arnould, Ed. 6, p. 957; Carrie v. Bombay Ins. Co. (1869), L. E. 3 P. 0. at p. 78. = Arnould, EJ. 6, p. 960 ; Carrie v. Bombay Ins. Co. (1869), L. R. 3 P. C. at p. 79; Bankin v. Poller (1873), L. E. 6 H. L. at p. 105; Ealtenbach v. Mackenzie (1878), 3 C. P. D. at pp. 472, 478. * Arnould, Ed. 6, pp. 968, 970 ; Bankin v. Fotter (1873), L. R. 6 H. L. at p. 119. This is the general rule of law as to the exercise of an election, but cuilihet licet renunciare juri pro se introduclo. f McArthur, Ed. 2, p. 156 ; and illustrations below. LOSS AND ABANDONMENT. 77 The mere silence of the insurer after notice is not an Seot. 63. acceptance.^ (7.) "Where notice of abandonment is accepted the abandonment is irreTocable. The acceptance of the notice conclusively admits liability for the loss and the sufficiency of the notice.^ (8.) Notice of abandonment is unnecessary where at the time when the assured receives information of the loss there would be no possibility of benefit to the insurer if notice were given to him.^ (9.) Notice of abandonment may be waived by the insurer.* (10.) Where an insurer has re-insured his risk, no notice of abandonment need be given by him.^ (11.) Where the assured has given a notice of aban- donment which has not been accepted, the validity of the abandonment must be determined with reference to the state of affairs at the time of action brought," Illustrations. 1. Policy on ship. On the Tth. of February assured is informed that she is a constructive total loss. On the 23rd of February she is sold for what she will fetch. On the 10th of March notice of abandon- ment is given. This is too late.'' > Amould,:EA. 6, pp. 968, 969; Provincial Ins. Co. v. Leduc (1874), li. K. 6 P. 0. 224. 2 Arnould, Ed. 6, p. 968 ; Provincial Ins. Co. y. Leduc (1874), L. E. 6 P. 0. 224 (implied acceptance, waiver of breach of warra,nty), ' Arnould, Ed. 6, p. 959 ; Farnworth v. Byde (1865), 18 C. B. (N. S.) 835 ; BanTiin v. Potter (1873), L. E. 6 H. L. 83 ; Kalteribach v. Mackenzie <1878), 8 0. P. D. 467, 0. A. * Arnould, Ed. 6, p. 958; Houstman v. Thm-nton (1816), Holt N. P. 242. = Vzielli V. Boston Mar. Ins. Co. (1884), 15 Q. B. D. 11, C. A. * Buys V. Boyal Exchange (1897), 2 Q. B. 135; Sailing Ship Blairmore V. Macredie (1898), A. 0. 593 ; but qu. if this rule applies to Scotland, ibid. at pp. 606, 609. ' Kaltenbach v. Mackenzie (1878), 8 C. P. D. 467, 0. A. 78 DIGEST OF MARINE INSURANCE. Sect. 63. 2. Chartered freight on homeward voyage is insured by policy on prior outward voyage. On the outward voyage the ship becomes a constructive total loss, so freight on homeward voyage is lost. No notice of abandonment need be given.^ 3. A ship is captured by the enemy. The owner, hearing of this capture, gives notice of abandonment. The ship is recaptured and restored to he;* owner before action brought. The notice of abandon- ment is ineffectual. This is only a partial loss.^ 4. A ship insured against war risks is captured, and the assured gives notice of abandonment. The insurer declines to accept it. The assured commences an action. After the issue of the writ, the Prize Court, on the termination of the war, decrees the restoration of the ship. This is a valid abandonment, and the assured can recover for a total loss.^ 5. A ship is sunk in deep water in harbour. Notice of abandon- ment is given, but not accepted, and then the insurer, on his own initiative, and at great expense, recovers the ship before action brought. The notice is valid, and the assured can recover for a total loss.* 6. Policy on freight from New Zealand to San Francisco. The ship strands near Honolulu, and the cargo, which consists of coal, gets wetted. Ship and cargo are both sold at Honolulu. If the coal had been dried and sent on, the cost would have been more than its worth. There is a total loss of freight, and no notice of abandonment is necessary .5 Note. — The term "abandonment" is used in three different, but allied, senses. First, and strictly, it denotes the voluntary cession by the assured to the insurer of whatever remains of the subject-matter insured in case of a constructive total loss. Secondly, but incorrectly, it is used as equiralent to notice or tender of abandonment, that is to say, the act by which the assured signifies to the insurer his election to abandon what remains and claim for a total loss. Thirdly, it denotes the cession which takes place, by operation of law, of what- ever remains of the subject-matter insured when the insurer settles for a total loss ; see Note D, post, p. 146. ' RanUn v. Fotter (1873), L. K. 6 H. L. 83. => Bainbridge v. Neihon (1808), 10 East, 329 ; of. Dean v. Hornby (1854), 3 E. & B. 180, 190. ' Buys V. Boyal Exchange (1897), 2 Q. B. 135, reviewing previous cases. * Sailing Ship Blairmore v. Macredie (1898), A. C. 593. ' Trittder v. Thames and Mersey Mar. Ins. Co. (1898), 2 Q. B. at p. 119, C. A. LOSS AND ABANDONMENT. 79 It is an open question whether notice must be given if the subject- Sect. 63. matter must inevitably perish before notice could be received and acted on, though the subject-matter exists when the election to abandon is made.* Notice of abandonment can only be given by or on behalf of the owner of the subject-matter insured, e.g. it cannot be given by a Ijledgee of the policy, but it can be given by a joint owner who manages for the rest.^ It seems that where due notice of abandonment has not been given, the right to give notice of abandonment may revive on change of circumstances.^ According to the law of most foreign countries, the validity of a notice of abandonment must be determined by reference to the state of facts at the time when notice is given, but in England, as Lord Herschell says, the rule is " that if in the interval between the notice of abandonment and the time when legal proceedings are commenced there has been a change of circumstances reducing the loss from a total to a partial one, or, in other words, if at the time of action brought the circumstances are such that a notice of abandonment would not be justifiable, the assured can only recover for a partial loss," but this rule does not extend to a change of circumstances when brought about by the action of the insurer.* The issue of the writ is therefore all important in England. Until that be done, the notice of abandonment is liable to be defeated. § 64. — (1.) Where there is a yalid abandonment, Effect of whatever remains of the subject-matter insured is there- m^nt. upon [transferred] to the insurer, and the insurer is sub- rogated to all rights and remedies of the assured in and in respect of the subject-matter insured as from the time of the casualty causing the loss.^ » Kdltenbach v. Mackenzie (1878), 3 0. P. D. at p. 475, per Brett, L.J. ^ Armuld, Ed. 6, p. 956 ; Jardine v. Leathly (1863), 82 L. J. Q. B. 132. ' Stringer v. Eng. Mar. Ins. Co. (1870), L. E. 5 Q. B. 599, at p. 604. ■* Sailing Ship Blairrmre v. Macredie (1898), A. C. at p. 610. = Arnoidd, Ed. 6, p. 973 ; McArthur, Ed. 2, p. 157 ; Stewart v. Greenock Ins. Co. (1848), 2 H. of L. Cas. at p. 183 ; Manlcin v. Potter (1873), L. R. 6 H. L., at pp. 118, 144; and § 80. 80 DIGEST OF MARINE INSURANCE. Sect. 64. (2.) Upon abandonment, any act or thing done subse- quent to the casualty causing the loss by the assured or his agents for the protection of the subject-matter insured, is at the risk of the insurer and for his benefit, provided such act or thing be done in good faith and reasonably.^ (3.) Upon the abandonment of a ship the insurer thereof is entitled to any freight in course of being earned, and which is earned by her subsequent to the casualty causing the loss, but with this exception he acquires no rights in respect of any contract of affreight- ment which the assured may have.^ (4.) Where the ship is carrying the owners' goods the insurer is entitled to a reasonable remuneration for the carriage of them subsequent to the casualty causing the loss.^ Illustraiions. 1. Ship insured from Quebec to Liverpool. She is first damaged by an iceberg, and again damaged in entering the dock at Liverpool. The cargo is delivered and freight paid. After survey the ship is found to be not repairable, and the owner abandons her to the insurer. The freight belongs to the insurer on ship.* 2. Policy on ship. The ship half-way on the voyage becomes a total loss and is abandoned to the insurers, but the cargo is landed, and sent on by the master in another ship to its destination. The insurer on ship is not entitled to the freight so earned.^ .3. Policy on ship, which has been chartered. The ship is injured ' Rankin v. FoUer (1873), L. E. 6 H. L. at p. 119. 2 Sea Ins. Co. v. Hadden (1884), 13 Q. B. D. 706, C. A. = Miller v. Woodfall (1857), 27 L. J. Q. B. 120 ; see at p. 123 as to the American rule of apportionment. * Stewart v. QreenoeJe Ins. Co. (1848), 2 H. of L. Gas. 159 ; on these facts there is no loss of freight for which assured can claim against insurer on freight, Scottish Mar. Ins. v. Turner (1853), 1 Macq. H. L. 334. * Bielcie v. Bodoeanaohi (1859), 29 L. J. En. 273. But the insurer is entitled to pro rata freight earned under a foreign contract of affreight- ment; see London Assurance v. Williams (1893); Times L. E. 97, afSrmed ihid., p. 257, C. A. PABTIAL LOSSES. 81 by collision and cannot earn freight. Her injuries are such that she Sect. 64. is abandoned to the insurer. The insurer on ship is not entitled to the damages which assured may recover from the ship in fault for loss of freight.' 4. Policy on ship from Pensacola to Hartlepool. Part of the freight is prepaid. The ship is stranded getting in to Hartlepool, but the cargo is delivered, and freight earned. Assured abandons the ship. The insurer is not entitled to the prepaid freight, but only to the balance payable on arrival.^ Note. — For further illustrations, see notes to § 80, post, p. 102. All authorities agree that abandonment operates as a cession or transfer of whatever remains of the subject-matter insured, from the assured to the insurer. But is the transfer absolute or conditional? In the first place, a valid abandonment may be defeated by a subsequent change of circumstances before action brought, e.g., in the case of capture and recapture, see § 63 (11) and notes. In the second place, can the insurer disclaim an onerous property which is properly aban- doned to him ? See that question discussed in the note to § 80. See further. Note D on abandonment, jpos*, p. 146. Partial Losses (including Salvage and General Average). § 65. — (1.) A partial loss of the subject-matter Particular insured may be either a particular average loss or a i\^7^^° general average loss.^ (2.) A particular average loss is a loss, caused by a peril insured against, which is not a general average loss, and which falls exclusively on the owner or other person interested in insurable property, giving him no right of contribution against other persons who may be interested in the common marine adventure.* 1 Sea Ins. Co. v. Sadden (1884), 13 Q. B. D. 706, C. A. 2 The Rfd Sea (1896), P. 20, C. A. 3 Mc Arthur, Ed. 6, p. 163, but of. § 67 (4) as to jettison. * Arnould,'EiA. 6, p. 927; Oow on Insurance, p. 189; McArthur, Ed. 2, pp. 163, 212, 241 ; Kidtton v. Empire Ins. Co. (1866), L. B. 1 C. P. at p. 544 ; Price y. A 1 Small Damage Assn. (1889),! 22 Q. B. D. at p. 590, C. A. . . a 82 DIGEST OF MARINE INSUBANCE. Sect. 65. Note. — ^The expression " iDarticular average loss " involves a redun- dancy, but the use of the term among lawyers is inveterate. " A general average differs from a particular average in its nature and incidence. The former is a partial loss, voluntarily incurred for the common safety, and made good proportionably by all parties concerned in the adventure ; the latter is a partial loss, fortuitously caused by a mari- time peril, and which has to be borne by the party upon whom it falls."! The distinction in English law between " particular average " and " particular charges " corresponds with the distinction in French law between " avarie particuliSre matdrielle " and " avarie particuliere en frais." 2 As to particular charges, see § 77 (2) and § 79 ; and as to particular average warranties (or franchises, as they are sometimes inaccurately called), see § 77. See further, Note on definition of " average," post, p. 145, and the illustrations to §§ 70, 72, and 77. Salvage § 66. — (1.) Subject to any express provision in the c arges. policy, salvage charges may be recovered in like manner as a particular average loss.^ (2.) " Salvage charges " mean the charges recoverable by a salvor, under maritime law. They do not include the expenses of services in the nature of salvage rendered by the assured or his agents, or any person employed for hire by them, for the purpose of averting a peril insured against. Such expenses, where properly incurred, may be recovered as particular charges or as a general average loss, according to the circumstances under which they were incurred.* ' McArthur, Ed. 2, p. 163. ^ Gow on Insurance, p. 221. » McArthur, Ed. 2, pp. 171, 312 ; AitcMson v. Lohre (1879), 4 App. Cas. at p. 765 ; of. BteamsMp Balmoral v. Marten (1900), 2 Q. B. 748, as to effect of valuation in policy. * McArthur, Ed. 2, pp. 171, 261 ; of. Anderson v. Ocean Mar. Ins. Co. (1884), 10 App. Caa. 107. As to the. meaning of "salvage," see AitcMson v. Lohre (1879), 4 App. Cas. at pp. 765, 766 ; Carver's Carriage by Sea, §§ 361-445. PABTIAL LOSSES. 83 Note. — The decision of the House of Lords in 1879 {Aitchison v. Sect. 66. Jjohre)} that salvage charges could not be recovered under the " sue and labour clause" occasioned some surprise (see Arnould, Ed. 6, p. 792). The case proceeded on the ground that salvors are not the agents of the assured, for English law does not recognize the foreign doctrine of " agents of necessity." The payment of salvage charges under a foreign adjustment is usually provided for by a special clause in the policy, a common form of which runs : " General average and salvage charges payable according to foreign statement, if so made up, or per York-Antwerp Bales, 1890, if in accordance with the contract of affreightment." The expression " salvage '' requires definition, because it is used in various senses. In maritime law it is applied alike to the salvor's service and the salvor's reward. It is used to denote the services of a salvor, who intervenes voluntarily, and whose rights are given him by maritime law, and also the services of a salvor who is employed by the ship, and whose rights depend on contract. In insurance law it is also used, to denote the thing saved, as, for instance, in the phrase " with- out benefit of salvage," or when a loss is referred to as a " salvage loss." 2 Life salvage, apart from the salvage of property, is the creation of modern statutes, and the shipowner's liability therefor is not covered by the ordinary form of policy on ship. It must be covered by a special insurance.^ In the present section the term is used to denote salvage strictly so called, that is to say, the salvor's reward, under maritime law, for saving property, or property arid life conjointly. "With regard to salvage, general average and contribution," says Lord Bowen, "the maritime law differs from the common law. That has been so from the time of the Boman law downwards. The maritime law, for the purposes of public policy, and for the advantage of trade, imposes in these cases a liability upon the thing saved — a liability which is a special consequence arising out of the character of mercantile enterprise, the nature of sea perils, and the fact that the thing saved was saved under great stress and exceptional circumstances."* > Aitchieon v. Lohre (1879), 4 App. Oas. at p. 765. 2 Of. Sharpe v. Gladstone (1805), 7 East, at p. 37. ' Nourse v. Liverpool Sailing Ship Association (1896), 2 Q. B. 16, C. A. ; of. Kennedy's Law of Civil Salvage, p. 46. « Falcke v: Scottish Ins. Co. (1887), 34 Ch. D. at p. 248 ; Kennedy's Law of Civil Salvage, p. 6. 84 DIGEST OF MABINE INSURANCE. Sect. 67. § 67. — (1.) A general average loss is a loss caused by General OF directly Consequential on a general average act. It UsT*^* includes a general average expenditure as well as a general average sacrifice.^ (2.) There is a general average act where any extra- ordinary sacrifice or expenditure is voluntarily and reasonably made or incurred in time of peril for the purpose of preserving the [ship and cargo.] ^ (3.) Where there is a general average loss, the party on whom it falls is entitled, subject to the conditions imposed by maritime law, to a rateable contribution from the other parties interested, and such contribution is called a general average contribution. Apart from special contract, the parties interested are the owners of ship freight and cargo.^ (4.) Subject to any express provision in the policy, where the assured has suffered a general average loss he may recover from the insurer in respect of the proportion of the loss which falls upon him ; [and in the case of a general average sacrifice,] he may recover from the insurer in respect of the whole loss without having en- forced his right of contribution from the other -parties liable to contribute. But nothing in this subsection affects the insurer's right of subrogation on payment.^ ' MBArthur, Ed. 2, p. 164 ; Lowndes on General Average, Ed. 4, p. 20 ; Ocean Steamship Co. v. Anderson (1883), 13 Q. B. D. at p. 666, 0. A. ; Svensden v. Wallace (1884), 13 Q. B. D. at p. 84, 0. A. = Ibid. ; Iredale v. China Traders' Ins. Co. (1900), 2 Q. B. at p. 519, C. A. Qm-) say "common adventure" instead of "ship and cargo." Cases might be put where there was a common adventure, but no cargo, e.g., ship in ballast going out to earn chartered freight. ' Lowndes on Average, Ed. 4, p. 804 ; Svensden v. Wallace (1885), 10 App. Oas. at p. 415. * McArthur, Ed. 2, p. 134 ; Dickinson v. Jardine (1868), L. E. 3 C. P- 639 ; The Mary Thomas (1894), P. at p. 125, C. A. See subsect. (1) under which " loss " includes expenditure as well as sacriiioe. PARTIAL LOSSES. 85 (5.) Subject to any express provision in the policy, Sect. 67. where the assured has paid, or is liable to pay, a general average contribution he may recover therefor from the insurer.^ Provided that, in the absence of express stipulation^ the insurer is not liable for any general average loss or contribution where the loss was not incurred for the pur- pose of avoiding, or in connexion with the avoidance of, a peril insured against.^ (6.) It is the duty of the ship-owner and his agents to take such steps as may be reasonable to provide that all general average contributions (whether due to himself or others) are adjusted and collected, and he has a lien on the cargo until this be done.^ (7.) [Where ship freight and cargo, or ship and freight, are owned by the same assured, and insured with different insurers, the assured may recover pro tanto from the insurers for any loss which would constitute a general average loss if there were different owners.] * Illustrations. 1. Policy on goods. Certain goods are jettisoned by a general average act. The insurer of these goods must pay the insured value of them as an ordinary loss under the policy, but he then stands in the place of the assured as regards claims for contribution from the other contributories.^ > McAHlmr, Ed. 2, p. 206 ; The Brigella (1893), P. 198 ; 7 Asp. Mar- Oas. at p. 405. 2 Earrii v. Scaramanga (1872), L. E. 7 C. P. at p. 496. = MeArthur, Ed. 2, p. 199 ; Lowndes on Average, Ed. 4, p. 335 ; Crooks V. Allan (1879), 5 Q. B. D. 38 ; approved Strang, Steel and Co. v. Seott (1889), 14 App. Gas. at p. 607. * The Brigella (1893), 7 Asp. Mar. Gas. at p. 405; Montgomery v- Indemnity Mutual Mar. Ins. (1900), Times, November 20. 5 Dickinson v. Jardine (1868), L. E. 3 G. P. 639. (London usage to hold insurer only liable for the share of the loss cast upon the assured of the jettisoned goods held invalid.) See, too, Owen's Notes and Glauses, Ed. 3, p. 249. 86 DIGEST OF MARINE INSURANCE. Sect. 67. 2. Policy on ship from London to Liverpool and thence to Cal- cutta. The ship strands on a bank in Ireland. Half the cargo, con- sisting of salt, is jettisoned. The remainder is brought back much damaged to Liverpool. The amount to be made good in general average must be ascertained by valuing the jettisoned salt at the price it would have fetched in Liverpool, and the probability that it would have been damaged like the rest must be taken into account.^ 3. Policy on cargo of corn from Varna to Marseilles, general average as per foreign statement. The ship springs a leak, part of the corn is sea-damaged, and the voyage has to be broken up at Con- stantinople. Average is adjusted according to the law prevailing there, and the damage to the wheat is charged to general average^ though, according to English law, it would be particular average excluded by the memorandum. The insurer is liable to pay this sum.^ 4. Policy on ship valued at £33,000. Her real value is £40,000. The ship incurs certain general average and salvage expenses which are adjusted abroad on her real value. The assured can only recover 33-lOths of the amount so adjusted from the insurer.' Note. — The definition of general average given by Lawrence, J., in 1801, still remains the standard definition. "All loss,'' he says, " which arises in consequence of an extraordinary sacrifice made, or expense incurred, for the preservation of the ship and cargo comes within general average, and must be borne proportionately by all who are interested.* Subsects. (1) to (3) are merely explanatory, and perhaps belong more properly to the law of general average than to the law of marine insurance. As Barnes, J., says, " The obligation to contribute to general average exists between the parties to the adventure, whether they are insured or not. The circumstance of a party being insured can have no influence on the adjustment of general average, the rules of which are entirely independent of insurance. If a contracting party is insured he can claim an indemnity against his underwriter in respect of the contribution which he has been compelled to pay in general average, but that is all. I do not forget that in some cases an assured may have a right to recover in full for the loss of sacrificed property. ■ Fletcher v. Alexander (1868), L. E. 3 0. P. 375. ' Mavro v. Ocean Mar. Ins. Co. (1875), L. B. 10 C. P. 415, Ex. Ch. ; of. The Mary Tliomas (1891), P. 808, 0. A. ' Steamship Balmoral v. Marten (1900), 2 Q. B. 748. * Birliley v. Preegrave (1801), 1 East, at p. 228. PAETIAL LOSSES. 87 but the underwriters have the right to contribution from the various Sect. 67. contributories, and, subject to certain diEferenoes of values, the result to —— the underwriters should be practically the same as if the assured had only claimed his contribution from them." * Subsect. (4) is probably rightly expressed. The principle appears to cover not only jettison (the point actually decided), but also any general avei'age sacrifice, as opposed to a general average expenditure. Subsect. (7) deals with a somewhat doubtful point. " If the plaintiffs," says Barnes, J., "had insured all their interests in one policy, expenses properly incurred in averting a loss of those interests by a peril insured against would fall to be borne by the underwriters under the sue and labour clause. If they had insured the ship in oco' policy, and the freight in another, it follows that the underwriters on the respective policies should recover the expenses of averting a loss- of those interests in proportion, not to the actual values saved, but to the benefits derived by the underwriters from the averting of the- loss, that is to say, in proportion to the amounts insured by them respectively." ^ But Mathew, J., in a recent case, supports in terms the proposition laid down in the text.^ The whole subject of general average is in an unsatisfactory con- dition.* The liability to contribute is a common law liability, inde- pendent of insurance, and consequently the liability of the assured under the contract of affreightment may differ from that of the insurer under the policy. For example, suppose goods are insured with a war- ranty free from capture and seizure. General average expenses may be incurred in avoiding capture, but the insurer would not be liable for them. The English rule of law, though not always logically carried out in details, is narrower than the consistent practice of average adjusters, and considerably narrower than the rule which prevails in nearly all foreign countries. In England general average is only payable when the sacrifice was made, or the expenditure incurred, for the preservation of the ship and cargo. Foreign laws for the most part include in general average nearly all expenses incurred for the benefit of the common adventure. As to the place of adjustment, and the law to be followed, see note to § 91, post, p. 116. ' The Brigella (1893), P. at p. 195 ; 7 Asp. Mar. Cas. at p. 404. 2 Tlie BrigellallSdS), 7 Asp. Mar. Cas. at p. 405. 5 Montgomery v. Indemnity Mutual Mar. Ins. (1900), Times, Novem- ber 20. ■■ See discussion in McArthur, Ed. 2, p. 186, and article by T. G. Carver, on Port of Refuge Expenses, Law Quarterly Review, vol. viii. p. 229. 88 DIGEST OF MARINE INSUBANCE. Sect. 67. In practice the normal English rule only applies in exceptional cases, because nearly every policy contains a foreign adjustment clause. Lloyd's clause runs : — " General average and salvage charges payable as per foreign official adjustment, if so made up, or per York- Antwerp Rules [1890] if in accordance vfith the contract of affreight- ment." The York-Antwerp Eules, though generally accepted, only cover a portion of the field. It seems a moot point whether salvage charges, properly so called, can ever be recovered as general average (McArthur, Ed. 2, p. 171, n.). Mr. Carver contends that they cannot.' Concerning general average as between ship, freight, and cargo, see Carver's Carriage by Sea, Ed. 3 (1900), §§ 361-445. Measure of Indemnity. Extent of § 68. Where there is a loss recdverable under the insurer for poUcy, the insurer, or each Insurer if there be more than loss. Qjjg^ jg liable for such proportion of the loss as the amount of his subscription bears to the value fixed by the policy, in the case of a valued policy, or to the insurable value, in the case of an unvalued policy. The liability of the insurer for expenses properly incurred pursuant to the suing and labouring clause must be determined on the same principle. Note. — The adjustment of marine losses proceeds upon the hypo- thesis that the subject-matter insured is fully covered by insurance.^ Suppose a ship valued at £10,000 is insured for £1000 only. The ship- owner is said to be " his own insurer " for £9000, and any loss which occurs must be adjusted on this basis. The following cases may be put in illustration of this principle : — 1. A cargo valued at £10,000 is insured for £1000 by ten under- writers, who each subscribe for £100. It is damaged by sea perils to the extent of £1000. Each underwriter is liable for £10 only. ' See Carver's Carriage by Sea, Ed. 3, §§ 394-896, distinguishing salvors, properly so called, who intervene voluntarily, from salvors em- ployed by the ship. * Fire insurance losses are adjusted on a different basis. See post, p. 143. MEASURE OF INDEMNITY. 89 2. A. ship valued at £5000 is insured for £1000. The ship is Sect. 68. stranded, and the owner spends £1000 in trying to get her off, but eventually she is totally lost. The insurer must pay £1000 on the policy, and £200 (i.e. one-fifth) under the suing and labouring clause. It is immaterial whether the real value of the ship be £4500 or £5500.1 As to the suing and labouring clause, which is a distinct engage- ment in the policy, see § 79. § 69. Where there is a total loss of the subject-matter Total loss. insured : — (1.) If the policy be a valued policy, the measure of indemnity is the sum fixed by the policy.^ (2.) If the policy be an unvalued policy, the measure of indemnity (subject to the limit of the sum insured and any express provision in the policy), is the insurable value of the subject-matter insured.^ § 70. Where a ship is damaged, but is not totally Partial loss lost, the measure of indemnity, subject to any express" ^ ^^' provision in the policy, is as follows : — (1.) Where the ship has been repaired, the assured is entitled to the reasonable cost of the repairs, less the customary deductions mentioned in the Second Schedule to this Digest, but not exceeding the sum insured in respect of any one casualty.* ' See McAriliur, Ed. 2, p. 269 ; and § 79, Tpost. 2 Arnould, Ed. 6, p. 1157 ; Irving v. Manning (1847), 1 H. of li. Cas. at pp. 305, 307; Sailing Ship Blairmore v. Macredie (1898), A. C. at p. 610. ' Arnould, Ed. 6, p. 1156 ; Irving v. Manning (1847), 1 H. of L. Cas. at pp. 305, 307 ; and as to " insurable value," see § 16 and notes. * McArthur, Ed. 2, pp. 212, 219 ; Aitcliison v. lohre (1879), 4 App. Cas. at p. 762; Pitman v. Universal Mar. Ins. Go. (1882), 9 Q. B. D. at p. 208. For Schedule, see post, p. 131. 90 DIGEST OF MARINE INSUEANCE. Sect. 70. (2.) Where the ship has been only partially repaired, the assured is entitled to the reasonable cost of such repairs, computed as above, and also to be indemniiSed for the> reasonable depreciation arising from the unrepaired damage, provided that the aggregate amount shall not exceed the cost of repairing the whole damage, computed as above.^ (3.) Where the ship has not been repaired the assured is entitled to be indemnified for the reason- able depreciation arising from the unrepaired damage, but not exceeding the reasonable cost of repairing such damage, computed as above.^ (4.) Where the ship has not been repaired, and is sold in her damaged state during the risk, the assured is entitled to the reasonable cost of repairing such damage, computed as above, but not exceeding the actual depreciation in the value of the ship as ascertained by the sale.* lUustrations. 1. Policy on hull and machinery. ,The ship is injured in a collision, and has to put into dock for repairs. The cargo becomes putrid, and the shipowner incurs expenses in landing it. These expenses cannot he recovered under the policy on ship.* 2. Policy on ship. In consequence of damage the ship is put into dry dock for repairs. The owners take the opportunity to have her surveyed for Lloyd's classification, but this does not increase the ' McArlhv/r, Ed. 2, p. 220 ; cf. Stewart v. Steele (1852), 5 Scott N. E. 927, at p. 948. ^ Ihid. » Ibid.; and Pitman v. Universal Mar. Ins. Co. (1882), 9 Q. B. D. 192, at pp. 218, 219, 0. A. * Field Steamship Co. v. Burr (1899), X Q. B. 579, C. A. MEASURE OF INDEMNITY. 91 time in dock. The insurer must pay the whole expenses of docking Sect. 70, the ship.i ^— Note. — The Second Schedule, ^osf, p. 131, contains the details of aHjnstment. In the case of wooden ships, except on first voyage, the custom is to mSfce an arbitrary deduction of " one-third new for old " from the cost of the repairs.^ But -this rule is inapplicable to iron ships, and the practice is to provide for them by special clauses. Lloyd's clause for steamers and iron ships runp, " No thirds to be deducted except as regards hemp rigging and ropes, sails, and wooden deck." ^ Subsect. (4) reproduces the rule laid down in Pitman v. Universal Mar. Ins. Co., cited below. Lord Esher dissented from the judgment, thinking the principle it laid down a dangerous innovation, and that the estimated cost of repair, less the usual deductions, should be the sole measure of indemnity. The decision is unsatisfactory, because the other judges on appeal expressly refrained from deciding what was to be taken as the basis of depreciation. The sale price is one factor in the comparison, but what is the other factor? Is it the value of the ship at the commencement of the risk, or at the time of ^the casualty, or what other value ? As to total loss following a partial loss, see § 78, post, p. 99. § 71. Where there is a partial loss of freight, the Partial loss measure of indemnity (subject to the limit of the sum ° '^'^ *' insured, and any express provision in the policy), is such proportion of the sum fixed by the policy, in the case of a valued policy, or of the insurable value, ia the case of an unvalued policy, as the proportion of freight lost by the assured bears to the whole freight at the risk of the assured under the policy.* ' Buabon Steamship Co, v. London Assurance (1900), A. C. 6 H. L. ; distinguishing the Van/imiver Case (1886), 11 App. Cas. 573. ^ See MoArtlim, Ed. 2, p. 213; Pitman v. Universal Mar. Ins. Co. (1882), 9 Q. B. D. at p. 215 ; cf. Henderson, v. Shanldand (1896), 1 Q. B. at p. 530, 0. A. » See McArlhur, Ed. 2, pp. 313, 403. * Ibid., p. 235; Lowndes, Ed. 2, p. 195; Denocm v. Home and Col. Ins. Co. (1872), L. R. 7 C. P. at p. 351 ; The Main (1894), P. 320. As to the facts which constitute a partial, as distinguished from a total, loss of freight, see Ranltin v. Potter (1873), L. R. 6 H. L. at pp. 98-100, per Brett, J. 92 DIGEST OF MAEINE INSURANCE. Sect. 72. § 72. Where there is a partial loss of goods, merchan- Partiai loss dise,or Other movables, the measure of indemnity, subject me^chan- *° *^® limits of the sum insured and any express provision dise, etc. jn the policy, is as follows : — (1.) Where part of the goods, merchandise, or other movables insured by a valued policy is totally lost, the measure of indemnity is such propor- tion of the sum fixed by the policy as the value of the part lost bears to the insurable value of the whole, ascertained as in the case of an unvalued policy.^ (2.) Where part of the goods, merchandise, or other movables insured by an unvalued policy is totally lost, the measure of indemnity is the insurable value of the part lost, ascertained as in case of total loss.^ (3.) Where the whole or any part of the goods or merchandise insured has been delivered damaged at its destination, the measure of indemnity is the ratio of loss, ascertained by comparing the gross sound and damaged values, reduced to the same cash basis, at the time and place of arrival, applied to the sum fixed by the policy, in the case of a valued policy, or to the insurable value, in the case or an unvalued policy.^ (4.) " Gross value " means the price which a wholesale buyer would give with freight, landing charges. ' McAHhur, Ed. 2, p. 246; Lewie v. Backer (1761), 2 Burr. 1167. = Ibid.; of. Tobin v. Harford (1863), 32 L. 3. 0. P. 131, 136. » McArthur, Ed. 2, p. 247; Johnson v. Sheddon (1802), 2 East, 580 (the " brimstone case "). As to estimating the value of jettisoned goods, of. Fletcher v. Alexander (1868), L. E. 3 C. P. 375 (general average case). MEASURE OF INDEMNITY. 93 and duty paid beforehand ; provided that in the Sect. 72. case of goods or merchandise customarily sold in bond, the bonded price is deemed to be the gross value. " Gross proceeds " mean the actual price obtained at a sale where all charges on sale are paid by the sellers.^ (5.) Where any sale or other charges on damaged goods or merchandise are paid or payable by the buyers, such charges must be added to the gross proceeds before establishing the ratio of damage, as above provided, and in the event of a claim being established, such charges are subsequently recoverable from the insurer as "Extra charges." 2 IllustraKons. 1. Unvalued policy on coffee from Jamaica to London. The insurable value, i.e. the invoice cost, plus shipping expenses and charges of insurance, is £200. Half the coffee is damaged on the voyage. The value of the damaged coffee in London is half that of the undamaged coffee. The selling price in London fixes the measure or percentage of depreciation, but not the amount the insurer has to pay. That must be determined by applying the depreciation to the insurable value, so that in this case the insurer has to pay £50.* 2. Policy on 40 bales of cotton, which are shipped as part of a cargo of 1600 bales of cotton belonging to different owners. Owing to sea perils 200 bales have to be jettisoned, and the rest are damaged and the marks wholly obliterated. The 1400 bales are sold for the benefit of whom it may concern. This is a partial loss, and the assured is entitled to recover, as if five of his 40 bales had been jettisoned, and the rest damaged to the extent shown by the sale of the whole.* ' McArthur, Ed. 2, p. 253 ; cf. Gow on Insurance, p. 198 ; Rules of Practice of Association of Average Adjusters, 1900, post, p. 157. 2 McArthur, Ed. 2, p. 271 ; of. Gow on Insurance, p. 125 ; Francis v. Boulton (1895), 65 L. J. Q. B. 153 (conditioning charges). » Usher \. Noble (1810), 12 East, 639, and § 16, ante. The test adopted excludes the rise or fall of the London market. * Spence v. Union Mar. Ins. Co. (1868), L. E. 3 0. P. 427. 94 DIGEST OF MARINE INSURANCE. Sect. 72. 3. Policy on 1700 packages of tea, valued at £6000. Part of Ihe tea is sea-damaged, and the remainder, which arrives undamaged, sells in consequence for a smaller price. The insurer is not liable for the depreciation so caused. ' 4. Policy on cargo of sheet iron in separate packages, average payable "on each packet separately or on the whole." Damage is sustained before the termination of the risk. The whdle of the iron is unpacked and examined. The damaged iron is sold, and the rest is repacked and sent on. The insurer is not liable for the expenses incurred in examining and repacking the packages which were not damaged.^ Note. — The policy of the rules contained in subseots. (3) to (5) has often been criticized, but they are only prima facie rules, appli- cable to ordinary merchandise. There are many matters to which they could not apply, e.g. loss of part of a machine, rendering the whole valueless.^ Such cases are usually provided for by special clauses. See, further, § 76, post. § 73. Where different species of property are insured under a single valuation, the valuation must be appor- tioned over the different species in proportion to their relative insurable values, as in the case of an unvalued policy. The insured value of any part of a species is such proportion of the total insured value of the same as the insurable value of the part bears to the insurable value of the whole ascertained in both cases as above.* § 74. Subject to the limit of the sum insured and any express provisi'on in the policy, where the assured has paid, or is liable for, any general average contribution, the measure of indemnity is the full amount of such con- Apportion' ment of valuation. General average contribu- tions. » Cator V. Great Western Ins. Co. (1873), L. E. 8 0. P. 552, 561. There was a special warranty as to sea-damage, but the judgment eetabUshes the general principle. " Lysaght v. Coleman (1895), 1 Q. B. 49, C. A. = Cf. British Columbia Co. v. Nettlethip (1868), L. R. 3 0. P. 499 (measure of damage against shipowner) ; and see § 76, post. * MeArthur, Ed. 2, pp. 244-246 ; Gow on Insurance, p. 191 ; Kules of Practice of Asaooiation of Average Adjusters, 1900, post, p. 157; and see § 77, post. MEASURE OF INDEMNITY. 95 tribution if the subject-matter liable to contribution is Sect. 74. insured for its full contributory value ; but if such subject-matter be not insured for its full contributory value, or if only part of it be insured, the indemnity pay- able by the insurer must be reduced in proportion to the under insurance.^ Note. — This section deals with adjustment. As to liability, see § 67, ante. Suppose goods are insured for £1500 by a valued policy. General average is incurred, of which £80 is found to be the proportion payable by the owner of the goods, their contributory value being taken at £1600. The insurer is liable for 15-16ths of £80, viz. £75. But if the contributory value of the goods be £1200, the insurer is liable for the whole £80. § 75. Where the assured has effected an insurance in Liabilities 1. 1 ... 1-1 *" third express terms against any liability to a third party, the parties, measure of inderanity, subject to the limit of the sum insured and any express provision in the policy, is the amount paid or payable by him to such third party in respect of such liability.^ Note. — An insurance against liability to a third person is a distinct engagement added to the ordinary policy. In a case where it was held that the " sue and labour " clause in the policy could not be read in with the running-down clause, so as to supplement it, the Court, speaking of the latter, say : " It is in each case a special con- tract, very different from the contract of insurance in its ordinary form ; and the liability under it does not depend upon the ordinary ' See MeArthur, Ed. 2, pp. 206, 210 ; Qow on Insurance, p. 301 ; Eules of Practice of Association of Average Adjusters, 1900. As to the effect to be given to the foreign general average clause, see McArthur, Ed. 2, p. 208, and Greer v. Poole (1880), 5 Q. B. D. 272 ; The Mary Thomas (1894), P. 108, C. A. As to effect of valuation in policy, see Steamship Balmoral V. Marten (1900), 2 Q. B. 748. As to contribution by goods where ship is a constructive total loss, see Henderson v. Shanldand (1896), 1 Q. B. 525, C. A. » Amould, Ed. 6, pp. 23, 24, and 730 ; McArthur, Ed. 2, pp. 320, 370, and the ordinary forms of running-down clauses ; The Nidbe (1891), A. C. 401, H. L. (collision); cf. Joyce v. Kennard (1871), L. E. 7 Q. B. 78 (lighterman's liability). 96 BIOEST OF MABINE INSURANCE. Sect. 75. perils covered by the policy, but upon the special matters mentioned in the clause itself." ^ Eunning-down clauses were introduced into policies in consequence of the decision in Devawo v, Salvador,^ that the insurer under the ordinary form of policy was not liable for the balance which one ship had to pay to the other when both were to blame for a collision. The forms at first introduced have again been modified to meet other decisions.^ The insurer is liable under the ordinary form of policy for injury caused by collision to the assured's ship, whether she be in fault or not.* The construction of a collision or running-down clause depends entirely on the language used by the parties in the particular clause in question.* Though the shipowner's liability for collision is limited by statute, he is expressly authorized to insure, see Merchant Shipping Act, 1894 (57 & 58 Vict. c. 60), § 506, ^os*, p. 141. General § 76. — (1.) Where there has been a loss in respect of as t^^" any subject-^matter not expressly provided for in the fore- indem'^it°^ golog provisions of this Digest, the measure of indemnity must be ascertained, as nearly as may be, in accordance with those provisions, in so far as applicable to the par- ticular case, but if there be no provision applicable to the case, then in accordance with usage." > Xenos V. Fox (1868), L. E. 3 C. P. at p. 635, affirmed L. E. 4 C. P. 665. ^ Devaux v. Salvador (1836), 4 Ad. & B. 420. ' See Tatham v. Burr (1898), A. C. at p. 385. ♦ Davidson v. Burnand (1868), L. E. 4 0. P. at p. 121, per Willes, J. As to the scope to be given to the term " collision," see Chandler v. Bhgg (1897), 1 Q. B. 32 (collision with sunken barge) ; The Niche (1891), A. 0. 401 (collision with tug). ° The undermentioned recent cases may be referred to : — Tlie Niobe (1891), A. C. 401 (tug and tow regarded as identical) ; The Munroe (1893), P. 218 (meaning of sunken wreck); Union Mar. Ins. Co. v. Borwiclr (1895), 2 Q. B 279 (" piers or similar structures " include artificial bank) r IShelbourne v. Law Investment Ins. Corpn. (1898), 2 Q. B. 626 (loss by detention daring repairs not recoverable) ; Tatham v. Burr (1898), A. 0. 382 (removal of obstructions under statutory powers) ; Burger v. Indemnity Mutual Mar. Ins. Co. (1900), 2 Q. B. 348, C. A. (injury to ship or vessel itself). " See notes to §§ 72 and 75, and such cases as Baring v. Marine Ins. Co. (1893), W. N., p. 164 (stock sent abroad by registered letter). MEASURE OF INDEMNITY. 97 (2.) Nothing in the provisions of this Digest relating Sect. 76. to the measure of indemnity affects the rules relating to double insurance, or prohibits the insurer from disproving interest wholly or in part, or from showing that at the time of the loss the whole or any part of the subject- matter insured was not at risk under the policy.^ § 77. — (1.) Where the subject-matter insured is Particular ■warranted free from particular average, the assured ^g^nmties. cannot recover for a loss of part, whether the policy be valued or unvalued, unless the contract contained in the policy be apportionable ; but if the contract be apportion- able, the assured may recover for a total loss of any apportionable part. The contract is apportionable where the policy itself provides for apportionment, or where by usage the contract is treated as apportionable.^ (2.) Where the subject-matter insured is warranted free from particular average, either generally or under a certain percentage, the insurer is nevertheless liable for salvage charges, and for particular charges and other expenses properly incurred pursuant to the provisions of the suing and labouring clause in order to avert a loss insured against.^ ' See § 33 (double insurance), and note to § 28 as to short interest. ^ McArihur, Ed. 2, pp. 242, 341 ; Qmo on Insurance, p. 191 ; Balli v. Jamon (1856), 6 E. & B. 422 (bags of seed), read with Duff v. Mackenzie 768. For definition of salvage charges, see § 66, atUe. » Eidaton v. Empire Ins. Co. (1866), L. R. 1 C. P. at pp. 516, 517, per Willes, J. : Meyer v. Eaili (1876), 1 0. P. D. 358. ' MoArthur, Ed. 2, p. 263; Eidston v. Empire Int. C). (1866), L. R. 1 0. P. at p. 541 : Carrie v. Bombay Ins. Co. (1869), L. R. 3 P. C. 72. » Eidston v. Empire Ins. Co. (1866), L. R. 1 0. P. 585; affirmed L. R. 2 0. P. 357, Ex. Ch. « Xenos V. Fox (1869), L. R. 4 C. P. 665, Kx. Ch. 102 BIGEST OF MAEINE INSUBANCE. Sect. 79. 3. Policy on freight. A ship bound for L. is stranded at P. The cargo is»landed, and, in order to earn freight, is sent on by rail to L. at a cost of £200. It might have been sent on by ship at a cost of £70. The insurer on freight is liable for £70 only, under the sue and labour clause.' 4. Policy for £1000 on ship and cargo valued at £4000. Expenses are incurred under the sue and labour clause to the extent of £2000. The insurer is liable to contribute £500.^ 5. Live cattle are insured against all risks. The ship, owing to sea perils, is detained in a port of refuge for some weeks. The cost of extra fodder supplied to the cattle during the detention is recoverable under the sue and labour clause.^ Note. — The assured and his agents are bound by law to use all reasonable efforts to avert or minimise a loss.* The suing and labouring clause enables the assured to recover the expenditure involved in those efforts from the insurer. The Continental Codes embody the conditions of the suing and labouring clause, so that under those codes the liability of the insurer is determined by law, whereas in England it rests on contract. The sue and labour clause is usually supplemented by the " waiver clause " (see Lloyd's policy, 'post-, p. 120), which provides that " no acts of the insurer or insured in recovering, saving, or preserving the property insured shall be considered as a waiver or acceptance of abandonment." '' Bights of Insurer on Payment. Right of § 80. — (1.) Where the insurer pays for a total loss, tioD™^"" whatever may remain of the subject-matter insured is thereupon [transferred] to him, and he is thereby subro- gated to all the rights and remedies of the assured in ' Lee V. Souiliern Ins. Co. (1870), L. K. 5 C. P. 397. ^ Dixon V. Wentworth (1'879), 4 C. P. D. at pp. 377, 378. The case is over-ruled only so far as it decided that salvage expenses were recoverable under the clause. ' The Pomeranian (1895), P. 349. * Benson v. Chapman (1849), 2 H. L. C. 496; Notara v. Henderson (1872), L. K. 7 Q. B. 225, Ex. Oh. (shipper v. shipowner). ' McArthur, Ed. 2, p. 272 ; Loimdei, Ed. 2, p. 165. SiaSTS OF INSUBUR ON PAYMENT. 103 and in respect of the subject-matter insured as from the Sect. so. time of the casualty causing the loss.^ (2.) Where the insurer pays for a partial loss, the subject-matter insured, or such part of it as may remain, is not transferred to him, but he is thereupon subrogated to all rights and remedies of the assured in and in respect of the subject-matter insured as from the time of the casualty causing the loss, in so far as the assured has been indemnified, according to law, by such payment for the loss.^ Illustrations, 1. Goods insured by a valued policy are captured and sold. The underwriters pay down 50 per cent, of the loss. Afterwards the assured receives half the proceeds of the goods. The insurers are not entitled to this or any part of it.^ 2. A ship is missing, and the insurer pays for a total loss. If the ship afterwards arrives she belongs to the insurer.* 3. Insured goods are jettisoned. The insurer of these goods must pay as for a total loss, but he then stands in the place of the assured as regards claims for general average contribution.® 4. A ship valued at £6000 is insured for £6000. Her real value is £9000. She is run down by another ship, and the insurers pay for a total loss. Afterwards the assured recovers £5000 damages from the owners of the ship in fault. The insurers are entitled to the whole of this sum as salvage." 5. Cargo insured under a valued policy is destroyed by a Con- federate cruiser. The cargo is worth more than the valuation. After the war, compensation is paid to the cargo owner by the United States ' McAHhur, Ed. 2, p. 158; Banhin v. Potter (1873), L. R. 6 H. L. at pp. 118, 119, 144 ; Simpson v. Thomson (1877), 3 App. Gas. at pp. 284, 292 ; Darrell v. Tibbitts (1880), 5 Q. B. D. at p. 563, 0. A., per Lord Esher. == Simpson V. Tliomson (1877), 3 App. Oas. at p. 292, H. L. ' Tunno v. Edwards (1810), 4 East, 488. * Soustman v. Thornton (1816), Holt N. P. 242. 5 Bichinson v. Jardine (1868), L. R. 3 C. P. 639; and Rules of Practice of Average Adjusters' Association, 1900. " North of England Ins. Assn. v. Armstrong (1870), L. R. 5 Q. B. 244, doubted, BurvMnd v. Bodocanachi (1882), 7 App. Caa. at p. 342. 104 DIGEST OF MABINE INSURANCE. .Sect. 80, under an Act which expressly refuses to recognize claims made by '- — ' or on behalf of insurers. The insurers, who have paid for a total loss, are not entitled to this compensation.^ 6. Two ships belonging to the same owner come into collision. The insurers of the ship not in fault have no claim against the ship in fault, for they stand in the place of the assured, who cannot have a claim against himself.^ 7. Goods, on which freight has been prepaid, are lost through the negligence of the shipowner. Subiecfc to any special provision in the contract of affreightment, the shipper can recover as damages the prepaid freight for the benefit of the insurers on freight.^ 8. A ship is run down, and the insurer pays for a total loss. The insurer on ship is not entitled to the damages recovered by the ship- owner from the ship in fault for loss of freight.* 9. Wool is damaged in a collision between lighters. The insiirers pay the claim, and the assured assigns to them his rights against the- owner of the lighter in fault. That owner cannot set up the defenca that the payment was outside the policy.* Note. — The right of subrogation is a necessary incident of a contract of indemnity, and it operates on every right and remedy " by which the loss insured against can be or has been diminished.* If the assured is indemnified it seems the insurer may recover from a third party more than he has paid.' But suppose a ship valued at £5000 i& insured for £4000, how is the subrogation to be apportioned ? Probably the assured, being " his own insurer " for £1000, is entitled to a fifth of the salvage.' The cases do not suggest a rule of apportionment. ' Burnand v, Modotxmaehi (1882), 7 App. Cas. 333, explained Castellain v. Preston (1883), 11 Q. B. D. at p. 404, per Lord Bowen. ' Simpeon v. Thomson (1877), 3 App. Cas. 279, H. L. ; discussed Mid- land Int. Co. V. Smith (1881), 6 Q. B. D. at p. 565. " Dufomcet v. Bishop (1886), 18 Q. B. D. 373. * Sea Ins. Co. v. HaMen (1884), 13 Q. B. D. 706, C. A. * King v. Victoria Ins. Co. (1896), A. C. 250, P. 0. ' Castellain v. Preston (1883), 11 Q. B. D. at pp. 388, 404, C. A. ; and cf. West of England Fire Ins. Co, v. Isaacs (1896), 2 Q. B. 377 (fire policy). ' North of England Ins. Assn. v. Armstrong (1870), L. B. 5 Q. B. 244 ; but cf. Burnand v. BodoaanacM (1882), 7 App. Cas. at p. 342, as to valuation. » Arnould, Ed. 6, p. 980. But see other cases of difficulty suggested, Lowndes, Ed. 2, pp. 227, 229, RIGHTS OF INSURER ON PAYMENT. 105 but such a rule seems required. It is recognized in French law. See Sect. 80. Pothier, Traits d'Assurance, § 133. The authorities fully bear out the proposition that whatever remains of the subject-matter insured vests in the insurer when he settles for a total loss. " The assured," says Lord Cottenham, " must give up to the underwriters all the remains of the property recovered, together with all benefit and advantage belonging or incident to it, or rather such property vests in the underwriters." * But is the vesting absolute or conditional, that is to say, can the insurer disclaim the property if it is onerous ? Suppose a ship is wrecked in harboiu- and the insurer pays for a total loss. There may be an obligation to remove the wreckage, the expense of which would exceed the value of the wreckage. Or take the case of a collision in a fog in mid-ocean with a derelict vessel. The question has been discusaed, but not decided, in England.^ In France, it seems, the insurer can disclaim. See Pothier, Traite d'Assurance, § 136. Again, in the case of a British ship, at any rate, it is the equitable and net the legal title which vests in the insurer. Speaking broadly, the insurer, in the absence of special contract, must exercise all remedies in the name of the assured.' It follows that the insurer is entitled to the use of the assured's name ; but if the insurer wishes to bring an action he must, of course, indemnify the assured as regards costs. As to the effect of the rule of subrogation on the doctrine of con- tribution between insurers of the same property, see note to § 33, ante, and see further, note, post, p. 146, as to abandonment. § 81. — (1.) Where the assured is over-insured by Eight of double insurance, each insurer is bound, as between him- ""on. self and the other insurers, to contribute rateably to the loss in proportion to the amount for which he is liable under his contract.* (2.) If any insurer pays more than his proportion of ' Stewart v. Greenock Mar. Ins. Co. (1848), 2 H. L. 0. at p. 183. 2 EglinUm v. Norman (1877), 3 Asp. Mar. Gas. 471, C. A. ; and see Arrow Shipping Co. v. Tyne Improvement Commissioners (1894), A. C. 508, H. L. ' Simpson v. Thomson (1877), 3 App. Cas. 290, 293 ; but see King v. Victoria Ins. Co. (1896), A. C. 250 (special assignment of rights). * ArnoM, Bd. 6, p. 329; Lowndes, Ed. 2, p. 35; Ledlce on Contracts, Ed. 3, pp. 62, 65.5; Newhy v. Reed (1763), 1 W. Bl. 416; North British Ins. Co. V. London and Globe Ins. Co. (1877), 5 Ch. D. at p. 583, C. A. 106 DIGEST OF MARINE INSURANCE. Sect. 81. the loss, he is entitled to maintain an action for contribu- tion against the other insurers, and is entitled to the like remedies as a surety who has paid more than his propor- tion of the debt.^ Note. — Under the foreign codes provision is made for successive liability to avoid the complication of the Baglish rule (see Arnould, Ed. 6, pp. 329-331). Co-insurers are not co-sureties, but in many- respects they have similar relations inter se. As Martin, B., says, when two or more policies are effected on the same subject-matter and interest " the policies are one insurance as between all the under- writers, but not one insurance for all purposes." ^ But for a qualifica- tion of this principle as regards return of premium, see note to § 84, and as to double insurance, see § 33, ante. Beturn of Premium. Enforce- § 82. Where the premium, or a proportionate part return"'^ thereof, is, by this Digest, declared to be returnable : — (a.) If already paid, it may be recovered by the assured from the insurer, and, (6.) If unpaid, it may be retained by the assured or his agent.^ Note. — The broker is directly responsible to the insurer for the payment of the premium, but when returnable it is repayable to the assured.* There is said to have been a custom that when the premium was returnable, the insurer was nevertheless allowed to make a deduction of one-half per cent. (Arnoidd, Ed. 6, p. 1121). But this custom is now believed to be obsolete. Return by § 83. Where the policy contains a stipulation for the agreement, return of the premium, or a proportionate part thereof, ' Subsect. (2) is consequential. = Bruce v. Jones (1863), 32 L. J. Ex. at p. 135. » Arnould, Ed. 6, pp. 194, 197, 206; Sliee v. Clarlcson (1810), 11 R. E. 473 ; 12 East, 507 (broker) ; of. McArtJiur, Ed. 2, p. 40. * Arnould, Ed. 6, p. 198. See also § 61, ante. ' JiETUBN OF PREMIUM. 107 on the happening of a certain event, and that event Sect. 83. happens, the premium, or, as the case may be, the pro- portionate part thereof, is thereupon returnable to the assured.^ § 84.— (1.) Where the consideration for the payment Retum for of the premium totally fails, and there has been no fraud '^^''""''' or illegality on the part of the assured or his agents, the sideration. premium is thereupon returnable to the assured.^ (2.) Where the consideration for the payment of the premium is apportionable and there is a total failure of any apportionable part of the consideration, a propor- tionate part of the premium is, under the like conditions, thereupon returnable to the assured.^ (3.) In particular — (a.) Where the policy is void, or is avoided by the insurer as from the commencement of the risk, the premium is returnable, provided that there has been no fraud or illegality on the part of the assured; but if the risk is not apportionable, and has once attached, the pre- mium is not returnable.* (h.) Where the subject-matter insured, or part thereof has never been imperilled, the premium, or, as the case may be, a proportionate part thereof is returnable. Provided that where the subject-matter has been insured " lost or not lost," and has arrived ' Arnould, Ed. 6, p. 1115 ; Owen's Notes and Clauses, Ed. 3, p. 122 ; Kellner v. Le Mesurier (1803), 4 East, 396, 7 K. E. 581 ; Gorsedd Steam- ship Co. V. Forbes (1900), 5 Com. Cas. 413 (return after loss); of. Rules of Practice of Association of Average Adjusters, 1900, posi, p. 158. 2 MoArihur, Ed. 2, p. 43. ' Mc Arthur, Ed. 2, pp. 43, 44. * Arnould, Ed. 6, p. 1109; and as to the proviso, see ibid. p. 1100; Leake on Contracts, Ed. 3, p. 92. 108 DIGEST OF MARINE INSURANCE. Sect. 84. in safety at the time when the contract is con- cluded, the premium is not returnable unles?, at such time, the insurer knew of the safe arrival.^ (c.) Where the assured has no insurable interest throughout the currency of the risk the premium is returnable, provided that this rule does not apply to a policy effected by way of gaming or wagering.^ {d.) Where the assured has a defeasible interest which is terminated during the currency of the risk the premium is not returnable.* (e.) Where the assured has over-insured under an unvalued policy, a proportionate part of the premium is returnable,* (/.) Subject to the foregoing provisions, where the assured has over-insured by double insurance, a proportionate part of the several premiums is returnable.^ Illustratwns. 1. Goods are insured from London to a port in an enemy's country. The ship is captured. The insurance is void, as trading with an enemy, and the premium is not returnable." 2. A ship insured at and from A, sails from A with an insufficient crew, and is lost. The insurer is not liable, and the premium is not returnable.' ' Arnould, Ed. 6, p. 1111 ; and as to the proviso, see Bradford v. Symondson, 7 Q. B. D. 456, C. A. ' Arnould, Ed. 6, p. 1109. = Boehm v. Bell (1799), 8 T. E. 154. * Arnould, Ed. 6, p. 1112. ' Arnould, Ed. 6, p. 1113; McArthur, Ed. 2, p. 44. = Vandyelc v. Hewitt (1800), 1 East, 96 ; 5 E. R. 516 ; see, too, PalyaH V. Leckie (1817), 6 M. & S. 290, when the voyage was abandoned, ' Annen v. Woodman (1810), 3 Taunt. 299. RETURN OF PREMIUM. 109 3. Cotton, at sea and overdue, valued at £30,000, is insured by Sect. 84. policies effected on the 12tli of April for £20,000, and by policies effected on the 13th of April for £16,000. In case of safe arrival, no premium is returnable on the policies effected on the 12th, for they bore the whole risk till the other policies were effected. Bat premium on £6000, the extent of the over-insurance, is returnable on the policies effected on the 18th.i 4. Policy on goods at sea. The assured represents to the insurer that the ship sailed from Baltimore on the 12th of January. As a fact she sailed on the 1st of January. The insurer is not liable. If the representation was an honest mistake, the premium is returnable, aliter if it was made dishonestly .^ 5. Insurance on profits and commission "without benefit of sal- vage." The policy is illegal under 19 Geo. 2, c. 37, and the premium is not returnable.' 6. A, who has insured the cargo on a ship believed to be overdue, re-insures his risk with B. At the time the re-insurance is effected the ship has safely arrived, but neither party knows this. The re-insurance policy attaches, and the premium is not returnable.* 7. Insurance on 500 bales of cotton to be shipped by a particular ship. Only 250 bales are shipped. Half the premium is returnable.'* Note. — Apart from agreement, the return of the premium seems to rest on the doctrine of failure of consideration. The principle has been generalized in subsects. (1) and (2), as the subordinate rules in subsect. (3) may not be exhaustive. " The general rule of law," says Bovill, C. J., " is that where a contract has been in part performed, no part of the money paid under such contract can be recovered back. There may be some cases of partial performance which form an exception to this rule, as, for instance, if there were a contract to deliver ten sacks of wheat, and six only were delivered, the price of the remaining four might be recovered back. But there the consideration is clearly severable." ^ The case of double insurance gives rise to complications. " The assured has the right to elect under which policy or set of policies he • 1 Fish V. Matterman (1841), 8 M. & W. 165. ^ Anderson v. Thornton (1853), 8 Exch. 425. ' Allkins V. Jtipe (1877), 2 0. P. D. 375, see at p. 388 as to possibility of salvage in such a case ; cf. § 5, ante. * Bradford v. Symondson (1881), 7 Q. B. D. 456, C. A. « Cf. McArthur, Ed. 2, p. 41. « Whincup V. Sughes (1871), L. R. 6 C. P. at p. 81. no DIGEST OF MARINE INSURANCE. Sect. 84. will claim for a loss, and under which policy or set of policies he will claim for a return of premium ; but the underwriters, having settled with the assured, must proceed to readjust the entire claim among themselves, so that each underwriter shall ultimately bear his proportionate part both of the loss and of the return premium." ' But as regards return premium this rule is subject to qualification. When, as commonly happens, the risk under some of the policies attaches before the risk under later policies, so that under the earlier policies the entire risk is run for a time, then the premium is only returnable by the underwriter of the later policies.^ This qualification, is really a deduction from subseot. (3) (a). To get rid of this complication, and to discourage over-insurance, Lord Herschell proposed that in case of double insurance premium, should not be returnable. ModiBca- tions in mutual insurance. Mutual Insurance. § 85. — (1.) Where two or more persons mutually agree to insure each other against marine losses there is said to be a mutual insurance, and such persons are called the members of a mutual insurance association.* (2.) The provisions of this Digest relating to the premium do not apply to mutual insurance, but a guarantee, or such other arrangement as may be agreed upon, may be substituted for the premium.* (3.) The provisions of this Digest, in so far as they may be modified by the agreement of the parties, may in the case of mutual insurance be modified by the terms of the policies issued by the association, or by the rules and regulations of the association.^ ' McArthm, Ed. 2, p. 44. See, too, § 33. = Fisk V. Masterman (1841), 8 M. & W. 165; Lowndes, Ed. 2, p. 36. " MeArthur, Ed. 2, p. 345 ; and for history of mutual insurance, see Marine Mutual Ins. Assn. Ltd. v. Young (1880;, 4 Asp. Mar. Gas. at p. 358. * MoArthur, Ed. 2, p. 346 ; Lion Ins. Assn. v. Tucker (1883), 12 Q. B. D. at p. 187, C. A. ' Oeean Iron Steamship Assn. v. Leslie (1889), 22 Q. B. D. 722 ; British Marine Mutual Ins. Co. v. JenUns (1900), 1 Q. B. 299. SUPPLEMENTAL. Ill (4.) Subject to the exceptions mentioned in this Sect. 85. section, the provisions of this Digest apply to a mutual Note. — ^Mutual marine associations consisting of more than twenty members must be registered under the Companies Acts,^ and the in- surances effected by them must be embodied in marine policies in con- formity with the Stamp Acts.^ " Mutual insurance," says Mathew, J., " is the simplest thing in the world if you have not to record it in written documents. It is a system by which every one insured is at once underwriter and assured. This very simple principle was acted upon successfully for many years, till technical difficulties began to be interposed. The first technical difficulty was this : all mutual insurance associations were ordered by statute to be incorporated as joint stock companies. The second technical difficulty was, that under statutes framed for different purposes, which were positive in their terms, every contract of marine insurance had to be recorded in a written document ; there must be a policy of insurance. These two conditions having to be complied with, the mutual associations set themselves to work to reconcile the rules of the law with the conduct of their business, and different regulations have been adopted to meet the decisions." * The policies issued by mutual associations omit the ordinary provision as to premium. The omission is provided for by rules of the association which regulate members' contributions to losses. Their policies therefore have to be construed together with the rules and regulations of the association. Supplemental. § 86. Where a contract of marine insurance is in good Eatifica- faith effected by one person on behalf of another, the ^^°1^J^ person on whose behalf it is effected may ratify the contract even after he is aware of a loss.^ 1 British Marine Mutual Ins. Co. v. Jenkins (1900) 1 Q. B. 299. 2 Be Padetow Ass. Assn. (1882), 20 Ch. D. 137, 0. A. ' Edwards v. Aberayron Mutual Ins. Sodeiy (1875), 1 Q, B. D. 563, Ex. Ch. * Ocean Iron Steamship Assn. v. Leslie (1889), 22 Q. B. D. at p. 724. 5 Arnould, Ed. 6, p. 166; Williams v. North Cliina Ins. Co. (1876), 1 C. P. D. 757, 0. A,, see at p. 764. 112 DIGEST OF MARINE INSURANCE. Sect. 86. Note.— This is an old rule of insurance law. It was questioned in Williams v. North China Ins. Co.,^ but affirmed. " I tMnk," says Cockburn, C.J., " that this is a legitimate exception from the general rule, because the case is not within the principle of that rule. Where an agent effects an insurance subject to ratification, the loss is very likely to happen before ratification, and it must be taken that the insurance so effected involves that possibility as the basis of the contract." The insurance can only be ratified by the person on whose behalf it is effected. Thus, if A takes out a policy in his own name on behalf of B, the transaction cannot be adopted by C.^ Implied § 87. — (1.) Where any riglit, duty, or liability would varied by ^ arise under a contract of marine insurance by implication agreement ^f \^^^ j^ m^y be negatived or varied by express agree- ment, or by usage, if the usage be such as to bind both parties to the contract.^ (2,) The provisions of this section extend to any right, duty, or liability which may be modified by agreement. Note. — This section is suggested by § 55 of the Sale of Goods Act, 1893 (56 & 57 Vict. c. 71). The cases are analogous. As Potbier long ago pointed out, marine insurance is a consensual contract, and in the absence of positive legal prohibition, the parties may make any stipulation they please. As regards "express agreement," the maxims of the law are Expressum facit cessare taciturn, andModtis et conventio vincunt legem. For example, it is a well-known rule of law that deviation is ground for avoiding the insurance, but the parties may agree to a deviation clause. As regards usage, it is to be noted that when one party relies on and gives evidence of usage, the other party is at liberty to prove — " first, the non-existence of the usage ; or, secondly, its illegality or unreasonableness ; or, thirdly, that \a fact it formed no part of the agreement between the parties." * > Williams v. North China Ins. Co. (1876), 1 0. P. D. 757, C. A., see at p. 764. ^ „„ ■ Byas V. MilUr (1897), 3 Com. Cas. 39. == Jiyas V. muuir (±aai/, " .^™- — 3 Mo Arthur, Ed. 2, pp. 33-35; Hart v. Standard Ins. Co. (1889), 22 Q. B. D. at p. 501, 0. A. * Tat/lor on Evidence, § 1077. As to usage in maritime law generally, Eee Carver's Carriage by Sea, §§ 160-200. SUPPLEMENTAL. 113 Speaking, in 1791, of a marine policy, Buller, J., says, " it is founded Sect. 87. on usage and must be governed by usage." ^ This proposition must now be taken with qualifications. A usage may be either a general usage of trade, or a particular usage, prevailing only among particular classes or in particular localities. When a general usage has been affirmed by judicial decision, it becomes incorporated with the law merchant, and thenceforward evidence of any usages inconsistent therewith, is inadmissible.^ A particular usage must be proved by evidence in each case, at any rate till it becomes so notorious that the Courts will take judicial notice of it.^ It is only binding in so far as it forms an implied term of the contract between the parties concerned. As a marine policy is an instrument in writing, evidence of usace is not admissible to contradict anything which is plainly expressed.* Such evidence is only admissible to explain what is technical or ambiguous, or, as lawyers put it, to annex incidents to the contract.^ § 88. Whpre by this Digest any reference is made to Reasonable reasonable time, reasonable premium, or reasonable dili- aTuest*o'n gefice, the question what is reasonable is a question of "^ **'='• fact.s § 89. Where there is a duly stamped policy reference ^"P ^^ evidence. ' Brough v. Whitmore (1791), 4 T. R. at p. 210. " Goodwin v. IRoharts (1875), L. R. 10 Ex. at p. 357, Ex. Ch. » Cf. Ex parte Turquand (1885), 14 Q. B. D. at p. 645. * Arnould, Ed. 6, p. 291; Parkinson v. Collier ^ 2 Park. Ins. 653. * For illustrations of the part played by usage, see Universo Ins. Co. v. Merchants' Mar. Ins. Co. (1897), 2 Q. B. 93 (liability of broker for premium) ; Atwood v. Sellar (1880), 5 Q. B. D. 286, 0. A. (practice of average adjusters to charge certain general average expenses to particular average, invalid) ; Stephens v. Australasian Ins. Co. (1872), L. E. 8 O. P. at p. 23 (declarations on floating policies) ; Dickinson v. Jardine (1868), L. B. 3 C. P. 639 (special usage as to jettison, invalid) ; Sweeting v. Pearce (1861), 30 L. J. C. P. 109 (usage of Lloyd's as to settlement of losses) ; Blaclcett v. Boyal Exchange (1832), 2 Or. & J. 244 (usage not to pay for boat slung outside, invalid) ; Palmer v. BlacJcburn (1822), 1 Bing. 60, 64 (measure of indemnity, gross freight). ^ As to reasonable time, see Carlton Steamship Co. v. Castle Mail Packets Co. (1898), A. C. at p. 491, per Lord Hersohell ; Currie v. Bombay Native Ins. Co. (1869), L, R. 3 P. C. at p. 79 ; as to premium, see note to § 32. 114 DIGEST OF MARINE INSURANCE. Sect. 89. may be made to the slip or covering note, in any action for rectifying or avoiding the policy.^ Note. — Lord Blackburn says, " As the slip is clearly a contract for marine insurance, and is equally cleraly not a policy, it is, by virtue of these enactments (the stamp laws) not valid, that is, not enforceable at law or in equity; but it may be given in evidence, wherever it is, though not valid, material." ^ For example, the slip is evidence for the purpose of correcting an error in the name of the^hip. So, too, if the insurer seeks to avoid the policy on the ground of concealment of a material fact, the date of the slip would be material to show whether, when the fact came to the knowledge of the assured, the contract had or had not been concluded.' interpreta- S 90, In this Digest, unless the context or subject- tion of ... terms. matter otherwise requires — "Action " includes counter-claim and set off: * " Assured " includes the agent of the assured : ® "Freight" includes the profit derivable by a ship- owner from the employment of his ship to carry his own goods or movables, as well as freight pay- able by a third party, but does not include passage money : ® " Insurer " includes the agent of the insurer : ' *' Movables" mean any movable tangible property. ' McArtltur, Ed. 2, p. 23 ; Arnould, Ed. 6, p. 260 ; Leake on Contracts, Ed. 3, pp. 270, 342 ; lonid^s v. Paeific Mar. Ins. Co. (1872), L. E. 7 Q. B. 517, Ex. Oh. ' lonides v. Pacific Mar. Ins. Co. (1871), L. E. 6 Q. B. at p. 685 (name of ship). ' Cory V. Patton (1872), L. E. 7 Q. B. 704; of. Lishman v. Northern ' Mar. Ins. Co. (1875), L. E. 10 0. P. 179, Ex. Oh. * Of. § 62 (1) of the Sale of Goods Act, 1893 (56 & 57 Viot. c. 71). ' Arnould, Ed. 6, p. 158 ; Ooean Steamship Ins. Assn. v. Leslie (1889), 22 Q. B. D. at pp. 724, 726. « Arnould, Ed. 6, p. 31 ; Flint v. Flemyng (1830), 1 B. & Ad. 45 ; see note, post. ' Arnould, Ed. 6, pp. 150, 271 ; McArthur, Ed. 2, p. 50. SUPPLEMENTAL. 115 other than the ship, and include money, valuable Sect. 90. securities, and other documents : ^ " Policy " means a marine policy. Note. — In ordinary shipping law tlie term " freight " is sometimes used to denote the goods or cargo laden on board ship. More com- monly it is used to denote the sum payable to a shipowner by a third person for the use of a ship as a vehicle for merchandise.^ In insur- ance law the term has a wider meaning. In a case where it was held that an insurance " on freight" did not cover coolies' passage money, Willes, J., after commenting on the different meanings of the word, says it has been " decided that ' freight ' sufficiently represents the interest of the shipowner in the carriage of his own goods, and includes the value of their carriage." ^ It is immaterial to the insurer whether the ship be regarded as hired to an actual or to a hypothetical charterer. As to " advance freight,'' sea § 12. § 91. — (1.) Nothing in this Digest affects : — (a.) The provisions of the Stamp Act, 1891, or any enactment for the time being in force relating to the revenue ; ^ or (b.) The provisions of the Companies Act, 1862, or any enactment amending or substituted for the same.® (2.) The rules of the common law, including the law merchant, save in so far as they are inconsistent with the express provisions of this Digest, and in particular the rules relating to the effect of fraud, illegality, misrepre- • See Baring Brothers v. Marine Ins. Go. (1893), W. N. p. 164 (postal packet containing stock certificates) ; The Pomeranian (1895), P. 349 (live cattle) ; Sleigh v. Tyser (1900), 2 Q. B. 333 (live cattle). The term "goods" in a marine policy has a restricted meaning. See post, p. 130. " By English law, apart from special contract, freight is only payable on right delivery of the cargo, and freight pro rata itineria is not recog- nized. Cf. Carver's Carriage by Sea, Ed. 3, § 542. 3 Denoon v. Home and Col. Ass. Go. (1872), L. E. 7 C. P. at p. 349. ^ See the stamp provisions set out, post, p. 136. • See the notes to § 85. 116 DIGEST OF MABINE INSURANCE. Sect. 91. sentation, and mistake, apply to contracts of marine insurance.^ Note. — In continental countries marine and mercantile cases are relegated to special commercial tribunals. In England, as in the United States, they are dealt with by the ordinary courts of justice. The law merchant is part of the common law, and its special rules are enforced as part of the ordinary law of the land. Marine insurance is a contract, and, in so far as that contract has not special incidents peculiar to itself, it is dealt with on the same footing as other con- tracts. If the law of contract were codified in England, the special rules relating to marine insurance would form a chapter in that code. Conflict of Conflict of Laws. — Mr. Dicey sums up the decisions in the foUow- laws. jjjg juigg^ j^jj^ underwriter is bound by an average adjustment duly taken according to the law of the place of adj^istment, that is to say, when the voyage is completed in due course, by the law of the port of destination, or, when the voyage is not so completed, by the law of the place where the voyage is rightly broken up and the ship and cargo part company. An English insurer of goods shipped by an English merchant on board a foreign ship is not affected by the law of the flag.^ As Lush, L. J., says, an insurer on an English policy may, if he chooses, stipulate " that such policy shall be construed in whole or in part according to the law of any foreign state, as if it had been made in and by a subject of the foreign state, and the policy in question does so stipulate as regards general average ; but, except when it is so stipulated, the policy must be construed according to our law, and without regard to the nationality of the vessel." ^ Calculation The differences in time in different places raise some curious of time. points. Suppose a ship is insured in London with A up to midnight of the 31st of December, without any special provision as to time, and with B from the 1st of January. The ship founders in the West Indies on the 31st of December at 10 p.m. according to ship's time. According to London time A's policy would have expired, and the risk ' As to fraud and misrepresentation, see Leake on Contracts, Ed. 3; pp. 291, 330 ; as to illegality, ibid. p. 620 ; as to mistake, iUd. pp. 262-287, and Spalding v. Crocker a897), 13 Times L. E. 396. '' Bieey'i Conflict of Laws, pp. 597, 598; of. Waveriree Co. v. Love- 1897), A. C. 373, P. 0. » Greer v. FooU (1880), 5 Q. B. D. 272 (English policy with foreign adjustment clause). ( 118 ) FIEST SCHEDULE. FoKM OP Lloyd's Policy. Lloyd's Be it known THAT* ^ as S.G. policy. well in ^ own name as for and in the name and names of all and every other person or persons to whom the same doth, may, or shall appertain, in part or in all doth make assurance and cause ^ and them, and every of them, to be insured lost or not lost, at and from * Upon any kind of goods and merchandises, and also upon the body, tackle, apparel, ordnance, munition, artillery, boat, and other furniture, of and in the good ship or vessel called the ^ whereof is master under God, for this present voyage,® or whosoever else shall go for master in the said ship, or by whatsoever other name or names the said ship, or the master thereof, is or shall be named or called ; begin- ning the adventure upon the said goods and merchandises * The blanks in the policy are filled up in writing. At the end special clauses are inserted, or they may be put in the margin. The Company form usually provides a blank in which the amount insured is expressed in words. Lloyd's policy has no such blank, probably because the sum insured is split up among the various "names" subscribing the policy. Taking a policy on goods as an illustration, the blanks might be filled up as follows : — (') "John Brown," or "John Brown and [or] as agent"; (') "his"; C) "himself"; (*) "Madras to London"; {^) " Calliope" ; («) "William Smith," but commonly left blank; (') "as above"; (') "as above"; (») usually left blank ; ('») "A. B. 100 bales cotton valued at £1000." FORM OF LLOTirS POLICY. 119 from the loading thereof aboard the said ship,' upon the said ship, etc.^ and go shall continne and endnre, daring her abode there, npon the said ship, etc. And farther, antil the said ship, vith all her ordnance, tackle, apparel, etc., and goods and merchandises whatsoever shall be arrived at ^ npon the said ship, etc., nntil she hath moored at anchor twenty-fbnr hoars in good safety; and npon the goods and merehandises, nntil the same be there discharged and safely landed. And it shall be lawfnl for the said ship, etc., in this Toyage, to proceed and sail to and teach and stay at any ports or places whatsoever® without prejudice to this insurance. The said ship, etc.,^ goods and merchandises, etc., for so mncli as concerns the a^ured bv afnreement between the assured and assurer* in this policy, are and shall be valued at ^ Touching the adventures and perils which we, the assurers, are contented to bear and do take upon us in this voyage : they are of the seas, men of war, fire^ enemies, pirate, rovere, thieves, jettisons, letters of mart and countermart snrprisals, takings at sea, arrets, re- straints, and detainments of all kin^, princes, and people, of what nation, condition, or quality soever, barratry of the master and mariners, and of all other perils, losses, and misfortones, that have or shall come to the hurt, detriment, or damage of the said goods, and merchandises, and ship, etc., or any part thereofc And sne and in case of any Xosa or misfortune it shall be lawful to the ^lan^ assured, their factors, servants and assigns, to sue, labour, and travel for, in and about the defence, safeguard, and recovery of the said goods and merchandises, and ship, etc., or any part thereof, without prejudice to this in- surance ; to the charges whereof we, the assurers, wiU 120 DIGEST OF MARINE INSURANCE. contribute each one according to the rate and quantity- Waiver of his sum herein assured. And it is especially declared *'*"^°' and agreed that no acts of the insurer or insured in recovering, saving, or preserving the property insured shall be considered as a waiver, or acceptance of abandon- ment. And it is agreed by us, the insurers, that this writing or policy of assurance shall be of as much force and effect as the surest writing or policy of assurance heretofore made in Lombard Street, or in the Eoyal Exchange, or elsewhere in London. And so we, the assurers, are contented, and do hereby promise and bind ourselves, each one for his own part, our heirs, executors, and goods to the assured, their executors, administrators, and assigns, for the true performance of the premises, confessing ourselves paid the consideration due unto us for this assurance by the assured, at and after the rate of. In Witness whereof we, the assurers, have subscribed our names and sums assured in London. Memoian- jv.^, — Com, flsb, Salt, fruit, flour, and seed are war- ctum. ranted free from average, unless general, or the ship be stranded — sugar, tobacco, hemp, flax, hides, and skins are warranted free from average, under five pounds per cent., and all other goods, also the ship and freight, are war- ranted free from average, under three pounds per cent., unless general, or the ship be stranded. 'iji OTE.— Lloyd's Policy. — The policy was settled in its preseut form in 1779, but most of its provisions are of much older date. The " Memorandum " was added in 1749. Lloyd's policy has twice been scheduled to statutes now repealed (see 35 Geo. 3 c. 63, and 30 & 31 Vict. c. 23). The judges have not been complimentary to its drafting. Mansfield, C.J., has described it as "a very strange instrument." ^ Lawrence, J., has described it as "drawn with much laxity," ^ and " Le Cheminant v. Pearson (1812), i Taunt. 380. = Marsden v. Beid (1802), 3 East, 579. FORM OF LLOYD'S POLICY. 121 Duller, J., says that " a policy of assurance has at all times been con- sidered in courts of law as an absurd and incoherent instrument, but it is founded on usage, and must be governed and construed by usage." ^ The classes concerned nevertheless cling to it with inveterate con- stancy. Many of the insurance companies have slightly altered some of its provisions, but it is recognized as the typical British policy. Every line, and almost every word, of it has been judicially construed, and has now acquired a conventional meaning. The policy is framed as a ship and goods policy. Hence pre- sumably the letters S.G. in the- margin, though some learned persons suggest that those letters stand for " salutis gratia'' The policy consists of three inter-related but distinct engagements, namely, the insurance, the sue and labour clause, and the memorandum. All British insurance law has been developed through cases arising on the policy. In so far as those cases appear to establish general principles, which are independent of the terms of the policy, they are summarized in the provisions of the Digest. The main rules to be derived from the cases on the printed terms of the policy are sum- marized in this schedule. The policy itself, as noted above, is framed as an insurance on ship and goods. To make it apply to other interests and to meet the constantly changing requirements of modern commerce, special terms or " clauses " are written in to the policy. These are constantly being altered to meet new requirements. These clauses are business stipulations, and must be construed from a busi- ness, and not a technical, point of view.^ The decisions on these special provisions are numerous, but each case turns on the particular language used. If the special clause be inconsistent with the pro- visions of the printed policy, the special clause must prevail.^ For a general canon of construction, see Hart v. Standard Ins. Co. (1889), 22 Q. B. D. at p. 501, per Lord Bowen. For a form of company policy (Alliance Marine), see Owen's Notes and Clauses, Ed. 3, p. 6 ; and for forms of American policies and clauses, see ibid. pp. 230-244. For the form of the oldest extant English policy (1613), see Martin's History of Lloyd's, p. 46. For a form of an Italian policy, dated 1523, see Lowndes, Ed. 2, p. 233. ' Brough, v. Whitmore (1791), 4 T. R. at p. 210. » Tatham v. Burr (1898), A. C. at p. 386. ' Hydarnei S.S. Co. v. Indemnity Mutual Mar. Ais. Co. (1895), 1 Q. B. 500, C. A. ; cf. Dudgeon v. Pewhroke (1877), 2 App. Gas. 284. 122 DIGEST OF MAEINE INSUBANCE. Rules for Construction of Policy. The following are the rules referred to by § 31 of this Digest for the construction of a policy in the above or other like form, where the context does not otherwise require: — Lost or not 1. Where the subject-matter is insured " lost or not ^°^^' lost," and the loss has occurred before the contract is concluded, the risk attaches unless, at such time, the assured was aware of the loss, and the insurer was not.^ Pj.^^ 2. Where the subject-matter is insured "from" a particular place, the risk does not attach until the ship starts on the voyage insured.^ At and 3. (a.) Where a ship is insured " at and from " a ""°' particular place, and she is at that place in good safety [Ship.] when the contract is concluded, the risk attaches imme- diately.^ (b.) If she be not at that place when the contract is concluded, the risk ' attaches as soon as she arrives there in good safety, and, unless the policy otherwise provides, it is immaterial that she is covered by another policy for a specified time after arrival.* [Freight.] (c) Where chartered freight is insured " at and from " a _particular place, and the ship is at that place in good safety when the contract is concluded, the risk attaches immediately. If she be not there when the contract is concluded, the risk attaches as soon as she arrives there in good safety.^ ' MeArthur, Ed. 2, p. 80 ; of. Mead v. Davison (1835), 3 A. ifc E. 303 ; Gledstanes v. Eoyal Exchange Corporation (1864), 34 L. J. Q. B. 35 (floating policy) ; Bradford v. Symondson (1881), 7 Q. B. D. 456, 0. A. (re-insurance) ; and see § 6 and notes. 2 McAHhur, Ed. 2, p. 81 ; Arnould, Ed. 6, p. 388 ; and § 46 and notes. = McArfhur, Ed. 2, p. 81 ; Falmer v. Marshall (1831), 8 Bing. 79. ' MeArthur, Ed. 2, p. 82; Haughfon v. Empire Mar. Ins. Co. (1865), L. E. I Ex. 205. = MeArthur, Ed. 2, p. 101 ; Foley v. VniUd Mar. Ins. Co. (1870), L. E. 5 0. P. 155. BULES FOR CONSTRUCTION OF FOLICY. 123 {d.) Where freight [other than chartered freight] is insured " at and from " a particular place, the risk attaches ^ro rata as the goods or merchandise are shipped ; pro- vided that if there be cargo in readiness which belongs to the shipowner, or which some other person has contracted with him to ship, the risk attaches as soon as the ship is ready to receive such cargo.^ Note. — The expression. " good safety " has a technical meaningr. It denotes (a) that the ship is in the possession of the assured, and not under capture or arrest, and (6) that she exists as a ship, even though damaged.^ 4. Where goods or other movables are insured " from From the the loading thereof," the risk does not attach until such thereof. goods or movables are actually on board, and the insurer is not liable for them while in transit from the shore to the ship.^ Note. — Eisk of craft to and from the vessel is commonly included by a supplementary provision. 5. Where the risk on goods or other movables con- Safeiy tinues until they are "safely landed," they must be *° ^ " landed in the customary manner and within a reasonable time after arrival at the port of discharge, and if they are not so landed the risk ceases.* Note. — Ordinarily the risk on freight terminates at the same time as the risk on goods ; but in the case of chartered freight the terms of ' MeArthur, Ed. 2, p. 100 ; of. Jones v. Neptune Ins. Co. (1872), L. K. 7 Q. B. at pp. 706, 707. But as to advance freight, see § 12, ante, p. 16. ' MeArthur, Ed. 2, p. 94 ; Gow on Insurance, p. 55 ; Lidgett v. Secretan (1870), L. E. 5 C. P. at p. 198. = MeArthur, Ed. 2, p. 91 ; Arnmld, Ed. 6, p. 378. ■■ MeArthur, Ed. 2, p. 97 ; Arnoidd, Ed. 6, p. 392 ; Oow on Insurance, p. 56; cf. Boulder v. Merehants' Mar. Ins. Co. (1886), 17 Q. B. D. 354 (goods put in lighters for transhipment, risk ended) ; Marten v. Nippon (1898), 14 Times L. K. 333 (re-insurance, warehouse clause). 124 BIQEST OF MARINE INSURANCE. the policy often determine its termination.' The risk on ship under the ordinary form of policy terminates when she has been " moored for twenty-four hours in good safety." As to "good safety," see note to Rule 3. DifBcult questions sometimes arise where the cause of loss comes into operation before the expiration of the policy, but the actual loss occurs afterwards.^ In a case on a policy in the ordinary form, with the added provision that the ship was to be covered " during thirty days stay in her last port of discharge," it was held that the thirty days must be added to the twenty-four hours given by the policy.' Touch and 6. In the absence of any further license or usage, the liberty to touch and stay " at any port or place whatso- ever" does not authorize the ship to depart from the course of her voyage from the port of departure to the port of destination.* Perils of 7. The term "perils of the seas" refers only to the seas. i • <% i t j fortuitous accidents or casualties of the seas. It does not include the ordinary action of the winds and waves.^ Note. — It is unsafe to attempt a complete definition of the expres- sion " perils of the seas," because in practice the question " what is a peril of the seas " is inextricably woven up with the further question, was the loss proximately caused by the sea peril ? Lord Bramwell has tentatively suggested the following definitions, namely, " Every accidental circumstance, not the result of ordinary wear and tear, delay, or of the act of the assured, happening in the course of the navigation of a ship and incidental to the navigation, and causing loss to the subject-matter of the insurance." He then goes on to approve an alternative definition given by Lopes, L.J., namely, "In a sea- worthy ship, damage to goods caused by the action of the sea during 1 McArtlmr, Ed. 2, pp. 100, 101. - See the cases reviewed in Lidgett v. people " refers to political or executive acts, and does not include a loss caused by riot or by ordinary judicial )cess.* Note. — An insurance against British capture is illegal. See note process.* ' McArthur, Ed. 2, p. 121 ; Arnould, Ed. 6, p. 770 ; of. Carver's Car- riage by Sea, Ed. 3, §§ 11, 94 ; Owen's Declaration of War, p. 437. ^ Arnould, Ed. 6, p. 770; Gow on Insurance, p. 113; of. Carver's Car- riage by Sea, Ed. 3, § 94. " Taylor v. Liverpool O. W. Steam Co. (1874), L. E. 9 Q. B. 546, at p. 531. < McArihm, Ed. 2, p. 128 ; Arnould, Ed. 6, p. 765 ; Gow on Insurance, p. 115 ; Carver's Carriage by Sea,.Ed. 3, § 82 ; cf. Cory v. Burr (1883) 8 App. Caa. at p. 396. BULES FOB OONSTBUUTION OF FOLIO Y. 127 to § 42. The word " people " in this context, says Lord Kenyon, " means the ruling power of the country." i In a case, in 1883, where a ship, warranted free from capture and seizure, was forcibly seized and practically destroyed by natives in the Brass Eiver, whose object was to plunder the cargo. Cave, J., held that this was a seizure within the warranty. After commenting, on the various attempts to define the terms " capture " and " seizure,'' he says, " the seeming confusion in some of these passages arises from the desire of the authors in question to give a distinct and different mean- ing to such words as ' capture,' ' seizure,' ' arrest,' ' detention,' and 'restraint,' and the impossibility of accomplishing the task is shown by their attempts to distinguish between ' arrest,' ' restraint,' and ' detention.' I have no doubt that the word ' seizure,' like many other words, is sometimes used with a more general, and sometimes with a more restricted, meaning ; and whether it is used in a particu- lar case with the one meaning or the other depends, not on any general rule, but on the context and circumstances of the case." ^ As to takings at sea and the warranty " free from capture and seizure," see Oweii's Declaration of War, p. 68 ; as to embargo, ilid. p. 39 ; and as to blockade, ibid. p. 123. 12. The term " barratry " includes every wrongful Barratry. act wilfully committed by the master or crew with intent to defraud or prejudice the owner, or, as the case may be, the charterer.^ Note. — This definition is inclusive, not exhaustive. See Note B, post, p. 143, on definitions of barratry, and discussion thereof. 13. The term "all other perils " includes only perils All other similar in kind to the perils specifically meationed in the policy.* > Neshitt V. LusMngton (1792), 4 T. E. at p. 787. " Johnston V. Hogg (1883), 10 Q. B. D. at p. 435. ' Arnould, Ed. 6, p. 774 ; of. Carver's Carriage by Sea, Ed. 3, §§ 99, 100. * Arnould, EJ. 6, p. 789 ; Oullen v. Butler (1816), 5 M. & S. at p. 465'; Thames and Mersey Ins. Co. v. Hamilton (1887), 12 App. Cas. 484, reviewing the cases at p. 495; The Knight of St. Miohael (1898), P. at p. 35 (fire). 128 DIGEST OF MABINE INSURANCE. Note.— The practical effect of the words is to prevent a narrow and technical construction being placed upon the perils specifically- enumerated. If the assured wants to go further than this, he must cover his lisk by special terms. Average 14. The term "average unless general" means a general, partial loss of the subject-matter insured other than a general average loss, and does not include " particular charges." ^ Note. — In a case where it was held that general average could not be added to particular average to make up the 3 per cent, war- ranty, Lord Bsher says that the words "average unless general" "must be read as equivalent to warranted free from partial loss under 3 per cent., unless it be a general average loss ; " and Lord Bowen points out that from the time of Lord Mansfield the words have beea read "as an exception, and not a condition, with this consequence, that the occurrence of a general average loss was held not to entitle- the assured to recover for a particular average loss." ^ See further,. Rule 15 and notes, and Note C, post, 145. Stranded. 15. Where the ship has stranded the insurer is liable for the excepted losses, although the loss is not attribu- table to the stranding, provided that when the stranding takes place the risk has attached and, if the policy be on goods, that the damaged goods are on board.^ Note. — It is unsafe to attempt a complete legal definition of " stranding." The question is mainly one of fact. Lord Tenterden, in an often-quoted case, says : " Where a vessel takes the ground in the ordinary and usual course of navigation and management in a tide river or harbour upon the ebbing of the tide or from natural deficiency of ' See MoArthur, Ed. 2, pp. 173, 261 ; see, too, § 65 and notes thereto, and note on Average, poit, p. 145. " Price \.A1 Small Damage Asm. (1889), 22 Q. B. D. at pp. 586, 591. ' See McAHhur, Ed. 2, p. 283 ; ArnouU, Ed. 6, p. 821 ; Thames and' Mersey Mar. Ins. Co. v. Pitts (1893), 1 Q. B. 476 (goods in lighters, not on board) ; The Alsace Lorraine (1893), P. 209 (goods landed at port of refuge); cf. BusseU v. Erwin (1890), 6 Times L. E. 353, as to when a. barge is stranded. RULES FOR CONSTRUCTION OF FOLIC F. 129 water so that she may float again upon the flow of tide or increase of water, such an event shall not be considered as stranding within the sense of the memorandum. But where the ground is taken under any extraordinary circumstances of time or place, by reason of some unusual or accidental occurrence, such an event shall be considered as ■stranding withiu the meaning of the memorandum. According to the construction that has long been put upon the memorandum, the words • unless general or the ship be stranded ' are to be considered as an exception out of the exception as to the amount of the average or partial loss provided for by the memorandum, and consequently to leave the matter at large, according to the Icontents of the policy." * See also note to last rule.' 16. The term " ship " includes the hull, materials and Ship. outfit stores and provisions for the officers and crew, and, in the case of vessels engaged in a special trade, the ordinary fittings requisite for the trade, and also, in the case of a steamship, the machinery, boilers, and coals.^ Note. — The term " ship " is used in the Digest with the same meaning that it has in the ordinary policy. See § 16, ante. 17. The term " freight " includes the profit derivable Freight. by a shipowner from the employment of his ship to carry his own goods or movables, as well as freight payable by a third party, but does not include passage money .^ Note. — The term " freight " is used throughout the Digest in the ■same sense as in the policy. See § 90, ante. 18. The term " goods " means goods in the nature of Goods, merchandise, and does not include personal effects or provisions and stores for use on board. In the absence of any usage to the contrary, deck cargo > Wells V. Hopwood (1832), 3 B. & Ad. 20, at p. 84 ; see this passage approved in Letchford v. Oldham (1880), 5 Q. B. D. 538, 5i5, C. A., where the oases are reviewed. " See McArthur, Bd. 2, p. 67 ; and § 16, ante. ' See Arnould, Ed. 6, p. 31; Flint v. Flemyng (1830), 1 B. & Ad. 45; Denoon v. Some and Colonial Ais. Co. (1872), L. K. 7 C. P. at p. 349. K 130 DIGEST OF MARINE INSURANCE. and living animals must be insured specifically, and not under the general denomination of goods.* Note. — The expression "goods," in ordinary law, covers all movable tangible property.^ But when used in a policy the nature of the contract imposes a restricted meaning. If the insurer is required to undertake anything more than an ordinary risk, the policy ought to disclose the particular nature of the subject-matter insured. Hence it has been held that machinery is not covered by a policy on goods.* So, too, if the policy is on a particular kind of goods, goods of another kind cannot be substituted.* The construction of the rule would presumably be influenced by the fact whether or not the particular subject-matter was in fact made known to the insurer before the conclusion of the contract. See further, § 27 and notes thereto. ' See McAHhur, Ed. 2, p. 58; Arnould, Ed. 6, pp. 24-^8; Oow on Insurance, pp. 44-46. As to meaning of " merchandise " in a contract of affreightment, see Carver's Carriage by Sea, Ed. 3, § 263. " See, e.g., Clialmere' Sale of Goods Act, 1893, § 62, and notes. ' Scott V. Mannheim, Int. Co., Times, April 19, 1899. * Mackenzie v. Whihoorth (1875), 1 Ex. D. at p. 41. ( 131 ) SECOND SCHEDULE. (See Section 70.) In the adjustment of claims for particular average in a policy on ship, in the absence of any special provision in the policy, the following items for repairing damage or making good losses are recoverable from the insurer without deduction, new for old : — Graving dock expenses. Cost of removals. Use of shears, stages, and graving dock appliances. Cost of anchors, provisions, and stores. Cost of temporary repairs. Cost of straightening bent ironwork. All repairs of damage sustained by a vessel on her first voyage. Chain cables are subject to a deduction of one- sixth. All other repairs of damage sustained after the first voyage are subject to a deduction of one-third.^ 1 See MeArthur, Ed. 2, pp. 184, 213 ; cf. Gow on Insurance, p. 339, and Rules of Practice of Association of Average Adjusters, post, p. 155. { 133 ) APPENDIX I— STATUTES. THE MARINE INSUEANCE ACT, 1745. (19 Geo. 2, c. 37.) An Act to regulate Insurance on Ships helonging to the Subjects of Great Britain and on Merchandizes or Effects laden thereon. "Whereas it hath been found by experience that the making assur- Preamble, anoes, interest or no interest, or without further proof of interest than the policy, hath been productive of many pernicious practices, ■whereby great numbers of ships, ■with their cargoes, have either been fraudulently lost and destroyed, or taken by the enemy in time of ■war ; and such assurances have encouraged the exportation of wooll, and the carrying on many other prohibited and clandestine trades, ■which by means of such assurances have been concealed, and the parties concerned secured from loss, as ■well to the diminution of the publick revenue as to the great detriment of fair traders, and by intro- ducing a mischievous kind of gaming or ■wagering, under the pretence of assuring the risque on shipping, and fair trade, the institution and laudable design of making assurances hath been perverted, and that ■which was intended for the encouragement of trade and navigation has, in many instances, become hurtful of and destructive to the same : For remedy whereof, be it enacted, etc. 1. Prom and after the first day of August, one thousand seven No assur- hundred and forty-six, no assurance or assurances shall be made by """f 1 T 1 1 • niaile any person or persons, bodies corporate or politick, on any ship or interest or ships belonging to his Majesty, or any of his subjects, or on any no interest, "oods, merchandizes, or effects laden or to be laden on board of any such ship or ships, interest or no interest, or without further proof of interest than the policy, or by way of gaming or wagering, or without benefit of salvage to the assurer ; and that every such assurance shall be null and void to all intents and purposes.' • See § 4 of Digest, ante, p. 7, reproducing this provision and noting the decisions thereon. 134 APPENDIX I. Assurance on private ships of war, may- be made for the Assurance on effects from Spain or Portu- gal. In all actions plaintiff to declare within fifteen days What sums he hath -assured. 2. Provided always, . . . that assurance on private ships of war, fitted out by any of his Majesty's subjects solely to cruise against his Majesty's enemies, may be made by or for the owners thereof, interest or no interest, free of average, and without benefit of salvage to the assurer, any thing herein contained to the contrary thereof in any wise notwithstanding. 3. Provided also, . . . that any merchandizes or eflfects from any ports or places in Europe or America, in the possession of the crowns of Spain or Portugal, may be assured in such way and manner, as if this Act had not been made. [§§ 4, 5 rep. 30 & 31 Vict. c. 59 (S. L. E.).] 6. And . . . in all actions or suits brought or commenced after the said first day of August, by the assured, upon any policy of assurance, the plaintiff in such action or suit, or his attorney or agent, shall, within fifteen days after he or they shall be required so to do in- writing by the defendant, or his attorney or agent, declare in writing what sum or sums he hath assured or caused to be assured in the whole, and what sums he hath borrowed at respondentia or bottom- ree, for the voyage, or any part of the voyage in question, in such suit or action.* [§ 7 rep. 46 & 47 Vict. o. 49, § 4 ; but see § 7 as to Lancaster Palatine Court and inferior civil courts. § 8 rep. 30 & 31 Vict. c. 59 (S. L. R.).] Preamble. 2.5 Geo. c. 44, re-cited 3, THE MAEINE INSURANCE ACT, 1788. (28 Geo. 3, c. 56.) An Act to repeal an Act made in the Twenty-fifth Tear of the Eeign of his present Majesty, intituled " An Act for regulating Insur- ances on Ships, and on Goods, Merchandizes or Effects," and for substituting other Provisions for like purpose in lieu thereof. Weebeas it hath been found by experience that great mischiefs and inconveniences have arisen to persons interested in ships or vessels, and also to persons using trade or commerce, from the effect of an Act made in the twenty-fifth year of the reign of his present Majesty, intituled " An Act for regulating insurances on ships, and on goods, merchandizes or effects : " And whereas it is highly expedient that other and more convenient provisions should be made for the regu- ' Superseded by modern practice as to discpvery. STATUTES. 135 lating insurances hereafter to be made on ships, and on goods, mer- chandizes or effects, than those which are contained and enacted in and by the said Act : Be it therefore enacted . . . 1. The said Act made in the twenty-fifth year of the reign of his and re- present Majesty shall be and the same is hereby repealed ; and that from S^* it and after the passing of this Act it shall not be lawful for any person or passing of persons to make or effect or cause to be made or effected any policy or this Act no policies of assurance upon any ship or ships, vessel or vessels, or upon P"'"'?' , any goods, merchandizes, effects or otherproperty whatsoever, without any ship, first inserting or causing to be inserted in such policy or policies of etc., with- assurance the name or names or the usual stile and firm of dealing of ?"* '"s*'''" ° mg thereon one or more of the persons interested in such assurance, or without, the name instead thereof, first inserting or causing to be inserted in such policy or names or policies of assurance the name or names or the usual stile and firm °J ^ ^'"^ '^ or one or of dealing of the consignor or consignors, consignee or consignees, of more of the the goods, merchandizes, effects or property so to be insured, or the persons lilt PT*6^fiP(1 name or names or the usual stile and firm of dealing of the person or . ' persons residing in Great Britain who shall receive the order for and effect such policy or policies of assurance, or of the person or persons who shall give the order or direction to the agent or agents immedi- ately employed to negooiate or effect such policy or policies of assurance.^ 2. And . . . every policy and policies of assurance made or under- Policies wrote contrary to the true intent and meaning of this Act shall be ™* ™"" •' ° trary to null and void to all intents and purposes whatsoever. tjiis Act to be void. THE POLICIES OF MARINE INSUEANCE ACT, 1868. (31 & 32 Vict. o. 86.) An Act to enable Assignees of Marine Policies to sue thereon in their own Names. [31st July, 1868.] 1. Whenever a policy of insurance on any ship, or on any goods in Assignees any ship, or on any freight, has been assigned, so as to pass the bene- of marine ficial interest in such policy to any person entitled to the property ^^ '" „ may sue thereon in • The effect of this provision is reproduced in § 24 (1), ante, p. 30. their own The Act has been construed as ttierely prohibiting policies made in blank names. or to bearer. See ArnouU, Ed. 6, p. 107, where the history of this legislation is given ; Wolff v. Horncastle, 1 B. & P. 316. 136 APPENDIX I. thereby insured, the assignee of such policy shall be entitled to sue thereon in his own name ; and the defendant in any action shall be entitled to make any defence which he would have been entitled to make if the said action had been brought in the name of the person by whom or for whose account the policy sued upon was effected.* Assign- 2. It shall be lawful to make any assignment of a policy of insur- ment by ^^^g ^,y. endorsement on the policy in the words or to the effect set ment. forth in the schedule hereto.^ Interpreta- ^* ^°^ *^^ purposes and in the construction of this Act the term tion of " policy of insurance " or " policy " shall mean any instrument by terms. which the payment of money is assured or secured on the happening of any of the contingencies named or contemplated in the instrument of assurance known as " Lloyd's policy," or in any other form adopted for insuring ships, freights, and goods carried by sea. Short 4. This Act may be cited for all purposes as the "Policies of ""«• Marine Assurance Act, 1868." SCHEDULE. FoBM OP Assignment. I, A.B., of, &c., do hereby assign unto CD., &c., his executors, administrators, and assigns, the within policy of assurance on the ship, freight, and the goods therein carried [or on ship or freight or goods, as the case may he']. In witness whereof, &c. THE STAMP ACT, 1891. (54 & 55 Vict. c. 39.) Policies of Insurance. Meaning of , 91. For the purposes of this Act the expression "policy of insur- pohcy of ance " includes every writing whereby any contract of insurance is made or agreed to be made, or is evidenced, and the expression " insurance " includes assurance.^ ' See § 51 of Digest, ante, p. 58, which reproduces the effect of this section and the decisions thereon. " See § 51 of Digest, ante, p. 58, which reproduces the effect of this provision. = As to the provisions which follow, see generally Eiglmore's Stamp Laws, pp. 147-153, and see correspondence with Inland Eevenue m Owen's Notes and Clauses, Ed. 3, and Allen's Stamp Duties on Sea Insurances. STATUTES. 137 Policies of Sea Insurance. 92. — (1.) For the purposes of this Act the expression " policy of Meaning of sea insurance " means any insurance (including re-insurance) made P""py "' ,. , ,,.,, sea insur- upon any snip or vessel, or upon the machinery, tackle, or furniture ance. of any ship or vessel, or upon any goods, merchandise, or property of any description whatever on board of any ship or vessel, or upon the freight of, or any other interest ^ which may be lawfully insured in or relating to, any ship or vessel, and Includes any insurance of goods, merchandise, or property for any transit which includes not only a sea risk, but also any other risk incidental to the transit insured from the commencement of the transit to the ultimate destination covered by the insurance. (2.) Where any person, in consideration of any sum of money paid or to be paid for additional freight or otherwise, agrees to take upon himself any risk attending goods, merchandise, or property of any description whatever while on board of any ship or vessel, or engages to indemnify the owner of any such goods, merchandise, or property from any risk, loss, or damage, such agreement or engage- ment shall be deemed to be a contract for sea insurance. 93. — (1.) A contract for sea insurance (other than such insurance Contract as is referred to in the fifty-fifth section of the Merchant Shipping *" ]'^_ '" Act Amendment Act, 1862) ^ shall not be valid unless the same is 25 &"2^" expressed in a policy of sea insurance. Vict. u. 63. (2.) No policy of sea insurance made for time shall be made for any time exceeding twelve months.* (3.) A policy of sea insurance shall not be valid unless it specifies the particular risk or adventure, the names of the subscribers or underwriters, and the sum or sums insured, and is made for a period not exceeding twelve months.* ' The woid " interest " in this context clearly includes liability. = Section 55 of the Merchant Shipping Act Amendment Act, 1862 (25 & 26 Vict. c. 63), is now repealed, and reproduced in § 506 of the Merchant Shipping Act, 1894 (57 & 58 Vict. c. 60). The saving effected by this section is curious. The object of the Merchant Shipping Act was to make it clear that although the shipowner's common-law liability was limited by the Act, he was nevertheless entitled to insure against this limited liability. The apparent effect of the saving is to dispense with the necessity for a policy in those cases. ' This provision is reproduced in § 26 (2) of the Digest, ante, p. 32. * The effect of these provisions is reproduced in § 24 of the Digest, ante, p. 30. The words " the names of the subscribers or underwriters," though more applicable to individual insurers, include a body corporate. 138 APPENDIX I. Policy for 94. Where any sea insurance is made for a voyage and, also for voyage and time, or to extend to or cover any time beyond thirty days after the chargeable ^'^'P ^^*^^ ^*^® arrived at her destination and been there moored at with two anchor, the policy is to be charged with duty as a policy for a voyage, duties. a^^ g^jgQ viUh. duty as a policy for time. No policy 95. — (1.) A policy of sea insurance may not be stamped at any ^''V , , time after it is signed or underwritten by any person, except in the unless duly ,,,.,. stamped, t^'o cases followmg; that is to say, (o.) Any policy of mutual insurance having a stamp impressed thereon may, if required, be stamped with au additional stamp provided that at the time when the additional stamp is required the policy has not been signed or underwritten to an amount exceeding the sum or sums which the duty impressed thereon extends to cover : (6.) Any policy made or executed out of, but being in any manner enforceable within, the United Kingdom, may be stamped at any time within ten days after it has been first received in the United Kingdom on payment of the duty only. (2.) Provided that a policy of sea insurance shall for the purpose of production in evidence be an instrument which may legally be stamped after the execution thereof, and the penalty payable by law on stamping the same shall be the sum of one hundred pounds. Legal 96. Nothing in this Act shall prohibit the making of any altera- alterations ^j^^ which may lawfully be made in the terms and conditions of any in policies .... » , 1. 1 1 1 . may be policy of sea insurance after the policy has been underwritten ; pro- made under vided that the alteration be m^de before notice of the determination certain re- ^^ ^^^ j,jg^ originally insured, and that it do not prolong the time covered by the insurance thereby made beyond the period of six months in the case of a policy made for a less period than six months, or beyond the period of twelve months in the case of a policy made for a greater period than six months, and that the articles insured remain the property of the same person or persons, and that no addi- tional or fuither sum be insured by reason or means of the alteration,' Penalty on 97.— (1.) If any person — assunng ^^>^ becomes an assurer upon any sea insurance, or enters into policy duly any contract for sea insurance, or directly or indirectly stamped. . ' At common-law a contract may be altered with the consent of the parties thereto. A material alteration made by one party, without the consent of the other, avoids the contract, and, if the alteration is made fraudulently, it may amount to forgery. As to the alterations which do or do not require a new stamp, see Arnould, Ed. 6, p. 267; McArthur, Ed. 2, pp. 47-49. STATUTES. 139 receives or contracts or takes credit in account for any premium or consideration for any sea insurance, or know- ingly takes upon himself any risk, or renders himself liable to pay, or pays, any sum of money upon any loss, peril, or contingency relative to any sea insurance, unless the insur- ance is expressed in a policy of sea insurance duly stamped, or (6.) makes or effects, or knowingly procures to be made or effected, any sea insurance, or directly or indirectly gives or pays, or renders himself liable to pay, any premium, or considera- tion for any sea insurance, or enters into any contract for sea insurance, unless the insurance is expressed in a policy of sea insurance duly stamped, or (c.) is concerned in any fraudulent contrivance or device, or is guilty of any wilful act, neglect, or omission, with intent to evade the duties payable on policies of sea insurance, or whereby the duties may be evaded, he shall for every such offence incur a fine of one hundred pounds, (2.) Every broker, agent, or other person negotiating or transacting any sea insurance contrary to the true intent and meaning of this Act, or writing any policy of sea insurance upon material not duly stamped, shall for every such offence incur a fine of one hundred pounds, and shall not have any legal claim to any charge for broker- age, commission, or agency, or for any money expended or paid by him with reference to the insurance, and any money paid to him in respect of any such charge shall be deemed to be paid without con- sideration, and shall remain the property of his employer. (3.) If any person makes or issues, or causes to be made or issued, any document purporting to be a copy of a policy of sea insurance, and there is not at the time of the making or issue in existence a policy duly stamped whereof the said document is a copy, he shall for such offence, in addition to any other fine or penalty to which he may . be liable, incur a fine of one hundred pounds. FIRST SCHEDULE. £ s. PoiiicY OF Sea Insubance — (1.) Where the premium or consideration does not exceed the rate of 2s. Qd. per centum ^f the sum insured 140 APPENDIX I. (2.) In any other case — (a.) For or upon any voyage — In respect of every full sum of £100, and also any fractional part of £100 thereby insured 3 (i.) For time- In respect of ev6ry full sum of £100, and also any fractional part of £100 thereby insured — Where the insurance shall he made for any time not exceeding six months . 3 Where the insurance shall be made for any time exceeding six months and not exceeding twelve months . . 6 And see §§ 91, 92, 93, 94, 95, 96, and 97. SALE OF GOODS ACT, 1893. (56 & 57 ViOT. 0. 71.) Risk prima, § 20. — Unless otherwise agreed, the goods remain at the seller's with prT- ^ ^^^^ until the property therein is transferred to the buyer ; but when perty. the property therein is transferred to the buyer, the goods are at the buyer's risk, whether delivery has been made or not. Provided that where delivery has been delayed through the fault of either buyer or seller, the goods are at the risk of the party in fault as regards any loss which might not have occurred but for such fault. Provided also that nothing in this section shall affect the duties or liabilities of either seller or buyer as a bailee of the goods of the other party .1 Duty of § 32 (3). — ^Unless otherwise agreed, where goods are sent by the seller as to seller to the buyer by a route involving sea transit, under circum- stances in which it is usual to insure, the seller must give such notice to the buyer as may enable him to insure them during their sea transit, and, if the seller fails to do so, the goods shall be deemed to be at his risk during such sea transit.^ • See notes to these provisions in Chalmers' Sale of Goods Act. ^ Ibid. STATUTES. 141 THE MERCHANT. SHIPPING ACT, 1894. (57 & 58 Vict. c. 60.) § 506. — An insurance effected against the happening, without the Insurances owner's actual fault or privity, of any or all of the events in respect of of y«rtam i^iSKS not which the liability of owners is limited under this Part (VIII.) of this invalid Act, shall not be invalid by reason of the nature of the risk.* ' Part VIII. limits the liability of the owners of British ships. The object of this section is to make it clear that although the liability of a shipowner is limited, he is still at liberty to insure. See ante, p. 137, as to the saving in the Stamp laws for this provision. ( 142 ) APPENDIX IL— NOTES. Note A. — Definitiosts of Makike Insurance. The following definitions of marine insurance may be referred to :— 1. "Marine insurance is a contract whereby one party, for a stipulated sum, undertakes to indemnify tbe other against loss arising from certain perils or sea risks to which his ship, merchandise, or other interest may be exposed during a certain voyage or a certain period of time.'' Arnould, Ed. 6, p. 16. 2. "Marine insurance is a contract whereby one party, for a specified consideration agrees to indemnify another who is interested in property exposed to marine risks, against loss incidental thereto.'' McArthur, Ed. 2, p. 1. 3. "Marine insurance is a contract whereby for a consideration stipulated to be paid by one interested in a ship, freight, or cargo subject to marine risks, another undertakes to indemnify him against' some or all of those risks during a certain period or voyage." Phillips on Insurance, § 1 (U.S.). 4. " Assurance maritime, c'est un contrat par lequel I'un des con- tractants se charge des lisques et fortunes de mer que doivent courir un vaisseau, ou les marchandises qui y doivent 6tre chargles, et promet en indemniser I'autre contractant pour uce certaine somme que celui-ci lui donne pour le prix du risque dont il se charge." Pothier, Traite du Contrat d' Assurance, § 4. After fancifully comparing insurance to a contract of sale in which the assured buys from the insurer an indemnity from risk, Pothier proceeds to classify the contract by describing it as (a) consensual, (6) synallagmatic, for it gives rise to reciprocal obligations, (c) aleatory, not commutative, and (ti) universal, i.e. du droit des gens. 5. "L'assurance est un contrat par lequel on promet indemnite des choses qui sont transport&s par mer, moyennant un prix convenu entre I'assure qui fait ou fait faire le transport et I'assureur qui prend le peril snr soi et lo charge de I'evenement. Cette definition est tirfie du Guidon de la^^mer et de la doctrine de tous nos auteurs." Emerigon, Ch. I. NOTES. 143 6. " Assecuratio est conventio seu contractus quo quis iu se sus- cipit incertum periculum cui alter est obnoxius que e contrario eo nomine illi premium retribuere tenetur.'' Qrotius ; cited by Lawrence, J., in Lucena v. Orauford (1806), 2 B. & P. at p. 300, H. L., and see other ancient definitions cited at p. 295. 7. " A policy of marine insurance is a contract of indemnity against all losses accruing to the subject-matter of the policy from certain perils during the adventure." Lloyd v. Fleming (1872), L. K. 7 Q. B. at p. 302, per Lord Blackburn. Most of these definitions assume that the premium is an essential part of the contract. Generally it is so, but there are exceptions, so that it does not necessarily enter into the definition. In the case of mutual insurance the policy is silent as to premium, and the con- tributions of members are provided for by the rules of the association. Besides a policy may be under seal, and a contract under seal imports consideration.! Comparing marine with life insurance, the former is a contract of indemnity, the latter is not.^ Death is a certainty, the occasion of it only is uncertain. Moreover, human life is incapable of money valuation. Comparing marine insurance with fire insurance, both of them are contracts of indemnity,^ but the measure of indemnity is assessed on wholly different principles.* In a fire insurance (unless the policy otherwise provides) if goods valued at £20,000 be iosured for £1000, and a loss of £1000 occurs, the insurer is liable for that amount ; but with regard to marine insurance, if goods to the value of £20,000 are insured for £1000, and a loss occurs, it is necessary to show what proportion the goods lost bear to the whole value, for the owner of the goods is his own insurer for £19,000. For a comparison between a contract of insurance and a contract of guarantee, see Seaion v. Heath (1899), 1 Q. B. at p. 792, and BowlaWs Principal and Surety, p. 9. Note B. — ^Definitions of Baeratet. Barratry, in the maritime sense of the term, is derived from the- Italian word " barrateria," which is supposed to be of Arabic origin, and which signifies "cheating." The following definitions may be referred to : — ' Bdberts v. Security Co. Ltd. (1897), 1 Q. B. Ill, C. A. * DaJby v. Ind. Life Ass. Co., 15 C. B. 355 ; Surnand v. Bodocanachi (1882), 12 App. Cas. at p. 340. » Castellain v. Freston (1883), 11 Q. B. D, 380, C. A. ' See Joyce v. Kennard (1871), L. K. 7 Q. B. at p. 81. 144 APPENDIX II. 1. "Barratry, in English law, may be said to comprehend not only every species of fraud and knavery covinously committed by the master with the intention of benefiting himself at the expense of his owners, but every wilful act on his part of known illegality, gross malversation, or criminal negligence, by whatever motive induced,, whereby the owners or charterers of the ship (in cases where the latter are considered owners pro tempore) are in fact damnified." Arnould, Ed. 6, p. 775. 2. " Any act, with criminal intent, committed by the master or crew of a vessel, in violation of their duty to the shipowner, and without his connivance, is barratry." McArthur, Ed. 2, p. 130. 3. "Barratry or barratry of the master or mariners means any wilful act of spoliation, or violence to the ship or goods, or any fraudu- lent or consciously illegal act which exposes the ship or goods to danger of damage, destruction, or confiscation, done by the master or crew without the consent of the shipowner." Carver s Carriage by Sea, Ed. 3, § 99. 4. "Barratry is an unlawful, fraudulent, or dishonest act of the master mariners or other carriers, or of gross misconduct, or very gross and culpable negligence, contrary in either case to their duty to the owner, and that might be prejudicial to him or to others interested in the voyage or adventure." Phillips on Insurance, § 1062 (U.S.). 5. " Barratry is every species of fraud or knavery in the master of a ship by which the freighters or owners are injured ; and in this light a criminal deviation is barratry, if the deviation be without their consent." Lochyer v. Offietj (1786), 1 T. B. 259 ; 1 R. E. 197, per Willes, J. 6. " Barratry is considered as being precisely tantamount to fraud, in the particular relation which subsists between master, mariners, and owners being such by which a loss may happen to the subject- matter insured." Earle v. Bmacroft (1806), 8 East, 134; 9 E. E. 385, 392; approved Cory v. Burr (1883), 8 App. Gas. 399. All the definitions and cases up to 1870 are reviewed in an American case, Atkinson v. &reat Western Ins. Co. (1872), 1 Asp. Mar. Gas. (N. S.) 382. 7. "Les termes laratteries du patron comprennent toutes les espfeces, tant de dol que de simple imjirudence, d^faut de soin et imperitie, tant du patron que des gens de I'equipage," Pothier, Traite d' Assurance, § 65. Comparing the French with the English definition it appears that the French definition includes losses caused by unskilful and improper navigation, which in England would be attributed to losses by perils of the seas. In England the essence of barratry is a criminal or quasi- criminal breach of duty to the owners for the time being. As Lord NOTES. 145 Ellenborougb says, "la order to constitute barratry, which is a crime, the captain must be proved to have acted against his better judgment." * If the master commits a criminal act with the privity of his owners it is not barratry; but if the master be a part owner his barratrous act is none the less barratry as against innocent co-owners arid shippers.^ The general opinion is that barratry can only be committed against the owner, or a charterer who pro hac vice is in the position of an owner {Arnould, Ed. 6, p. 785) ; but Hannen, J., in one case ruled that if a ship was scuttled with the consent of the owners it would be barratry as regards an innocent shipper of goods.' The following acts are instances of barratry: — Engaging in smuggling, deviation in order to smuggle, fraudulent sale of ship and cargo, scuttling the ship. Note C. — Definition op Average. Much learning and ingenuity have been spent on the endeavour to define the true meaning of the term " average." See McArfhur, Ed. 2, p. 386 ; Arnould, Ed. 6, p. 828. The fact is that the term is used in different senses, and its meaning in each case must be sought in its context. The word is derived from the French " avarie " or Italian " avaria," which themselves are of uncertain derivation. The final syllable follows the form of such words as " towage " and " poundage." Originally the term " average " signified a toll or duty. In ordinary shipping law it denotes an extra charge, as in the expression " primage and average as accustomed." In insurance law the use of the word " average " is very puzzling. The fact is, the law has been developed piiscemeal by decisions, and no uniform theory has been worked out. A partial loss, as dis- tinguished from a total loss, may be either a general average loss or a particular average loss, that is to say, it may be a loss which gives rise to a right of contribution, or a loss which does not do so. But here a complication comes in. The term " particular average loss '' applies only to damage to the subject-matter insured. Expenses incurred for the purpose of preserving the subject-matter from peril are known 1 Todd V. BitcUe (1815), 1 Stark. 240. ' Jones V. Nichohon (1854), 10 Exch. 28, 37; Westport Coal Co. v MePhail (1898), 2 Q. B. 132 ; Small v. U. K. Mar. Assn. (1897), 2 Q. B. 311, C. A. (innocent mortgagee). ' lonidee v, Pender (1872), 1 Asp. Mar. Cas. (N. S.) 432, 435. L 146 APPENDIX II. as particular charges, and are recoverable under the sue and labour clause, and not under the body of the policy (see §§ 65 and 79) ; but the expression " general average " includes a general average expenditure as well as a general average sacrifice, and also a general average contribution. Therefore, the scope of the word " average " in the two classes of cases is different. The expression " average unless general," as used in the memo- randum to Lloyd's policy, is a good illustration of the confused use of the word. It appears to mean " a partial loss of the subject-matter insured, which is not a general average loss." See ante, p. 128. But the case of a general average sacrifice gives rise to a further complication. If, for example, insured goods be jettisoned so as to constitute a general average loss, the insurer who has insured against jettison is liable under the express terms of the policy. As between insurer and assured, the loss is to this extent a particular average loss, though for other purposes the loss is a general average loss (see ante, pp. 85, 87). But even this rule is not carried to its logical conclusion, because it has been held that for the purpose of making up the three per cent, franchise a general average loss cannot be added to a particular average loss. (See McArthur, Ed. 2, p. 386, and ante, p. 98.) According to French law, " le mot avarie designe un dommage material et aussi une d^pense extraordinaire faite pour le navire et pour las merchandises, conjointement ou separement." Code de Com- merce, Art. 397. " Les avaries se divisent en deux classes. Elles sont (1) simples ou particulifees ; (2) grosses ou communes." Bravard- Demangeat, Ed. 7, p. 475. French law, therefore, differs from English law by including ex- penses which, under our law, would be classed as " particular charges." See Kidston v. Empire Ins. Co. (1866), L. K. 1 0. P. at 550, per Willes, J. See particular charges distinguished from general average, McArthur, Ed. 2, p. 173. Note D. — Definition of Abandonment. Abandonment (from the French " abandonner," but the corresponding term in insurance is " delaissement "). — ^In ordinary language the term "abandonment" is used as the equivalent of " relinquishment." But in marine insurance law the term has a highly special though indefinite meaning. It is used to denote (1) the voluntary cession by the assured to the insurer of whatever remains of the subject-matter insured, in case of constructive total loss ; (2) the notice by which the assured signifies to the insurer his election to abandon ; and (3) the NOTES. 147 cession which takes place, by operation of law, of whatever remains of the subject-matter insured when the insurer pays for a total loss. I. In marine insurance, where there is a constructive total loss, the assured may elect either to treat the loss as a partial loss or, within- a reasonable time, to cede to the insurer, as from the date of the casualty causing the. loss, whatever may remain of the subject- matter insured, together with all rights and remedies incident thereto, and claim for a total loss. This cession is called abandonment. , " Abandonment is the act of cession, by which in cases where the loss or destruction of the property, though not absolute, is highly imminent, or its recovery is too expensive to be worth the attempt, the assured, on condition of receiving at once the whole amount of the insurance, relinquishes to the underwriters all his property and interest in the thing insured, as far as it is covered by the policy, with all the claims that may ensue from its ownership, and all the profits that may arise from its recovery." Arnould, Marine Insurance, Ed. 6, p. 953, citing in notes 2 Pardessus 400 "Le d^aissement equipoUe h. un transport." " Abandonment is a relinquishment to the underwriter, in case of loss constructively total, of all right, title and claim to what may be saved, leaving it to him to make the most of it for his own benefit. It operates as an assignation." BdVs Principles of the Laws of Scotland, § 484. "L'acte par lequel I'assur^ quitte et d^laisse aux assureurs les droits, noms, raisons et actions de propriety qu'il a en la chose assuree." Emerigon, Traite des Assurances, c. 17, citing Guidon de la Mer, Ch. 7, Art. 1. As to the modern French definition, see Bacre, Dictionnaire de Droit Commercial, Tit. Avarie, No. 5. "In reference to constructive total loss, it is defined to be a cession or transfer of the ship from the owner to the underwriter, and of all his property and interest in it, with all the claims that may arise from its ownership, and all the profits that may arise from it, including the freight then being earned. Its operation is as effectually to transfer the property in the ship to the underwriter as a sale for valuable con- sideration." Per Martin, B., Banhin v. Potter (1873), L. R. 6 H. L. at p. 144. II. The notice by which the assured signifies to the insurer his election to abandon and claim for a total loss is frequently confused with the abandonment or cession itself. Thus the Draft New York Civil Code, § 1486, proposes to define abandonment as " the act by. which after a constructive total loss the person insured declares to the insurer that he relinquishes to him his interest in the thing insured." " The cession or abandonment," says Blackburn, J., "is a very different 148 APPENDIX 11. thing from a notice of abandonment, though the ambiguous word ' abandonment ' often leads to confounding the two." Bankin v. Potter (1873), L. R. 6 H. L. at pp. 118, 119, 156. III. Where the insurer pays or settles for a total loss, the assured is bound to abandon or cede to the insurer, as from the date of the casualty causing the loss, whatever may remain of the subject-matter insured, together with all rights and remedies incident thereto. This cession is sometimes called abandonment, and sometimes is referred tO' as the " subrogation " of the insurer for the assured. See Castellain v, Preston (1883), 11 Q. B. D. 380, C. A, Abandonment in this sense of the term is not peculiar to marine insurance, but is a necessary incident of every contract of indemnity. It is to be noted that life insurance, unlike the insurance of property, is not a contract of indemnity. Bankin v. Potter (1873), L. E. 6 H. L. at pp. 118, 119. " On general principles of equity, not at all peculiar to marine insurance, he who recovers on a contract of indemnity must and does by taking satisfaction from the person indemnifying him, cede all his right in respect of that for which he obtains indemnity. There is no notice of abandonment in fire insurance, but the salvage is transferred on the principle of equity, expressed by Lord Hardwicke, that the person who originally sustains the loss was the owner, but, after satis- faction made to him, the insurer." Per Blackburn, J., Bankin t. Potter (1873), L. E. 6 H. L. at p. 118 (loss of freight). " Where the owners of an insured ship have claimed or been paid as foi: a total loss, the property in what remains of the ship, and all rights incident to the property, are transferred to the underwriters as from the time of the disaster in respect of which the total loss is claimed for and paid. The right to receive payment of freight accruing due but not earned at the time of the disaster is one of those rights so incident to the property in the ship, and it therefore passes to the underwriters, because the ship has become their property, just, as it would have passed to a mortgagee of the ship who before the freight was completely earned had taken possession of the ship. This is at times very hard upon the insured owner of the ship; he can, however, avoid it by claiming only for a partial loss, keeping the property in himself, and so keeping the right to earn the accruing freight. In such a case he recovers an indemnity for the amount of the loss actually sustained, in calculating which all the benefits incident to the property retained by the shipowner must be considered, " But the right of the assured to recover damages from a third person is not one of those rights which are incident to the property in the ship ; it does pass to the underwriters in case of payment for a total loss, but on a different principle. And on this same principle NOTHS. 149 it does pass to the underwriters, who have satisfied a claim for a partial loss, though no property in the ship passes. ****** " Mason v. Sptinsbury (3 Douglas' Eep. 61) and Yates v. Whyte (4 Bing. N". C. 272) were both cases of partial loss only. The right of the underwriters could not arise in those cases by relation back to the passing of the property at the time of the loss, for there was no 6uch passing of the property. It could only arise, and did only arise, from the fact that the underwriters had paid an indemnity, and so were subrogated for the person whom they had indemnified in his personal rights from the time of the payment of the indemnity." Per Lord Blackburn, Simpson v. Thomson (1877), 3 App. Cas. at pp- 292, 293. In a later case, Brett, L.J., proceeds to point out that abandon- ment is applicable to every claim for a total loss, whether actual or constructive. " If there is anything to abandon, abandonment must take place ; as, for instance, when there is an actual total loss, and that which remains of a ship is what has been called a congeries of planks, there must be an abandonment of the wreck . . . But that abandonment must take place at the time of the settlement of the ■claim. It need not take place before." Ealteribach v. Mackenzie <1878), 3 C. P. D. at p. 471. Note E. — Definition op Pibacy. Piracy (from Lat. piratica, sea robbery). — Robbery with violence &t sea is called piracy, but no precise general definition of the term can be given.! There are certain acts which all civilized nations recognize as piratical, and which constitute piracy jure gentium. Then there is the common law definition of piracy, and then by the statute law of various countries certain acts are deemed to constitute piracy for the purposes to which the statutes apply. Thus " the slave trade is piratical ia England and the United States, and in France the crew of an armed vessel navigating in time of peace with irregular papers become pirates upon the mere fact of irregularity, without the commission of any act of violence." Sail's International Law, Ed. 3, p. 264. It is obvious that different legal consequences may ensue according as an act comes within one or another of these overlapping but not coincident descriptions of piracy. Tor instance, the master of a ship might be criminally liable for piracy on facts which would not constitute piracy within the meaning of a mercantile document, such as a charter party or marine policy. The following definitions may be cited : — 150 APPENDIX II. 1. " Piracy is defined by the text writers to be the offence of depre- dating on the seas without being authorized by any sovereign state,- or with commissions from different sovereigns at war with each other." Wheaton, International Law, Ed. 2, p. 246. As to piracy by municipal law, see at p. 247. 2. " The crime of piracy, or robbery and depredation upon the high seas, is an offence against the universal law of society, a pirate being, according to Sir Edward Coke, hostis hwmani generis .... The offence of piracy, by common law, consists in committing those acts of robbery and depredation upon the hi"h seas which if committed upon land would have amounted to felony there. But by statute some other offences are made piracy also." Blackstone Commentaries, vol. 4, pp. 71, 72, citing 2 Inst. 113. Cf. Cicero, off. 3, 29. Pirata non est perduelUum numero definitus, sed communis hostis omnium. 3. " Piracy, by the law of nations, is taking a ship on the high seas, or within the jurisdiction of the Lord High Admiral, from the possession or control of those who are lawfully entitled to it, and carrying away the ship itself, or any of its goods, tackle, apparel, or furniture, under circumsta'hces which would have amounted to robbery if the act had been done within the body of an English county .... It is doubtful whether persons cruising in armed vessels with intent to commit piracies are pirates or not." Stephen's Digest of Criminal Law, Ed. 3, Art. 104 ; as to piracy by statute for criminal purposes, see Arts. 106-117. 4. "Piracy is forcible robbery at sea, whether committed by marauders from outside the ship or by mariners or passengers within it. The essential element is that tiey 'violently dispossess the master, and afterwards carry away the ship itself or any of the goods with felonious intent." Carverh Carriage by Sea, Ed. 3, § 94, citing A. Q. V. Kwoh-a-Sing (1870), L. E. 5 P. C. at p. 179. 5. " Piracy is robbery on the sea, or by descent from the sea upon the coast, committed by persons not holding a commission from or at the time pertaining to any established state. . . . Piracy, being a crime against nations, may be brought before any court, no matter what the nationality of the plaintiff or the origin of the pirate may be. The law of such state may enlarge the definition of the crime of piracy, but must confine the operation of the new definition to its own citizens and foreigners on its own vessels." Wolsey, International Law, § 137. 6. " The charge of Sir Charles Hedges (13 St. Tr. 454) contains a correct exposition of the law as to what constitutes piracy jure gen- tium. Piracy is only a sea term for robbery, piracy being a robbery within the jurisdiction of the Admiralty. ... If the mariners of any NOTES. 151 ship shall violently dispossess the master and afterwards carry away the ship itself, or any of the goods, with a felonious intention in any place where the Lord Admiral hath jurisdiction, this is robbery and piracy." A. G.for Bong Kong v. Kwoh-a-Sing (1873), L. E. 5 P. C. at p. 199.^ (Murder of a Frenchman on a French ship by a Chinese. Piracy justiciable in any court.) 7. " The taint of piracy does not, in the absence of conviction or condemnation, continue, like a maritime lien, to travel with the ship through her transfers to various owners." R. v. Mc'Oleveriy (1871), L. K. 3 P. C. at p. 689. 8. " Piracy may be said to consist in acts of violence done upon the ocean or unappropriated lands, or within the territory of a state through descent from the sea, by a body of men acting independently of any politically organized society." SaWs International Law (1892), Ed. 3, p. 257. Note F. — History of Marine Insurance. The origin of marine insurance is obscure. Loans on bottomry are of very ancient date. Money lent on bottomry is not repayable in case of loss, and marine insurance, the earliest form of insurance, may well have been a development of this maritime usage. There is evidence that marine insurance was known to the Lombards in the twelfth century, and some time later it was introduced into England, probably by the merchants of the Steelyard, the representatives of the Hanseatio League, whose treaty privileges in England were abolished in 1578. Its English history is ably and exhaustively traced by Mr. F. Martin in his History of Lloyd's andT Marine Insurance, published in 1876. It will be sufficient here to give the leading dates in that history.^ 1589. — First reported case. Anon, 6 Coke R. 47b, tried before Wray, C.J. 1601. — First mention in the statute book. The 43 Eliz. c. 12 established a special court for the trial of marine insurance cases. The court fell into disuse by the end of the seventeenth century, but the Act was not repealed expressly till 1863. See Martin, p. 49. 1613. — Earliest extant English policy. It almost exactly resembles the form given in the Guidon de la Mer, published in France in 1600, and for the most part is in accord with the Lloyd's policy now in use. See Martin, p. 46. ' Mr. Marsden's Select Pleas of the Court of Admiralty, published for the Selden Society, contain some interesting antiquities of marine insurance. 152 APPENDIX II. 1688.— First mention of Lloyd's coffee-house, resorted to by- merchants and underwriters. 1720. — The "Eoyal Exchange Assurance Corporation" and the " London Assurance Corporation," incorporated by charter pursuant to the 6 Geo. I. c. 18, with the privilege of being the only corporations or societies who were allowed to insure marine risks or lend money on bottomry. 1726. — Lloyd's List established. See Martin, p. 107. 1730. — Lloyd's Register of Shipping first published. See Martin, p. 325. 1745.— The Marine Insurance Act, 1745 (19 Geo. II. c. 37), passed to prohibit wagering policies and re-insurance. See Martin, p. 139. 1749. — The " Memorandum " added to the common form of policy. See McArthur, Ed. 2, p. 274. 1756. — Lord Mansfield raised to the Bench. He sat till 1788, and settled the principles of English insurance law. 1769. — ^Lloyd's formed into a society with rules and regulations, and established in the Royal Exchange. See Martin, p. 145. 1779. — Lloyd's policy settled in its present form and printed. In 1850 a verbal alteration was made by omitting the introductory words "In the name of God, Amen,'' and substituting "Be it known that." 1788.— The Marine Insurance Act, 1788 (28 Geo. in. c. 56), requires the name of the assured to be inserted in all policies. 1795. — Marine policies first required to be in writing and stamped by 35 Geo. III. c. 63. See Home Marine Ins. Co. v. Smith (1898), 1 Q. B. at p. 834. 1824. — ^Monopoly of "Royal Exchange" and "London Assur- ance " Corporations abolished by 5 Geo. IV. c. 114, and companies and partnerships allowed to engage in marine insurance. See Martin, i p. 290. ' 1834. — Establishment of " Lloyd's Register of British and Foreign Shipping " on modem basis. See Martin, p. 345. 18i5.— The Gaming Act, 1845 (8 & 9 Vict. c. 109), makes void'all contracts by way of gaming or wagering.- 1862.— The Companies Act, 1862 (25 & 26 Vict. c. 89), provides for incorporation of limited companies, and prohibits associations of more than twenty persons from carrying on business unless incorjiorated. 1864. — Re-insurance again legalized by 27 & 28 Vict. c. 66. See Mackenzie v, Whitworth, 1 Ex. D. at p. 40. 1868.— The Policies of Marine Assurance Act (31 & 32 Vict. c. 86) provides for assignment of policies and empowers assignee to sue in his ovrn name. NOTES. X53 1871. — Lloyd's incorporated and regulated by Lloyd's Act, 1871 (34 & 35 Vict, c, xxi.). See Martin, p. 356. 1891. — Stamp law consolidated by Stamp Act, 1891 (54 & 55 Vict. c. 39). Contracts of sea assurance required to be embodied in policy, specifying certain particulars, and not to be made for more than twelve months.. 1894.— The Merchant Shipping Act, 1894 (56 & 57 Vict. c. 60), consolidates the laws relating to merchant shipping. The law of marine insurance developed more rapidly in France than in England. The Guidon de la Mer, published at Eouen about 1600, is a very complete exposition of the practice of that day. In 1681 the French law of marine insurance was codified by the Ordon- nance de la Marine. The great works of Pothier and Emdrigon appeared in the eighteenth century, and with their assistance the Ordon- nance of 1681, with various improvements and additions, was re- enacted in 1808, by the existing Code de Commerce, Arts. 332 to 439. The French code formed the basis of the other continental codes, but most of the continental nations have now re-enaeted their com- mercial codes, and in so doing have departed more or less widely from the original model. The latest is the German Commercial Code of 1897, which came into force in 1900. Note G. — Edles of Pkactice of Associatios of Avekage Adjusters. The following Kules of Practice of the Association of Average' Adjusters with regard to particular average may be cited in amplifi- cation of the notes to the text of the Digest. They are taken from the Report for 1900. Particular Average on Ship. Statement of Particular Average on Ships. (Proposed and accepted 1874, p. 23. Confirmed 1875, p. 19.) That claims for particular average on ships shall not be stated unless the policies or copies of policies of insurance, for claiming on which the statement is required, be produced to the adjusters. (Proposed and accepted 1874, p. 23. Confirmed 1875, p. 19.) That such statements shall give the names of the underwriting firms and companies interested, and the amounts payable on the respective policies produced. 154 APPENDIX 11. Apportionment of Coats in Collision Cases. (Proposed and accepted 1889, p. 42. Confirmed 1890, p. 30. Beferred to a Special Committee 1888, p. 38.) That when a vessel sustains and does damage by collision, and litigation consequently results for the purpose of testing liability, the technicality of the vessel having been plaintiff or defendant in the litigation shall not nepessarily govern the apportionment of the costs of such litigation, which shall be apportioned between claim and counterclaim in proportion to the amount which has been or would have been allowed in respect of each in the event of the claim or counterclaim being established; provided, that when a claim or counterclaim is made solely for the purpose of defence, and is not allowed, the costs apportioned thereto shall be treated as costs of defence. Expenses of Removing a Vessel for Repair. (Proposed and accepted 1896, p. 23. Confirmed 1897, p. 24.) Where a vessel is in need of repair at any port and is removed thence to some other port for the purpose of repairs, either because the repairs cannot be effected, or cannot be effected prudently — (a) The necessary expenses incurred in moving the vessel to the port of repair shall be allowed as part of the cost of repair, and where the vessel after repairing forthwith returns to the port from which she was removed, the necessary expenses incurred in so returning shall also be allowed. (J) Where by moving the vessel to the port of repair any new freight is earned, or any expenses are saved in relation to the current voyage of the vessel, such net earnings or savings shall be deducted from the expenses of moving her, and where the vessel loads a new cargo at the port of repair no expenses subsequent to the completion of repair shall be allowed. The expenses of removal include the cost of temporary repair, ballasting, wages and provisions of crew and [or] runners, pilotage, towage, extra marine insurance, port charges, and, in case of a steamer, coal and engine-room stores. (o) This rule shall not admit any ordinary expenses incurred in fulfilment of a contract of affreightment, though such expenses are ircreased by the removal to a port of repair. NOTES. 155 Coals and Stores used in Repair of Damage to the Hull. (Proposed and accepted 1876, p. 23. Confirmed 1877, p. 53.) That the cost of replacing coals and engine-room stores consumed either in the repair of damage to a steamer, in working the engines or winches to assist in the repairs of damage, or in moving her to a place of repair within the limits of the port where she is lying, shall be charged to the underwriters on ship as particular average. Bigging Chafed {Custom, of Lloyd! s, 1876). Eigging injured by straining or chafing is not charged to under- writers, unless such injury is caused by blows of the sea, grounding, or contact; or by displacement, through sea peril, of the spars, channels, bulwarks, or rails. Sails split or Uown away {Custom, of Lloyd's, 1876). Sails split by the wind, or blown away while set, unless occasioned by the ship's grounding or coming into collision, or in consequence of damage to the spars to which the sails are bent, are not charged to underwriters. Dry Dock Expenses. . (Proposed and accepted July, 1891, p. 26. Confirmed 1892, p. 28.) That where repairs on owner's account which can only be effected in dry dock are executed concurrently with other repair."!, for the cost of which the underwriters are liable, and which also can only be effected in dry dock, the cost of entering and leaving the dry dock, in addition to so much of the dock dues as is common to both repairs, shall be divided equally between the shipowner and the underwriters. This division shall apply in those cases where a vessel is due for ordinary dry docking or for repairs on owner's account necessary for procuring or retaining her class ; but it shall not apply when the ship- owner has only taken advantage of the vessel being in dry dock to scrape or paint or to effect any other repairs not immediately necessary, but which it may then be convenient to effect. Deduction of one-third {Custom of Lloyd! s, amended 1890-91). (1876) The deduction for new work in place of old is fixed by custom at one-third, with the following exceptions :— Anchors are allowed in full. Chain cables are subject to one-sixth only. 156 APPENDIX II. Metal sheathmg is dealt with, by allowing in full the cost of a weight equal to the gross weight of metal sheathing stripped off, minus the proceeds of the old metal. Nails, felt, and labour metalling, are subject to one- third. The rule applies to iron as well as to wooden ships, and to labour as well as material. It does not apply to the expense of straightening bent ironwork, and to the labour of taking out and replacing it. It does not apply to graving dock expenses and removals, cartages, use of shears, stages, and graving dock materials. It does not apply to a ship's first voyage. (1890-1) N.B. — Articles belonging to, or repairs done to, a ship, other than an iron ship, allowed in general average, are subject to similar deductions in respect to new for old materials as are made in adjusting claims of particular average on ship. In lieu of note to Custom of Lloyd's, 1876, viz. : — N.B. — Articles helonging to, or repairs done to, a sjiip, allowed in general average, are subject to similar deductions in respect to new/or old materials as are made in adjusting claims of particular average on ship. Pakticulab Average on Goods. Adjustment on Ponded Prices (Custom of Lloyd's, 1876). In the following cases it is customary to adjust particular averag on a comparison of bonded, instead of duty paid prices : — In claims for damage to tea, tobacco, coffee, wine, and spirits imported into this country. Adjustment of Average on Goods sold.in Bond. (Proposed and accepted 1885, p. 64. Confirmed 1868, p. 24.) That in consequence of the facilities generally offered to bond goods at their destination, on which terms they are often sold, the term "gross proceeds" shall, for the purpose of adjustment, be taken to mean the price at which the goods are sold to the consumer, after payment of freight and landing chargfes, but exclusive of Customs duty, in cases where it is the custom of the port to sell or deal with the goods in bond. NOTES. 157 Apportionment of Insured Value of Goods. (Proposed and accepted 1885, p. 43. Confirmed 1886, p. 23.) That where different qualities or descriptions'of cargo are valued in the policy at a lump sum, such sum shall, for the purpose of adjusting claims, be apportioned on the invoice values, where the invoice dis- tinguishes the separate values of the said different qualities or descriptions ; and over the net arrived sound values in all other cases. Under-insured Interest made good in General Average. (Proposed and accepted 1882, p. 47. Confirmed 1883, p. 48.) That an underwriter who has paid for loss by jettison of the thing insured is entitled, in the proportion that the sum insured bears to the policy value, to whatever is recovered in general average in respect to such loss, although the amount so recovered may exceed the amount paid by him. Allowance for water in picked cotton {Custom of Lloyd's, 1876). When bales of cotton are picked, and the pickings are sold wet, the allowance for water in the pickings (where there are no means of ascertaining it) is by custom fixed at one-third. Allowance for water in cut tobacco (Custom of Lloyd's, 1876). When damaged tobacco is cut off', the allowance for water in the- cuttings is one-fourth. Allowance for water in wool (Custom of Lloyd's, 1876). Damaged wool from f Australia, New Zealand, and the Cape is- subject to a deduction of 3 per cent, for wet, if the actual increase cannot be ascertained. Franchise Charges (Custom of Lloyd's, 1876). The expenses of protest, survey, and' other proofs of loss, including the commission or other expenses of a sale by auction, are not admitted to make up the percentage of a claim ; and are only paid by the underwriters in case the loss amounts to a claim without them. Extra Charges (Custom of Lloyd's, 1876). Extra charges payable by underwriters, when incurred at the port of destination, are recovered in full ; but when charges of the same 158 AtTENDIX II. nature are incurred at an intermediate port they are subjected to the same treatment, in respect of insured and contributory values, as general average charges. Adimimemt ofretwn of premium {Custom of LloyWs, 1876). When the words "and arrival" follow the stipulation for a return of premium on a policy on goods, the particular average, but not the special charges, is deducted from the amount insured to arrive at the amount on which the return is taken. INDEX ABANDONMENT, when required, 75 nature and effect of, 79, 146 of ship, effect on freight, 80 notice of, 76 policy without benefit of, 7, 8 note on definition of, 146 ABANDONMENT OP ADVENTUEE, 53, 54 ACTION, defined, 114 by assignee of policy, 59 by insurer in name of assured, 105 for contribution by co-insurer, 105 ACTUAL TOTAL LOSS, 69, 74 ADJUSTMENT OP LOSSES, 88-102 See Measitkb of Indemnity. ADVANCE PREiaHT, insurance of, 16 effect of abandonment on, 81 ADVANCES, insurance of, 4, 9, 14 ADVENTUEE (MAEINE), insurance of, 4, 5 legality of, 5, 51 abandonment of, 53, 54 frustration of, 71, 74 AGENT, of assured effecting insurance, 25, 26. See also Broker. of insurer, 115 shipping agent, 24 ratification of insurance effected by, 111 160 INDEX. " ALL OTHER PEEILS," 6, 127 ALTERATIONS IN POLICY, 138 AMOUNT INSURABLE, quantum of interest, 17 insurable value, 19 double insurance, 40 sum insured to be specified in policy, 30 APPORTIONABLE RISKS, 97 "ARRESTS, RESTRAINTS, ETC.," 126 ASSIGNMENT, of policy, 58 of interest in subject insured, 18, 59 on abandonment, 79, 105 ASSURED, defined, 1, 114 must have insurable interest, 7 assignment of interest by, 18, 59 duty as to good faith, 21 disclosure of material facts by, 22, 2 9 responsibility for disclosure by agent, 25 representations pending contract by, 26 not bound to disclose opinion, 28 warranties by, 42 issue of policy to, 31 assignment of policy by, 51 duty as to payment of premium, 61 loss caused by misconduct of, 63, 66 return of premium to, 106 ratification of insurance by agent. 111 "AT AND FROM," when voyage must commence, 52 when risk attaches, 122 AVERAGE, note on meanings of, 145 " average unless general," 128, 146 See General Aveeaqe ; Particular Average. AVERAGE ADJUSTERS ASSOCIATION, rules of practice of, 153 INDEX. 161 BAILEE, insurable iuterest of, IG BARRATRY, what the term includes, 127, 143-145 loss proximately caused by, 64 deviation paused by, 58 BILL OF LADING, construction of perils in, 125, 126 B LOG K ADE-RUNNIN&, not illegal, 5 must be disclosed, 6 BOATS, covered by policy on ship, 113, n., 118 BOTTOMRY, insurance on, 14 BROKER, may effect policy in his own name, 18, 59 liability for premium, 61 lien of, on policy, 61 concealment by, 25 representations by, 26 " BURNT," 125 CANCELLING CLAUSE, 6 CAPTAIN. See Master. CAPTURE AND SEIZURE, construction of the term, 127 when proximate cause of loss, 64 warranty free from, 44, 64, 127 effect of recapture, 78, 79 CARGO, when interest on, attaches, 12 See Goods. CARRIER, insurable interest of, 16, 17 CAUSA PROXIMA, rules as to, 63 162 INDEX. CHAIX-CABLBS, 131 CHANGE OP VOYAGE, effect of, 53 compared with deviation, 54 CHARGES OP INSURANCE, 16, 20 CHARTERED FREIGHT, insurance of, 10 cotnmeDcement of risk on, 122 See Peeight. CLAUSES (SPECIAL), construction of, 121 COALS, covered by policy on steamship, 20 spontaneous combustion of, 65 COLLISION, running-down clause and its construction, 95, 96 when proximate cause of loss, 63, n., 65 COMMENCEMENT OP RISK, 122 COMMISSION, is insurable, 4 broker's commission, 16 COMMON CARRIER, insurance by, 16 disclosure of special contract with, 24 CONCEALMENT, 22-26. See Non-Disclosure. CONDITIONING CHARGES, in partial loss of goods, 93 in constructive total loss, 73 CONPLICT OP LAWS, 116 CONSEQUENCE OP HOSTILITIES, when proximate cause of loss, 64 CONSIGNEE, insurable interest of, 17 CONSTRUCTION, of policy, 112,121 INDEX. 163 CONSTRUCTIVE TOTAL LOSS, what is, 71 effect of, 75 notice of abandonment, 76 valuation clause in policy disregarded, 34 CONTINUATION CLAUS^E, 32 CONTRACT, insurance a contract of indemnity, 2, 143 application of general rules of, 115 when deemed to be concluded, 28 See Marine Insurance. CORN, a memorandum article, 120 CONTRIBUTION, between insurers, 42, 105 COST PRICE, basis of insurable value of goods, 20, 92 COVERING-NOTE, defined, 1 no action to enforce, 29, 30 effect of, 28, 29, 30, 114 CEAPT (RISK OP), no warranty of seaworthiness, 50 special clause to cover, 123 CREW, insurance of wages of, 15 provisions for use of, 19 negligence of, 63 barratry by, 127, 144 CUMULATIVE LOSSES, 99 CUSTOM OP TRADE, 112, 113. See Usage. DAMAGE. See Particular Average. DECK CARGO, 129 DECLARATION OF INTEREST, under floating policy, 38 164 INDEX. DEDUCTIONS, customary, in average on ship, 89, 155 DELAY, in commencing adventure, 52 in course of voyage, 57, 58 losses proximately caused by, 63, 64, 67 restraint of princes, 126 DEVIATION, what is, and effect of, 54, 56 excuses for, 57 DISBURSEMENTS, insurable, 4 what covered by the term, 34, n. DISOLOSUBB, 21-26 DOUBLE INSURANCE, rules as to, 40 contribution between insurers, 105 return of premium, 109, 110 DRY DOCK EXPENSES, 90, 99, 155 EQUITABLE INTEREST, is insurable, 9 EVIDENCE, slip or covering note when admissible, 30, 113 of usage to explain policy, 112 materiality of facts not disclosed, 25 EXCLUDED LOSSES, 63, 67 EXPLOSION OF STEAM, not covered by ordinary policy, 65, 67, 125 EXPRESS WARRANTIES, 45-47 EXTRA CHARGES, 93 P. P. A. WARRANTY, 97, 98 FIRE, meaning of term in policy, 125 FIRE INSURANCE, compared with marine, 143 INDEX. 165 FIRST VOYAGE, 91, 131 FITTINGS OF SHIP, 19, 129 FLOATING POLICY, 38 FOREIGN ADJUSTMENT, 83, 88, 116 FOREIGN LAW, 116 FRANCHISES, 98 FRAUD, in valuation, 34, 37 concealment of material facts, 22, 25 untrue representations pending contract, 26 general application to insurance, 115 FREIGHT, meaning in marine insurance, 114, 115, 129 insurable interest in, 10 advance freight, 16 commencement of risk on, 122 termination of risk on, 123 loss of, proximately caused by delay, 67 constructive total loss of, 71, 72 when notice of abandonment not required, 78 effect of abandonment of ship on, 80 particular average on, 91, 99 FRUSTRATION OP ADVENTURE, 71, 74 "FULL INTEREST ADMITTED," 8 FURNITURE (OP SHIP), 19, 118 GAMING POLICIES, are void, 7, 51, 133 no return of premium, 109 GENERAL AVERAGE, liability of insurer for, 84-87 adjustment of contributions, 94 not within sue and labour clause, 101 ' meanings of average, 145 " average unless general," 128, 146 effect of valuation clause on, 36, 86 conflict of laws as to, 116 GOOD FAITH, insurer and assured must observe, 21 166 INDEX. GOOD SAFETY, meaning of, 123, 124 warranty of, 47 GOODS, restricted meaning in policy, 130 insurable value of, 20 commencement of risk on, 123 termination of risk on, 123 actual total loss of, 69 constructive total loss of, 71, 73, 74 transhipment of, 70 particular average on, 92, 94, 156 particular average warranties, 97 inextiicably mixed, 93 GRAVING DOCK EX;PBNSES, 131 GROSS PROCEEDS, meaning of, 93 GROSS VALUE, meaning of, 92 HISTORY, of marine insurance, 151 HONOUR POLICIES, 6, 8 HOSTILITIES, warranty free from consequences of, 64 trading witli enemy prohibited, 52 blockade-running, 5, 6 HULL AND MACHINERY, scope of policy on, 21 HYPOTHECATION, gives insurable interest, 4, 9 master's power of, 14, 15 ILLEGALITY,' of adventure, 5 implied warranty of legality, 51 nonreturn of premium, 107, 109 INDEX. 167 IMPLIED OBLIGATIONS, may be negatived or varied, 112 IMPLIED WAERANTY, general nature of, 43, 44 of seaworthiness, 47, 51 of legality, 51 none as to nationality, 46, 47 INDEMNITY, marine insurance based on, 2, 143 different theories of, 20 measure of, 88-102. See Measure op Indemnity. INHERENT VICE, 64 INSURABLE INTEREST, 9-19. See Interest. INSURABLE VALUE, rules for determining, 19 INSURANCE AGENT OR BROKER, duty as to disclosure, 25, 26 responsibility for premium, 61, 62 lien for charges, 61, 62 INSURER, defined, 1, 114 duty as to good faith, 21 what material facts he is presumed to know, 23 execution of policy by, 31 rights as to premium, 61 responsibility for losses, 61, 63 responsibility for return premium, 61, 106 rights of, on payment, 102 rights of, on abandonment, 79 INTEREST (INSURABLE), wagering policies void, 7, 133 definition of interest, 9 when interest must attach, 11 defeasible or contingent interest, 12 partial interest, 13, 17 re-insurance, 13 bottomry, 14 wages of master or crew, 15 168 INDEX. INTEREST (INSURABLE)— conimMcd. advance freight, 16 charges of insurance, 16 quantum of interest, 16, 17 assignment of interest, 18, 19, 59, 60 " policy proof of interest," 7, 8, 133 INVOICE COST, basis of adjustment on goods, 20, 92 IRON SHIP, particular average on, 91 ISSUE OF POLICY, 31, 61 JETTISON, 85, 87 LAND RISKS, 3 LEAKAGE AND BREAKAGE, 64 LEGALITY, of adventure, 5 implied warranty of, 51 LEAVE TO CALL, 124 LIABILITY (TO THIRD PERSON), may be insured against, 4 adjustment of losses, 95, 96 LIEN, of broiler on policy, 61, 62 LIFE, deviation to save, 58 LIFE INSURANCE, contrasted with marine, 143 LIFE SALVAGE, 83 LIGHTERAGE, special terms for, must be disclosed, 24 no warranty of seaworthiness, 50 LLOYD'S, history of, 151 usages of, 113, n. practice to pay innocent shippers, 50 usage as to payment of premium, 62 execution of policy at, 31 INDEX. 169 LLOYD'S POLICY, form of, 118 note on, 120 construction of main terms in, 122-130 See Policy. LOSS, meaning of, 2 of voyage, 74 LOSSES, included and excluded, 63 partial and total loss, 68 actual total loss, 69 missing ship, 70 constructive total loss, 71, 75 particular average loss, 81 ' salvage charges, 82 general average loss, 84 adjustment of losses, 88-102. &e Measukb op Indemnity. cumulative losses, 99 sue and labour clause expenses, 100 particular charges, 82, 97, 101 LOST OR KOT LOST, acquisition of interest, 11 attachment of policy, 122 MARINE ADVENTURE, defined, 4. See Adventure. MARINE INSURANCE, definition of, 1, 142 sea and land risks, 3 history of, 151 is a contract of indemnity, 2 must be embodied in policy, 29 based on good faith, 21 founded on interest, 7, 9 subject-matter of, 5 is a branch of contract law, 116 when contract deemed to be concluded, 28, 29 stamp laws concerning, 136-139 conflict of laws, 116 170 INDEX. MARITIME PERILS, definition of, 5, 6, 7 when proximate cause of loss, 63,' 67 MASTER, ■ barratry of, 127, 144 negligence of, 63, 66 authority to hypothecate, 15 authority to tranship, 70 MATERIAL PACTS, what are, 22, 27 duty to disclose, 22 MAXIMS, Aliud est celare, aliud tacere, 24 causa proxima, non remota, spectatur, 66 cwiUhet licet renunciare jwri pro se introducto, 76, n. dolus circuitu non purgatv/r, 66 expressum facit cessare taciturn, 112 freight is the mother of wages, 15 modvs et conventio vincunt legem, 112 MEASURE OP INDEMNITY, measure of insurable value, 19 general principle of adjustment, 88 total loss, 89 partial loss of ship, 89 partial loss of freight, 91 partial loss of goods, etc., 92 • apportionment of valuation, 94, 157 general average contributions, 94 collision and other liabilities, 95, 154 miscellaneous caseS, 96 MEMORANDUM, 120, 128 MERCHANDISE, meaning of the term, 129, 130 MISTAKE, 116 MISREPRESENTATION, in negotiating contract, 26, 28 generally, 116 INDEX. L71 MlSSma SHIP, 59 MIXED SEA AND LAND RISKS, 3 " MOORED IN SAFETY," 123, 124 MORTGAGEE, insurable interest of, 17, 18 double insurance, 41 MORTGAGOR, insurable interest of, 17, 18 double insurance, 41 MUTUAL INSURANCE, rules as to, 85 NAME, of assured in policy, 30 of insurer, 30, 31 of master of ship, 31, n., 118 of ship, 31, 118 NATIONALITY, warranty of, 46, 47 NEGLIGENCE, of assured, 66 of master or crew, 63, 66 NEUTRALITY, warranty of, 45, 46 NEW FOR OLD, deduction in case of ship, 91, 155 NON-DISCLOSURE, by assured in negotiating contract, 22, 27 by agent of assured, 26 NO THIRDS, 91 NOTICE OF ABANDONMENT, rules as to, 76 distinguished from abandonment, 147 none in actual total loss, 69 172 INDEX. OPEN POLICY, ambiguous meaning of, 36 See Unvalued Policy. OPINION, assured need not disclose, 28 OUTFIT, what covered by insurance on ship, 19, 21 OVER-INSURANCE, measure of insurable value, 19 by valued policy, 34, 37 by double insurance, 40 duty to disclose, 23, 37 return of premium, 108 OWNER OP SHIP. See Shipowner. OWNERSHIP, distinguished from insurable interest, 10, 13, 17 risk prima facie goes with, 140 necessary, to give notice of abandonment, 79 P. P. I. POLICY, 7, 8 PARTIAL INTEREST, is insurable, 13 insurance by limited owner, 17 PARTIAL LOSS, definition, 68 recovery for, on claim for total loss, 68 particular average defined, 81 salvage charges, 82 general average, 84 adjustment on ship, 89, 131 adjustment on freight, 91 adjustment on goods, 92 miscellaneous cases, 96 apportionment of valuation, 94 average warranties and franchises, 97 cumulative losses, 99 particular charges, 101 right of insurer on payment of, 103, 149 rules of Average Adjusters' Association, 153-158 INDEX. 173 PARTICULAK AVERAGE, definition, 81 warranties against, 97 rules of Average Adjusters' Association, 153-158 See Pabtial Loss. PARTICULAR CHARGES, recoverable under sue and labour clause, 101 distinguished from particular average, 82 PASSAGE MONEY, insurable, 4 not included in freight, 114, 129 PERILS INSURED AGAINST, what are, 5, 6, 7 must be proximate cause of loss, 63, 67 PERILS OP THE SEAS, what are, 124 when proximate cause of loss, 64, 65, 67 PILOT, 49 PIRATES, what included in term, 126 note on piracy, 149 POLICY, defined, 1 contract to he embodied in, 29 what it must specify, 30 execution and issue of, 31, 61- for voyage or time, 32 designation of subject-matter in, 32, 33 governed by usage, 113 valued, 34 unvalued, 37 floating, 38 stamp requirements, 137 See Lloyd's Policy. PORT, what is, 56, n. several ports of discharge, 56 seaworthiness for, 47 of departure, 54, 122 30 days after arrival at, 124 174 INDEX. PREMIUM, defined, 1, 143 when payable, 61 policy effected through broker, 61 effect of receipt, 62 substitute in mutual insurance, 110 additional, or to be arranged, 39 return of, 106 PREPAID FREIGHT, insurance^of, 16 effect of abandonment of ship on, 81 PROFITS, are insurable, 4 total loss of, 70 FBO RATA FREiaHT, effect of abandonment of ship on, 80, n. PROVISIONS (FOR CREW), 19, 129 PROXIMATE CAUSE, rules as to, 63 RATIFICATION, of insurance effected by agent. 111 RATS, losses caused by, 64, 66 RECAPTURE, 78, 79 RECEIPT, effect of, in policy, 62 RECONDITIONING CHARGES, 93 RE-INSURANCE, rules as to, 13, 14 designation in policy, 33 no notice of abandonment, 77 REMOVAL, of ship for repair, 154 REPAIRS, in partial loss of Ship, 89, 131, 154 estimate of, in constructive total loss, 71 INDEX. 1 75 REPRESENTATIONS, during negotiation of contract, 26 when amounting to warranty, 28 RESPONDENTIA, 14 RESTRAINT OF PRINCES, 126 RETURN OP PREMIUM, by agreement, 106 in other cases, 107 RISK, meaning of term, 2 when appoi'tionable, 94, 97 commencement of, 122 termination of, 124 of craft, 123 See Interest ; Voyage. ROBBERY, 126, 149 RUNNING DOWN CLAUSE, 95, 96 « SAFELY LANDED," 123 SAFETY, 123. See Good Safety. SAILING WARRANTIES, 45 SAILS, 155 SALE (SUBJECT-MATTER INSURED), effect of, on policy, 18, 59, 60 when risk is transferred by, 140 duty of seller as to iiisurance, 140 SALVAGE, different meanings of, 82, 83 policy without benefit of, 7, 8 abandonment of, to insurer, 79, 102, 148 life salvage, 83 SALVAGE CHARGES, defined, 82, 83 recoverable under policy, 82 not within sue and labour clause, 101 when general average, 82, 88 effect of valuation clause in policy, 36 176 INDEX. SAVINGS, 115 SEAL, policy under, 31, 143 SEAWORTHINESS, of ship, 47 of substituted ship, 49 of lighters, 50 of goods, 51 SEVERAL POLICIES, double insurance, 40 consecutive pblicies, 39 SHIP, insurable value of, 19, 129 seaworthiness of, 47. constructive total loss of, 71 particular average on, 89, 153 " stranded, sunk, or burnt," 125, 128 commencement of risk on, 122 termination of risk on, 124 "SHIP OR SHIPS," floating policy by, 38 SHIPOWNER, carrying his own goods, 80, 114 general average, when he owns ship and freight, 85 duty as to general average, 85 SHIPPER. /See Assured; Goods. SHORT INTEREST, 37, 109 SIGNATURE, of insurer, 31 SLIP OR COVERING NOTE, defined, 1 conclusion of contract by, 28 no action on, 29 wheti admissible in evidence, 30, 113 SMUGGLING, 51, 145 INDEX. 177 SPECIAL CLAUSES, tow added, 118, n., 121 construction of, 121 See also Warranty. STAMP ACT, 1891 provisions as to policies set out, 137-139 scale of duties, 139, 140 STATUTE OP FRAUDS, verbal contract of sale, 9 STATUTES CITED, 19 Geo. 2, c. 37 (wager policies), 7, 133 28 Geo. 3, c. 56 (name of assured), 30, 134 5 Geo. 4, c. 114 (insurance companies), 152 8 & 9 Vict. c. 109 (gaming and wagering), 7, 152 31 & 32 Vict. c. 86 (assignment of policy), 59, 135 43 & 44 Vict. c. 9 (definition of time), 117 54 & 55 Vict. c. 39 (stamps), 30, 32, 137 56 & 57 Vict. c. 71 (sale of goods), 140 57 & 58 Vict. c. 141 (merehaijt shipping), 15, 141 STEAMSHIP, what included in insurance on, 19, 129 no thirds clause, 91 STOPPAGE IN TRANSITU, effect of, on insurable interest, 12 STRANDING, what is, 128 effect of, on policy, 128 SUBJECT-MATTER INSURED, what really is, 5 designation of, in policy, 32, 33 SUBROGATION, in case of abandonment, 79, 147 on settlement of total loss, 102-105, 148 in cases of double insurance, 41, 42 SUE AND LABOUR CLAUSE, nature and effect of, 100-102 form of, 119 general average and salvage not within, 83, 101 178 INDEX. TACKLE, ETC., included in policy on ship, 119 TEMPORARY REPAIRS, 131 TERMINATION OF RISK, 123, 124 THEFT, meaning of, 126 THIRD PARTY, insurance against liability to, 4, 95, 96 THIRDS, deduction, new for old, 91, 131 TIME, ship's time or Greenwich time, 116 reasonable, a question of fact, 113 TIME POLICY, what is, 32 must not exceed twelve months, 32, 137, 138 no warranty of seaworthiness, 48 calculation of expiration of, 32, 124 stamp on, 138 f- scale of duty, 139, 140 ^TAL LOSS, C. 0,» ^ defined, 68 £: CQ actual total loss, 69 -J constructive total loss, 71 fp' ^ missing ship, 70 Z Cr < ' adjustment of, 89 p. tgT following partial loss, 99 U particular charges may be added to, 101 "TOUCH AND STAY," 124 TRANSHIPMENT, 70, 73 UNDERWRITER, defined, 1. See Insukee. UNSEAWORTHINESS, 47-51. See Seaworthiness. indi:j. 179 UNVALUED POLICY, defined, 37 insurable value on, 19 when floating policy treated as, 38 adjustment of total loss, 89 adjustment of partial loss, 89-95 return of premium for over-insurance, 108 USAGE, policy founded on, 113, 121 general application of, 112 as to payment of premium, 62 course of voyage when regulated by, 55, 5G landing of goods, 123 VALUED POLICY, defined, 34 effect of valuation, 34-37 adjustment of total loss, 89 partial loss of freight, 91 partial loss of goods, 92 apportionment of valuation, 94, 97 short interest, etc., 37, 97 general average or salvage under, 30, 94 riGE PBOPBE, 04 VOYAGE, when it must commence, 52 abandonment of adventure, 53 change of voyage, 53 change of port of departure, 54 deviation, 54 several ports of discharge, 56 delay in voyage, 57 excuses for deviation or delay, 57 liberty to touch and stay, 124 termination of, 124 VOYAGE POLICY, what is, 32 stamp on, 139, 140 effect of adding " thirty days after arrival," 124 implied warranty of seaworthiness, 47 180 INDEX. WAGERING POLICY, what is, 7, 8, 133 is void, 7, 51 no return of premium, 107, 109 WAGES, insurable by master or seaman, 15 WAIVER, of disclosure by assured, 23 of breacli of warranty, 43, 44 of notice of abandonment, 77 WAIVER CLAUSE, 102, 120 WAR RISKS, 126, 127 WAREHOUSEMAN, effect of insurance by, 41 WARRANTY, nature and effect of, 42 excuses for breach of, 44 express warranties generally, 45 as to neutrality, 45 to sail with convoy, 46 as to nationality, 46, 47 good safety, 47 seaworthiness, 47, 51 legality, 51 free from capture and seizure, 64, 127 free from particular average, 97 WEAR AND TEAR, insurer not liable for, 64 "WITHOUT BENEFIT OP SALVAGE," when a wagering policy, 7, 8. WRIT, fixes notice of abandonment, 77, 79 YORK-ANTWERP RULES, 83, 88 THE END. LONDON : PltrSTED BY WILLIAM CLOWES AND SONS, LIMITED, STAMFORD STBEET AND CHARING CCOSS. Wm. CLOWES AND SONS, Limited, LAW PUBLISHERS, Second Edition, demy 8vo., cloth, los. 6d. TRIENDLY SOCIETIKS (THE LAW RELATING TO). 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