NEW LAW BOOKS WM. CLi u 7, FLE Just Published. I MAT'S PARL] Law, Privileges, Proc D.C.L., Clerk of the (revised from the Tei ALFRED BONHAM-CA Second Clerk Assists Esq., of the Committ This, the Eleventh Ed throughout up to the pres o! Commons in its procedi have been necessary in on in the Preface. J> A TREATISE < AND INCUMBRAt with the Land Trans solidated form. By Australian Torrens Sj THE ALIENS OF ASYLUM; tog Legislation on the Si ALFRED ELIAS, LL.l THE PRESEN ALFRFD HENRY RUB COHEN, "M.A., BarrL Ninth I WOLSTENHO: ITED, UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LIBRARY E.C. calf, SOT. :ise on the t MAY, K.C.B., eleventh Edition VE, K.C.B., and WEBSTER, Esq., EL.WAKD C'.RKV, >rings tlii> work le by the House alterations that ion are indicated JERSHIP REIN ; together ringed in a con- Vuthor of "The 3 RIGHT I the History of A., I.L.M., and ONS. By ., and HERMAN IETTLED LAND ACTS. 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" As a concise and accurate treatise on the Law of Negligence it will be a valuable addition to the library either of the practitioner or the student." Law Journal. 7, FLEET STREET, LONDON, E.G. THE MARINE INSURANCE ACT, 1906. THE MARINE INSURANCE ACT, 1906. BY SIE M. D. CHALMERS, K.C.B., C.S.L, DRAFTSMAN OF THE ACT AND DOUGLAS OWEN, OF THE INNER TEMPLE, BABBISTER-AT-LAW, LATE SECBETAEY OF THE ALLIANCE MABINE AND GENERAL ASSURANCE CO., LTD. LONDON: WILLIAM CLOWES AND SONS, LIMITED, 7, FLEET STREET. 1907. T PRINTED BT WILLIAM CLOWES AND SONS, U1IITBD, LONDON ADD BECCLKS. THIS edition of the Marine Insurance Act, 1906, is in sub- stance a third edition of the Digest of Marine Insurance, the second edition of which was published, in 1903, by Mr. Douglas Owen and myself. Owing to Mr. Owen's absence abroad, I have, unfortunately, been deprived of his valuable assistance during the later stages of the preparation of this edition. The sections of the Act in the present edition corre- spond with the large type propositions in the Digest, which were taken from the Bill of 1903. A comparison of the sections with the large type propositions of the last edition will show what changes were effected in the measure during its passage through Parliament last year. Although the language of the Act is now authoritative it may, nevertheless, be useful to the profession to be referred to the authorities on which each proposition was founded, and the cases before the Act are still in point as illustrations in so far as the Act does not alter the existing law. Eeferences to the sixth edition of Arnould have been retained instead of references to the excellent seventh edition, because the sixth edition was used when the Bill was prepared. M. D. CHALMEES. February, 1907. INTRODUCTION TO FIRST EDITION OF DIGEST. 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 de- liberately 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 Vlii INTRODUCTION TO FIRST EDITION OF DIGEST. some small amendment in the law. In those cases the Digest reverts to the original drafts, and the point is mentioned in the notes. The law of marine insurance 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- nised 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 criticise them in detail. The objects of the Digest are twofold : first, 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 application 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 completeness, but may be useful as far as it goes. Occasional reference is made to foreign codes by INTRODUCTION TO FIRST EDITION OF DIGEST. IX way of illustration, but no attempt has been made to 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 E. T. Reid, Q.C.), and afterwards under the presidency of Lord Herschell. It consisted of Mr. John Glover and Mr. Milburn, representing the shipowners, Mr. McArthur (Chairman 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 insur- ance companies, Mr. C. B. Yallence, Chairman of the Liverpool Underwriters' Association, and the draftsman, Mr. Chalmers.* * After Lord Herschell's death, Lord Chancellor Halsbury again took up the Bill, and introduced it in the House of Lords in 1899, but did not proceed with it. Further criticisms on the Bill were obtained from Lord Justice Mathew, the Eight Hon. Arthur Cohen, K.C., and other friends, and the Bill was again introduced in 1900. Lord Halsbury then appointed another committee, on which the underwriters, shipowners, and average tidjusters were represented, and, presiding himself, went through the Bill with them clause by clause. After this conference the Bill was passed through the Lords, but it X INTRODUCTION TO FIRST EDITION OF DIGEST. " 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., 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. Offley, 1 T. R. 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 to 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 was always blocked in the House of Commons until, in 1906, it was taken up by Lord Chancellor Loreburn in conjunction with Lord Halsbury. In the Commons the Bill was sent to Grand Committee, and was in charge of the Solicitor-General. A good many amendments were made in com- mittee and on the report stage, and most of them were agreed to, with occasional modification, when the Bill returned to the Lords. INTRODUCTION TO FIRST EDITION OF DIGEST. XI 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. 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. C. January, 1901. CONTENTS. PAGE PREFACE v INTRODUCTION TO FIRST EDITION OF DIGEST . . . vii TABLE OF CASES CITED xvii TABLE OF CASES OVERRULED, ETC . xxvii Marine Insurance. SECT. 1. Marine insurance defined 1 2. Mixed sea and land risks ....... 3 3. Marine adventure and maritime perils defined ... 4 Insurable Interest. 4. Wagering or gaming contracts are void .... 8 5. Insurable interest defined 10 6. When interest must attach 13 7. Defeasible or contingent interest . . . . . .15 8. Partial interest 16 9. Re-insurance 16 10. Bottomry 18 11. Master's and seaman's wages 18 12. Advance freight 19 13. Charges of insurance 20 14. Quantum of interest 20 15. Assignment of interest 22 Insurable Value. 16. Measure of insurable value 22 Disclosure and Representations. 17. Insurance is uberrimas fidei 25 18. Disclosure by assured . . . . . . . .26 19. Disclosure by agent effecting insurance .... 29 XIV CONTENTS. SECT. I'A'IK 20. Representations pending negotiation of contract ... 30 21. When contract is deemed to be concluded ... 32 The Policy. 22. Contract must be embodied in policy 23. What policy must specify 24. Signature of insurer 25. Voyage and time policies 26. Designation of subject-matter 27. Valued policy 28. Unvalued policy . 29. Floating policy by ship or ships . 30. Construction of terms in policy . 31. Premium to be arranged Double Insurance. 32. Double insurance 45 Warranties, etc. 33. Nature of warranty 47 34. When breach of warranty excused 49 35. Express warranties . . . . - . . . .50 36. Warranty of neutrality 51 37. No implied warranty of nationality 52 38. Warranty of good safety 53 39. Warranty of seaworthiness of ship 53 40. No implied warranty that goods are seaworthy ... 57 41. Warranty of legality 59 The Voyage. 42. Implied condition as to commencement of risk ... 60 43. Alteration of port of departure 61 44. Sailing for different destination 61 45. Change of voyage 62 46. Deviation 63 47. Several ports of discharge 64 48. Delay in voyage 65 49. Excuses for deviation or delay 66 CONTENTS. XV Assignment of Policy. SECT. 1'AGE 50. When and how policy is assignable 67 51. Assured who has no interest cannot assign .... 68 The Premium. 52. When premium payable . . 69 53. Policy effected through broker . ... 70 54. Effect of receipt on policy 72 Loss and Abandonment. 55. Included and excluded losses 72 56. Partial and total loss 78 57. Actual total loss . . .79 58. Missing ship . 80 59. Effect of transhipment, etc 81 60. Constructive total loss defined 81 61. Effect of constructive total loss .... .87 62. Notice of abandonment " .88 63. Effect of abandonment 92 Partial Losses (including Salvage and General Average and Particular Charges} . 64. Particular average loss 94 65. Salvage charges 95 66. General average loss . . . ... . . .97 Measure of Indemnity. 67. Extent of liability of insurer for loss . . . . . 102 68. Total loss 103 69. Partial loss of ship 103 70. Partial loss of freight 105 71. Partial loss of goods, merchandise, etc. .... 106 72. Apportionment of valuation .... . 108 73. General average contributions and salvage charges . . 109 74. Liabilities to third parties 110 75. General provisions as to measure of indemnity . . . Ill 76. Particular average warranties 112 77. Successive losses 115 78. Suing and labouring clause 116 Hights of Insurer on Payment. 79. Right of subrogation 119 80. Right of contribution 123 81. Effect of under insurance . . 123 XVI CONTENTS. Return of Premium. SECT. PAGE 82. Enforcement of return 124 83. Return by agreement 124 84. Return for failure of consideration 125 Mutual Insurance. 85. Modification of Act in case of mutual insurance . . ' . 128 Supplemental. 86. Ratification by assured 130 87. Implied obligations varied by agreement or usage . .130 88. Reasonable time, etc., a question of fact .... 132 89. Slip as evidence . . 132 90. Interpretation of terms . 133 91. Savings 134 92. Repeals 137 93. Commencement 137 94. Short Title 137 SCHEDULE I. Form of Lloyd's policy 138 Rules for construction of policy 142 SCHEDULE II. Enactments repealed 153 CUSTOMARY DEDUCTIONS . . . .154 APPENDIX I. STATUTES. 54 & 55 Viet. c. 39 (Stamps) 155 56 & 57 Viet. c. 71 (Sale of Goods) 159 57 & 58 Viet. c. 60 (Merchant Shipping) 159 1 Edw. 7, c. 7 (Continuation Clauses) 159 3 Edw. 7, c. 46 (Revenue Act) 1GO APPENDIX II. NOTES. Note A. Definitions of marine insurance 161 Note B. Definitions of barratry 163 Note C. Definition of average 164 Note D. Definition of abandonment 166 Note E. Definition of piracy 168 Note F. History of marine insurance 170 Note G. Certain Rules of Practice of Association of Average Adjusters ......... 173 INDEX . 179 TABLE OF CASES CITED. FACE Adams v. Mackenzie ... 78 Aitchison v. Lohre . 2, 82, 95, 96, 103, 115, 116, 118 Ajam Ghulam v. Union Mar. Ins. Co 57 Allison v. Bristol Mar. Ins. Co 11,19,37 Allkins v. Jupe . . , 9, 127 Alps, The 77 Alsace Lorraine, The . . . 150 Anderson v. Morice . 2, 8, 13, 14, 15, 38, 57 - v. Ocean Mar. Ins. Co 95 Anderson v. Pacific Mar. Ins. Co 30,32 Anderson tr. Thornton . 31, 127 Angel v. Merchants Ins. Co. 39, 82, 83, 85 Anglo -Californian Bank v. London and Provincial Mar. Ins. Co 36, 102, 162 Annen v. Woodman . . . 127 Anon 171 Appollinaris Co. v. Nord Deutsche Ins. Co. . . . 151 Arrow Shipping Co. v. Tyne Improvement Commission- ers 122 Asfar v. Blundell .... 80 Atkinson v. Great Western Ins. Co 163 Attorney-General for Hong Kong v. Kwok-a-Sing . . 170 Atwood v. Sellar Aubert v. Gray PAGE 132 147 B Bainbridge v. Neilson . . 89 Baines v. Holland . . 48, 49 Ballantyne v. Mackinnon 76, 96 Barber v. Fleming 10, 11, 15, 143 Barker v. Janson . . . 39, 40 Baring Brothers v. Marine Ins. Co 112, 133 Barnard v. Faber .... 49 Barraclough v. Brown . . 122 Bates v. Hewitt .... 28 Bean r. Stupart .... 50 Bedouin, The . . 28, 31, 32, 77 Behn v. Burness ... 32, 50 Bell v. Bronifield .... 52 v. Humphries ... 16 Bensaude v. Thames and Mersey Ins. Co 77 Benson*. Chapman . 78, 84, 118 Bents en i: Taylor ... 50 Berridge v. Man On Ins. Co. 9 Bhugwandass v. Netherlands Sea Ins. Co 33 Biccard v. Shepherd . 53, 55, 56 Birkley v. Presgrave . . . 100 Birrell v. Dryer .... 51 Blackburn v. Haslam 27, 29, 30 v. Liverpool Steam Xav. Co 145 Blackburn v. Vigors 26, 28. 29, 30 b XV111 TABLE OF CASES CITED. Blackett v. Royal Exchange 114, 132 Blackhurst v. Cockell . . 53 Boehm v. Bell . . 5, 12, 15, 126 Bold v. Rotherham ... 81 Boston Fruit Co. v. British and Foreign Mar. Ins. Co. 35, 130 Bottomley v. Bovill ... 62 Bouillon v. Lupton . 54, 66, 67 Boulton v. Holder Bros. . . 25 Boyd v. Dubois ... 57, 146 Bradford v. Symondson . . 2, 16, 126, 127, 142 Brandon v. Curling . . . 136 Brankelow v. Canton Ins. Office 72 BrigeUa, The .... 98,100 British Columbia Co. r.Nettle- ship 108 British Marine Mutual Ins. Co. v. Jenkins .... 129 Brooks v. MacDonnell . 116, 120 Broomfield v. Southern Ins. Co 18 Brongh P. Whitmore . 23, 131, 141 Brown Brothers v. Fleming . 108 Brown v. Tayleur .... 64 Browning r. Provincial Ins. Co 68,87 Bracer. Jones. . . 40,45,123 Buchanan v. Faber ... 38 Burger v. Indemnity Mutual Mar. Ins. Co Ill Surges v. Wickham ... 56 Burnand v. Rodocanachi . 40, 42, 119, 121, 122, 162 Byas v. Miller .... 130 Byrne v. Schiller .... 20 C. Cahill v. Davidson Cammell v. Sewell 70 81 PAGE Carlton Steamship Co. v. Castle Mail Packets Co. . 132 Carter v. Boehm . . 25, 26, 28 Castellain v. Preston . 2, 20, 21, 121, 162, 167 Cator v. Great Western Ins. Co 108, 112 Chandler v. Blogg . . . Ill Charlesworth v. Faber . 17, 28, 37, 160 Chavasse, Ex parte ... 6 China Traders Assn. r. Royal Exchange 17 Chippendale v. Holt . . 17 City of Paris, The ... 77 Claphani v. Langton ... 54 Clay v. Harrison .... 15 Cochrane v. Fisher ... 51 Col. Ins. of New Zealand v. Adelaide Ins. Co. . . 14, 15 Company of African Mer- chants v. British Ins. Co. . 65 Company of South African Merchants v. Harper . . 42 Cornfoot v. Royal Exchange 144 Cory v. Burr . 59, 72, 75, 147, 163 v. Patton . . 30, 33, 133 Cossman v. West ... 79, 80 Cousins v. Nantes .... 8 Crocker v. Sturge .... 17 Cronan v. Stanier .... 118 Crooks v. Allan .... 101 Crowley r. Cohen .... 11 Cullen v. Butler .... 149 Cunard v. Hyde .... .V.) Cunard Co. v. Marten 5, 11, 110, 117, 118, 119 Currie v. Bombay Ins. Co. . 88, 117, 132 D. Dalby v. Ind. Life Ass. Co. . 162 Daniels v. Harris ... 55, 56 Darrell v. Tibbitts 119 h'if 1* TABLE OF CASES CITED. XIX PAGE Davidson v. Burnand . 74, 111 Davies v. National Ins. Co. of New Zealand . . . . 4, 43 Davis v. Garrett .... 63 Dean v. Hornby .... 89 De Cuadra v. Swann . . , 55 De Hahn v. Hartley . . 48, 50 De Hart c.Compauia Anonima Aurora 99 Delany v. Stoddart ... 66 De Mattos v. North ... 9 v. Saunders . 84, 112 Denoon v. Home and Colonial Ass. Co. 38, 40, 42, 105, 134, 151 Dent v. Smith . . . . 52, 74 Devaux v. Salvador . 72,76, 111 - v. Steele .... 10 De Wolf v. Archangel Ins. Co 60 Dickinson v. Jardine 98, 99, 100, 120, 132 Difiori v. Adams .... 64 Dixon v. Sadler . 54, 55, 56, 73 v. Stansfeld 70 v. Wentworth Dora Foster, The .... Driefontein Consolidated Mines v. Janson Dudgeon v. Pembroke 117 116 . . 136 54, 55, 59, 141 Duff v. Mackenzie . . 112, 113 Dufourcet v. Bishop . 20, 21, 121 Duus Brown & Co. K. Binning 116 E. 163 Earle v. Rowcroft . Ebsworth v. Alliance Mar. Ins. Co 16,20,21 Eden v. Parkinson ... 52 Edwards v. Aberayron Mutual Ins. Society . . . . 34, 129 Eglinton v. Norman . . . 122 Elgood v. Harris .... 70 PAGE Elton v. Brogden .... 66 Empress Ass. Cor. v. Bowring 70, 133 F. Falcke v. Scottish Ins. Co. . 97 Farnworth v. Hyde 79, 83, 84, 89 Fa wens v. Sarsfield . . . Field Steamship Co. v. Burr 54 75, 104 Fisher v. Liverpool Mar. Ins. Co Fisher v. Smith Fisk v. Masterman Fleming v. Smith . , Fletcher v. Alexander Flint v. Flemyng . . 33 , 70, 71 127, 128 79, 83, 87 99, 107 , 133, 151 143 Foley v. United Mar. Ins. Co. Forwood v. North Wales Ins. Co 78 Francis t;. Boulton . . 79, 107 v. Sea Ass. Co. 6 G. Gamba v. Le Mesurier . . 59 Gambles v. Ocean Ins. Co. . 36 Gardner v. Salvador ... 83 Garrels v. Kensington . 52 c Gedge v. Royal Exchange , e Ass. Corpn 6, 9, 59 v General Ins. Co. of Trieste v. / ' S Cory 50 Gibson v. Small .... 55 Gledstanes v. Royal Exchange Ass. Corpn 43, 142 Glenlivet, The 146 , Glover v. Black .... 39 ,/nrJ^? Goodwin v. Robarts . . . 132 -?> / ^ Gordon v. Rimington . . . 146 Gorsedd Steamship Co. v. Forbes 125 Grainger v. Martin ... 83 Grant v. King 61 7 XX TABLE OF CASES CITED. } . Great Indian Peninsular Rail- way v. Saunders . . . 113 Green v. Brown .... 80 Greenock Steamship Co. v. Maritime Ins. Co. 44,54,56,76 Greer v. Poole . . .74, 109, 135 Guthrie r . North China Ins. Co. 85 Haabet,The 18 Hagedorn v. Whitmore . . 112 Hnll v. Janson .... 19 Hamilton v. Pandorf . 73, 75, 146 Hansen v. Dunn .... 81 Harding v. Bussell ... 25 Harris r. Scaramanga . . 98 Harrower v. Hutchinson . . 26 H art r. Standard Mar. Ins. Co 51,131,141 Haughton v. Empire Mar. Ins. Co 53, 141, 143 Haywood r. Rodgers ... 27 Henderson v. Shankland 104, 109 Hickie v. Rodocanachie . . 92 Hill v. Patten 24 Hine r. Steamship Ins. Syndi- cate 70 Hobbs v. Hannam ... 21 Hogarth v. Walker . . 23, 24 Home Mar. Ins. Co. v. Smith 35, 172 Hore v. Whitmore ... 50 Hoskins v. Pickersgill . . 24 Houlder v. Merchants Mar. Ins. Co 144 Houstman v. Thornton . 89, 120 Hunter r. Northern Mar. Ins. Co 64 Hunter v. Potts .... 73 Hydaraes S.S. Co. v. Indem- nity Mutual Mar. Ass. Co. 141 Hyderabad (Deccan) Co. v. Willoughby . . . . 4, 44, 66 Imperial Mar. Ins. Co. r. Fire Ins. Corpn ...... 43 Inchmaree, The. See Thames and Mersey Mar. Ins. Co. r. Hamilton. Inglis v. Stock .... 16 Inrnan v. Bischoff ... 7, 7G, 77 lonides v. Pacific Mar. Ins. Co. 21, 30, 32, 34, 35, 132, 133 lonides v. Fender . 26, 27, 31, 42, 164 - v. Universal Mar. Ins. Assn ........ 74 Iredale v. China Traders Ins. Co ....... 75, 97 Irving v. Richardson . . 20, 39 - r. Manning . 39, 41, 42 43, 82, 85, 103, 106 J. Jackson v . Mumford ... 3 Jackson v. Union Mar. Ins. Co 72,77,85 Jacobs v. Caviller .... 4 Jamieson, Be . 77, 85 Janson v. Driefontein Cons. Mines 4, 137 Jardine v. Leathly ... 91 Johnson v. Sheddon . . . 107 Johnston v. Hogg .... 148 v. The Salvage Assn. 119 Jones v. Neptune Ins. Co. . 143 1;. Nicholson . . . 164: Joyce v. Kennard . . 3, 110, 162 Juarez r. Williams ... 70 Kaltenbach r. Mackenzie 79, 81, 87,88,89,91, 168 Keighley v. Durant . . . 130 -"~ / TABLE OF CASES CITED. XXI Keith r. Protector Mar. Ins. Co 10 Kcllner v. Le Mesurier 6, 59, 125 Kemp v. Halliday. ... 82 Kent r. Bird 2 Kidston r. Empire Iiis. Co. . 94, 112, 113, 116, 117, 165 King v. Victoria Ins. Co. 4, 121, 122 King v. Walker .... 78 Knifjht of St. Michael, The . 75, 146, 149 Knill v. Hooper .... 56 Koebel v. Saunders . 57, 58, 73 L. . 67 . 73 . 56 . 74 38, 114 115, 141 117 Laing v. Union Ins. Co. . Lane v. Nixon .... Laurie v. West Hartlepool Indemnity Assn. Laveroni v. Drury Law f. Hollingworth . Lawrence r. Aberdein Lawther v. Black . Le Cheminant v. Pearson Lee i\ Southern Ins. Co. Leitrim, The 77 Letchford v. Oldham . . . 150 Lewis r. Kucker ... 42, 106 Lidgett r. Secretan . 37, 40, 42, 116, 143, 144 Lion Ins. Assn. v. Tucker . 129 Lishman v. Northern Mar. Ins. Co 133 Livie v. Janson .... 115 Lloyd v. Fleming 2, 12, 67, 68, 69, 162 Lockyer v. Offley .... 163 Lohre r. Aitchison 79, 82, 102, 116 London Assurance v. Wil- liams 90, 92 Lower Khine Ins. Assn. v. Sedgwick 17 PAGE Lucena v. Crauford . 8, 9, 10, 12, 15, 18, 21, 162 Lysaght v. Coleman . . . 108 Macdowell v. Frazer ... 30 Mackenzie v. Whitworth . 7, 37 38, 39, 152, 172 Main,1he . . 39,40,41,42,105 Manchester Liners v. British and Foreign Mar. Ins. Co. 77 Manfield v. Maitland. . 10, 11 Maori King, The .... 58 Margetts v. Ocean Guarantee Corpn Ill Marine Ins. Co. v. China Trans-Pacific Co. (Van- couver case) . . . 104, 114 Marine Mutual Ins. Assn. Ltd. v. Young .... 128 Maritime Ins. Co. v. Stearns 17, 61 Marsden v. Keid . . . 65, 141 Marten v. Nippon. . . . 144 v. Steamship Owners Assn 17 Mary Tliomas, The . 98, 99, 109 Mason v. Sainsbury . . . 168 Mavro v. Ocean Mar._ Ins. Co. 99 McSwinney v. Koyal Ex- change 37 Mead v. Davison . . . 33, 142 ) /- * , ***** 144 27 Mercantile Marine Ins. Co. Titheriugton .... Mercantile Steamship Co. v. Tyser Metcalfe r. Parry. Meyer v. Ralli ... 8^ Middlewood v. Blakes . 63, 64 Midland Ins. Co. v. Smith . 121 Mildred v. Maspons . . 69, 70 Miller v. Law Accident Ins. Co 148 v. Woodfall 92 XX11 TABLE OF CASES CITED. PAGE Montgomery v. Indemnity Mutual Mar. Ins. 95, 96, 98, 99 Montoya v. London Assurance 73 Moran, Galloway & Co. v. Uzielli . . . 2, 5, 11, 13, 23 Morgan v. Oswald . . 136, 137 v. Price .... 45 Morrison v. Universal Mar. Ins. Co 25, 27, 33 Moss v. Smith . 2, 81, 82, 85, 86 Muirhead v. Forth Mutual Ins. Assn 41 Munroe, The Ill N. Navone v. Haddon . . . 112 Naylor v. Taylor .... 66 Nelson v. Empress Ass. Co. . 1 7 Nesbitt v. Lushington . . 148 Newby v. Keed . . . 45, 123 Nickells v. London and Pro- vincial Mar. Ins. Co. . . 61 Nigel Gold Mining Co. v. Hoade 136 Niobe, The . . . .110, 111 North Atlantic Steamship Co. v. Barr 82 North British Ins. Co. v. Lon- don, etc. Ins. Co. 20, 21, 45, 47, 123 North British Ins. Co. v. Moffatt 1 1 North Eastern Steamship Assn. v. Red " S " Steam- ship Co 129 North of England Oil Cake Co. v. Archangel Mar. Ins. Co 22,68,69 North of England Ins. Assn. v. Armstrong . . 40, 121, 122 Notara v. Henderson . . .118 Nourse v. Liverpool Sailing Ship Assn 97 Ocean Iron Steamship Assn. v. Leslie. . 1, 21, 34, 129, 130 Ocean Steamship Co. v. An- derson 97 Oceanic Steamship Co. v. Faber 7 Oppenheim v. Fry . . . 113 O'Reilly v. Royal Exchange Ass. Co. . 67 Padstow Ass. Assn., He . . 129 Page v. Fry 16 Palmer v. Blackburn . . 23, 132 v. Fenning ... 61 v. Marshall ... 142 Paly art v. Leckie .... 127 Parker v. Budd .... 82 Parkin v. Tunno .... 61 Parkinson v. Collier . . . 132 Paterson v. Harris . . . 145 Pawson v. Watson . . 30, 48 Pearson v. Commercial Union Ass. Co 64, 65 Pellas v. Neptune Ins. Co. . 68 Phillpott v. Swann . . 78, 85 Pickup v. Thames Ins. Co. . 57 Pickwick, The .... 118 Pink v. Fleming ... 73, 75 Pipon v. Cope 59 Pirie v. Middle Dock Co. . 146 Pitman v. Universal Mar. Ins. Co 2, 103, 104, 105 Pomeranian, The . . 118, 133 Powles v. Inues ... 22, 69 Price v. A 1 Small Damage Assn 94, 113, 150 Price v. Maritime Ins. Co. 5, 18, 114 Proudfoot v. Montefioro . 26, 28 TABLE OF CASES CITED. XX111 PAGE Provincial Ins. Co. v. Leduc. 48, 50, 88, 89 Puller v. Glover . 66 Q. Quebec Mar. Ins. Co. v. Com- mercial Bank of Canada 3, 48> 50, 53, 54, 56 . Ralli v. Janson . . . 112, 114 Rankin v. Potter . 5, 13, 39, 78. 79, 82, 85, 86, 87, 89, 90, 91, 92, 94, 105, 119, 167 Rayner v. Preston . 6, 22 Redmond v. Smith ... 60 Red Sea, The 93 Reg. v. McCleverty . . . 170 / / ' /" Reischer v. Berwick ... 72 ""I Rhind v. Wilkinson ... 13 : ^-/ Rivaz v. Gerussi . 26, 27, 30, 31 Roberts v. Security Co. Ltd. 36, i^ '?<( 72,162 Robinson Gold Mining Co. v. Alliance Mar. Ass. Co. . 148 ^x*-" 1 - Roddick v. Indemnity Mar. Ins. Co 10, 25, 50 Rodocanachi v. Elliott . 3, 4, 82, 84,86 iss v. Hunter .... 66 Roux v. Salvador . 78,79, 80, 82, 85,87 Rowland v. Maritime Ins. Co. 83 Royal Exchange v. Vega 37, 136, 160 Co. v. . 104, 114 . . 150 . . 29 90 Ruabon Steamship London Assurance Russell v. Erwin . v. Thornton Rnys v. Royal Exchange S. Sadler v. Dixon .... 56 Sailing Ship Blairmore v. Macredie 78, 82, 85, 90, 91, 103 St. Paul Fire & Mar. Ins. Co. o. Morice .... 148, 149 Salacia, The 20 Samuel v. Royal Exchange 65, 144 /.jt*J&~*~ , Scaramanga Stamp ... 66 Schloss Brothers v. Stevens . 4, 7 Scott, v. Mannheim Ins. Co. 152 Scottish Marine Ins. Co. v. Turner . 84, 92 f^ Seagrave v. Union Mar. Ins. Co ...... 10, 12, 42 f vj Z-fr Sea Ins. Co. v. Blogg . --- v. Hadden . 51 92, 93, 121 25, 162 . 61 93, 9(5 . 124 Seaton v. Heath .. Sellar v. McVicar .. Sharpe v. Gladstone . Shee v. Clarkson .. Shelbourne v. Law Invest- ment Ins. Co. . . .3,73,111 Shepherd v. Henderson . . 81 Shoolbred v. Nutt. ... 27 Sibbald v. Hill .... 31 Simon Israel & Co. v. Sedg- wick ...... 61, 62 Simpson v. Thompson 93, 119, 120, 121, 122, 168 Simpson Steamship Co. v. Premier Underwriting Assn. 51, 62 Sleigh v. Tyser . . 50, 57, 133 Small v. U. K. Mar. Ins. Assn ..... 21, 76, 164 Smith v. Pyman .... 19 South British F. & M. Ins. Co. v. Da Costa .... 17 South Staffordshire Tram- ways v. Sickness Ass. Assn. 36 Spalding v. Crocker . . .134 Sparkes v. Marshall . . . 14. 1 5 XXIV TABLE OF CASES CITED. Yy -r \i v Spence r. Union Mar. Ins. Co. 78, 80, 108 Stalnbank r. Fenning. . 10, 18 Steamship Balmoral v. Mar- ten 41,95,110 Steamship Carisbrook Co. v. London & Provincial Mar. Ins. Co 100, 173 Stearns r. Village Main Beef Co 121 Steel v. Lacey 52 Stephens v. Australasian Ins. Co. . 43, 132 Stewart v. Greenock Ins. Co. 92, 122 v. Merchants Mar. Ins. Co. ... 37, 114, 115 Stewart r. Steele . . . 104, 105 Stcckdale v. Dunlop ... 12 Strang, Steel and Co. r. Scott 101 Stringer r. English Mar. Ins. Co 91 Sutherland v. Pratt ... 13 Svensden v. Wallace . . 97, 98 Sweeting v. Pearce . . 70, 132 T. Tasker v. Cunningham . . 62 Tate r. Hyslop ... 26, 27 Tatham v. Burr . . 5,111,141 v. Hodgson ... 73 Taylor . Dunbar .... 73 v. Liverpool G. W. Steam Co 147 Thames and Mersey Mar. Ins. Co. r. Hamilton . 5, 7, 73, 75, 145, 149 Thames and Mersey Mar. Ins. Co. r. Pitts .... 146, 150 Thompson r. Hopper ... 73 v. Reynolds . . 40 Tobin r. Harford . . . 42, 106 Todd v. Ritchie 164 Trinder r. Thames and Mersey Mar. Ins. Co. 51, 59, 72, 73, 76, 1)0 Tudor 62 Tunno v. Edwards . . . 120 Turnbull r. Janson ... 54 v. Hull Under- writers' Aesn 77 Turquand, Ex parte . . . 132 Tyser r. Shipowners' Syndi- cate . 36 U. Union Mar. Ins. Co. v. Bor- wick Ill Union Mar. Ins. Co. v. Martin 46 United States Shipping Co. v. Empress Ass. Cor. . 23, 105 Universal Ins. Co. r. Mer- chants Mar. Ins. Co. . . 70 Universe Ins. Co. v. Mer- chants Mar. Ins. Co. . 71, 132 Usher v. Noble . . 20, 23, 107 Uzielli v. Boston Mar. Ins. Co. ... 16, 17, 89, 96, 118 V. Vagliano v. Bank of England 137 Vancouver, The. See Marine Ins. Co. t;. Chiua Trans- Pacific Co. Vaudyck v. Hewitt . . . 127 Vortigern, The ... 54, 56 Waugh v. Morris .... (JO Wavertree Co. v. Love . . 135 Way v. Modigliani ... 61 TABLE OF CASES CITED. XXV PAGE Wells v. Hopwood ... 150 Western Ass. Co. (Toronto) v. Poole 17 Western Ins. Co., Ex parte . 17 West of England Fire Ins. Co. v. Isaacs 121 Westport Coal Co. v. McPhail 76, 164 Westwood v. Bell ... 70 Wetherell r. Jones ... 6 Whincup v. Hughes . . . 128 Williams v. Canton Ins. Office 75, 80 -v. North China Ins. Co 42, 130 Wilson r. Jones 4, 8, 9, 10, 11, 12, 16,38 v. Martin .... 10 v. Nelson .... 39 v. Owners of Cargo, per Xantlto 146 I'AGE Wilson v. Eankin .... 59 -- v. Salamandra Ass. Co ........ 26 Wingate v. Foster ... 64 Woodside v. Globe Ins. Co. . 3, 41 Woolridge v. Boydell X. Xantho, The . . Xenos v. Fox . . -- v . Wickham 62 Yates v. White . 73, 146 40, 111, 117 . 36, 69 21, 168 TABLE OF CASES OVERRULED, ETC. Adams v. Mackenzie (1863), 13 C. B. (N. S.) 44G ; discussed, SAILING SHIP BLAIRMORE v. MACREDIE (1898), A. C. at p. 598. AitcJiison v. Lohre (1879), 4 App. Gas. 755 ; explained MONTGOMERY v. INDEMNITY MAR. INS. Co. (1900), 6 Com. Gas. at p. 23. Alps, The (1893), P. 109; followed and approved, THE BEDOUIN (1894), P. 1, C. A. Anderson v. Morice (1876), 1 App. Gas. 713 ; distinguished, COLONIAL INS. Co. OP NEW ZEALAND v. ADELAIDE MAR. INS. Co. (1886), 12 App. Gas. at p. 135. Assecurazioni Generali 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. Gas. 404. Barber v. Fleming (1869), L. R. 5 Q. B. 59; followed, FOLEY v. UNITED FIRE AND MAR. INS. Co. (1870), L. R. 5 C. P. 155. Barker v. Janson (1868), L. R. 3 C. P. 303 ; discussed, LIDGETT v. SECRETAN (1871), L. R. 6 C. P. at p. 628. Beatson v. Haworth (1786), 6 T. R. 531 ; explained, MARSDEN v. REID (1803), 4 East at p. 577. Beaver Line v. London and Provincial Ins. Co. (1899), 5 Com. Gas. 269 ; discussed, ANGEL v. MERCHANTS MAR. INS. Co. (1903), 1 K. B. at p. 825, C. A. Blackburn v. Vigors (1887), 12 App. Gas. 531 ; considered, BIACK- BTTRN v. HASLAM (1888), 21 Q. B. D. 144. Blackett v. Royal Exchange (1832), 2 C. & J. 244; distinguished, STEWART v. MERCHANTS MAR. INS. Co. (1885), 16 Q. B. D. 619, C. A. Booth v. Gair (1864), 33 L. J. C. P. 99 ; explained, KIDSTON v. EMPIRE INS. Co. (1866), L. R. 1 C. P. at p. 549. xxvili TABLE OF CASES OVERRULED, ETC. JJrigeUa, The (1893), P. 195 ; overruled MONTGOMERY v. INDEMNITY MUTUAL MAR. INS. Co. (1902), 1 K. B. 734, C. A. Burnand v. Eodocanachi (1882), 7 App. Cas. 382 ; distinguished, STEARNES v. VILLAGE REEF MINING Co. (1904), 10 Com. Cas. 89, C. A. Cator v. Great Western Ins. Co. (1873), L. R. 8 C. P. 592 ; dis- tinguished, BROWN BROTHERS v. FLEMING (1902), 7 Com. Cas. 245. Conway v. Gray (1809), 10 East, 547 ; disapproved, AUBEBT v. GRAY (1861), 3 B. & S. 163. Cory v. Pattern (1872), L. R. 7 Q. B. 304 ; followed, LISHMAN p. NORTHERN MAR. INS. Co. (1875), L. R. 10 C. P. 179, Ex. Ch. Cullen v. Butler (1816), 5 M. & S. 461 ; approved, THAMES AND MERSEY MAR. INS. Co. v. HAMILTON (1884), 12 App. Cas. at p. 501. Davy v. Milford (1812), 15 East, 559 ; explained, RALLI v. JANSON (1856), 6 E. & B. at p. 431. De Mattos v. North (1868), L. R. 3 Ex. 185; followed, BERRIDGE v. MAN ON INS. Co. (1887), 18 Q. B. D. 346, C. A. Devaux v. 1'Anson (1839), 5 Bing. N. C. 519, 540; criticised, THAMES AND MERSEY MAR. INS. Co. v. HAMILTON (1884), 12 App. Cas. at p. 496, H. L. Dickinson v. Jardine (1868), L. R. 3 C. P. 639 ; discussed, THE MARY THOMAS (1894), P. at pp. 114, 118; THE KXIGHT OF ST. MICHAEL (1898), P. at p. 34; MONTGOMERY v. INDEMNITY INS. Co. (1902), 1 K. B. at p. 741, C. A. Dixon v. Whitworth (1879), 4 C. P. D. 371 ; reversed, DIXON v. WUITWORTH (1880), 4 Asp. Mar. Cas. 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. Hyde (1865), 18 C. B. (N. S.) 835 ; reversed on one point, FARNWORTH v. HYDE (1866), L. R. 2 C. P. 204, Ex. Ch. ; see at p. 226. Farnworth v. Hyde (1866), L. R. 2 C. P. 204, Ex. Ch. ; criticised, MCARTHUR, Ed. 2, p. 151 ; LOWNDES, Ed. 2, p. 137. Fawcus v. Sarffield (1856), 6 E. & B. 192; explained, DUDGEON v. PEMBROKE (1877), 2 App. Cas. 284. Fttzherbert v. Mather (1785), 1 T. R. 12 ; commented on, BLACKBURN v. VIGORS (1887), 12 App. Cas. 531. Foi-bes v. Aspinall (1811), 13 East, 323; discussed, UNITED STATES SHIPPING Co. v. EMPRESS Ass. CORPN. (1907), 1 K. B. 259. TABLE OF CASES OVERRULED, ETC. XXIX Garston Sailing Ship v. Hickie (1885), 15 Q. B. D. 580 ; discussed, HUNTER v. NORTHERN- MAR. IKS. Co. (1888), 13 App. Cas. 717. Gibson 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. Cas. at pp. 530, 540. Great Indian Peninsular Ry. Co. v. Saunders (1861), 1 B. & S. 41 ; 2 B. & S. 266; explained, KIDSTON v. EMPIRE INS. Co. (1866), L. K. 1 C. P. at p. 548. Hafjedorn v. Oliverson (1814), 2 M. & S. 485; followed, CORY v. PATTON (1874), L. K. 9 Q. B. 577, Ex. Ch. Hamilton v. Mendes (1761), 2 Burr. 1198; discussed, BUYS v. ROYAL EXCHANGE (1897), 2 Q. B. at p. 138. Harris v. Scaramanga (1872), L. B. 7 C. P. 481 ; followed, DE HART v. COMPANIA ANONIMA " AURORA" (1903), 2 K. B. 503, C. A. Havelock v. Hancill (1789), 3 T. B. 277 ; discussed, CORY v. BURR (1883), 8 App. Cas. at p. 399. Hicks v. Shield (1857), 7 E. & B. 633 ; discussed, ALLISON v. BRISTOL MAR. INS. Co. (1876), 1 App. Cas. at p. 221. Holdsworth v. Wise (1828), 7 B. & C. 794; discussed, SAILING SHIP BLAIRMORE v. MACREDIE (1898), A. C. at p. 609. Hurst v. Usborne (1856), 18 C. B. 144 ; doubted, RANKIN v. POTTER (1873), L. R. 6H. L. at p. 117. Hyd'Jirnes Steamship Co. v. Indemnity Mutual Mar. Ins. (1894), 2 Q. B. 500; reversed (1895), 1 Q. B. 500, C. A. Jackson v. Union Mar. Ins. Co. (1874), L. R. 10 C. P. 125 ; dis- tinguished, INMAN STEAMSHIP Co. v. BISHOFF (1882), 7 App. Cas. at p. 676 ; followed, Re JAMIESON (1895), 1 Q. B. at p. 95, C. A. Joyce v. Kennard (1871), L. R. 7 Q. B. 78; discussed, CUNARD STEAMSHIP Co. v. MARTEN (1902), 2 K. B. at p. 629. Kirclmer v. Venus (1859), 12 Moore P. C. 361 ; explained, ALLISON v. BRISTOL MAR. INS. Co. (1876), 1 App. Cas. 209, at p. 224. Kleinwort v. Shepard (1859), 1 E. & E. 447 ; discussed, CORY v. BURR (1883), 8 App. Cas. at p. 396. Knight v. Faith (1850), 15 Q. B. 649 ; criticised, RANKIN v. POTTER (1873), L. R. 6 H. L. at pp. 102, 130 ; TRIXDER 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. PANDORF (1887), 12 App. Cas. at p. 523. XXX TABLE OF CASES OVERRULED, ETC. 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 Cheminant v. Pearson (1812), 4 Taunt. 367, 380 ; discussed, AITCHISON v. LOHRE (1879), 4 App. Gas. at p. 763. Lewis v. Rucker (1761), 2 Burr. 1167 ; discussed, IRVING v. MANNING (1847), 1 H. of L. Gas. at p. 305; Duus BROWN & Co. v. BINNING (1906), 11 Com. Gas. at p. 194. Livie v. Janson (1812), 12 East, 647 ; explained, IONIDES v. UNIVERSAL MAR. INS. Co. (1863), 14 C. B. (N. S.) at p. 294 ; LIDGETT v. SEOBKTAN (1871), L. B. 6 C. P. at p. 625. Lohre v. Aitchison (1878), 3 Q. B. D. 558, C. A. ; reversed, AITCHISON v. LOHRE (1879), 4 App. Gas. 755. Mason v. Sainsbury (1748), 1 Ves. Sen. 98 ; explained, SIMPSON v. THOMPSON (1877), 3 App. Gas. at p. 293. Moss v. Smith (1850), 9 C. B. 94; approved, AITCHISON v. LOHRE (1879), 4 App. Gas. at p. 762. North Britain, The (1894), P. 77 ; approved, TATHAM v. BURR (1808), A. C. 382, H. L. North of England Ins. Assn. V.Armstrong (1870), L. E. 5 Q. B. 244 ; doubted, BURNAND v. RODOCANACHI (1882), 7 App. Gas. at p. 342. Palmer v. JBlackburn (1822), 1 Bing. 61 ; followed, UNITED STATES SHIPPING Co. v. EMPRESS Ass. CORPN. (1907), 1 K. B. 259. Parmeter v. Todhunter (1808), 1 Camp. 541 ; disapproved, CURRIE v. BOMBAY NATIVE INS. Co. (1869), L. E. 3 P. C. at p. 78. Pink v. Fleming (1890), 25 Q. B. D. 396 ; distinguished, SCHLOSS BROTHERS v. STEVENS (1906), 11 Com. Gas. at p. 279. Piponv. Cope (1808), 1 Camp. 434; explained, TRINDER v. THAMES AND MERSEY MAR. 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. Gas. at p. 590. Powell v. Hyde (1855), 5 E. &'B. 607; discussed, CORY v. BURR (1883), 8 App. at p. 396. Price v. A 1 Ships' Small Damage Assn. (1889), 22 Q. B. D. 580, C. A. ; criticised, MCARTHUR, ED. 2, p. 386. Proudfoot v. Montefiore (1866), L. E. 2 Q. B. 511, 521 ; approved, BLACKBURN v. VIGORS (1887), 12 App. Gas. at p. 537. Randal v. Cockran (1748), 1 Ves. Sen. 98 ; distinguished, BPRNAND v. EODOCANACHI (1882), 7 App. Gas. at p. 339. RanTcin v. Potter (1873) L. E. 6 H. L. 83; discussed, KALTENBACH v. MACKENZIE (1878), 3 C. P. D, at pp. 474, 480, C. A. TABLE OF CASES OVERRULED, ETC. XXXI Rosetto v. Gurney (1851), 11 C. B. 176 ; approved, FARNWORTH v. HYDE (1866), L. R. 20. P. 204, Ex. Ch. Roux v. Salvador (1836), 3Bing. N. C. 266 ; discussed, FABNWORTH v. HYDE (1865), 18 C. B. (N. S.) at p. 856 ; TBINDER v. THAMES AND MERSEY MAR. INS. Co. (1898), 2 Q. B. at p. 119, C. A. Sailing Ship Garston v. Eickie (1885), 15 Q. B. D. 580; discussed, HUNTER v. NORTHERN , MAR. INS. Co. (1888), 13 App. Gas. 717. Scottish Mar. Ins. Co. v. Turner (1853), 1 Macq. H. L. 334 ; dis- cussed, RANKEST v. POTTEB (1873), L. R. 6 H. L. at p. 100. Smith v. Reynolds (1856), 1 H. & N. 221 ; followed, BERRIDGE v. MAN ON INS. Co. (1887), 18 Q. B. D. 346, C. A. Sparkes v. Marshall (1836), 2 Bing. N. C. 761; explained, ANDERSON v. MORICE (1876), 1 App. Cas. at p. 735. Stephens v. Australasian Ins. Co. (1873), L. R. 8 C. P. 18 ; discussed, IMPERIAL MAR. INS. Co. v. FIRE INS. CORPN. (1856), 4 C. P. D. 166. Stribley v. Imperial Mar. Ins. Co. (1876), 1 Q. B. D. 507 ; disapproved, BLACKBURN v. VIGORS (1887), 12 App. Cas. at p. 540. Thompson v. Hopper (1856), 6 E. & B. 172 ; reversed, THOMPSON -v. HOPPER (1858), E. B. & E. 1038; discussed and explained, DUDGEON v. PEMBROKE (1877), 2 App. Cas. 284. Thompson v. Taylor (1795), 6 T. R. 478 ; followed, FOLEY v. UNITED MAR. AND FIBE INS. Co. (1870), L. R. 5 C. P. 155. Thornely v. Eobson (1819), 2 B. & Aid. 513 ; discussed, COSSMAN v. WEST (1887), 13 App. Cas. at pp. 177, 178. Uzielli v. Boston Mar. Ins. Co. (1884), 15 Q. B. D. 11 ; discussed, WESTERN Ass. Co. (TORONTO) v. POOLE (1903), 1 K. B., at p. 384. The Vortigern (1899), P. 140 ; followed, GREENOCK STEAMSHIP Co. v. MARITIME INS. Co. (1903), 2 K. B. 657, C. A. Watson v. Clark (1813), 1 Dow. 336, H. L. ; discussed, PICKUP v. THAMES AND MERSEY MAR. INS. Co. (1878), 3 Q. B. D. 594, C. A. Weir v. Aberdeen (1819), 2 B. & Aid. 320 ; discussed, QUEBEC MAB. INS. Co. v. COMMERCIAL BANK OF CANADA (1870), L. R. 3 P. C. 234. West India and Panama Tel. Co. v. Home and Col. Mar. Ins. Co. (1880), 6 Q. B. D. 51, C. A.; overruled, THAMES AND MERSEY MAR. INS. Co. v. HAMILTON (1887), 12 App. Cas. 484, H. L. Williams v. London Ass. Co. (1813), 1 M. & S. 318; approved, STEAMSHIP CARISBROOK Co. v. LONDON AND PROV. MAR. INS. Co. (1902), 2 K. B. 692, C. A. XXxii TABLE OF CASES OVERRULED, ETC. Westwood v. Bell (1815), 4 Camp. 349 ; explained, FISHER v. SMITH (1876), 34 L. T. at p. 916. Wilson v. Rankin (1865), L. R. 1 Q. B. 162; followed, DUDOEON- y. PEMBROKE (1874), L. R. 9 Q. B. 581. Woodley v. Mitchell (1883), 11 Q. B. D. 47, C. A.; overruled, THE XANTHO (1887), 12 App. Gas. 503. Yates v. Whyte (1838), 4 Bing. N. C. 272 ; explained, SFMPSOX v. THOMSON (1877), 3 App. Gas. at p. 293. THE MABINE INSURANCE ACT, 1906. (6 EDW. 7, CH. 41.) An Act to codify the Law relating to Marine Insurance. [21st December, 1906.] Marine Insurance. 1. A contract of marine insurance is a contract Marine whereby the insurer undertakes to indemnify the assured, l^fi^ in manner and to the extent thereby agreed, against marine losses, that is to say, the losses incident to marine adventure. NOTE. For various definitions of marine insurance, and discussion thereof, see post, p. 161 ; for history of marine insurance, see^osf, p. 170. The formal instrument in which the contract is embodied is called the "policy." 1 The informal note or memorandum which is drawn -up when the contract is entered into is called the " slip " or " covering note. 1 ' 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 indemnified is called the " insured," or, more commonly, the "assured." 3 The consideration which the insurer receives for his undertaking 1 From Latin pollicitatio, a promise, through Italian polizza or French ., police. Oddly enough, in an English policy the promise to pay in case JK- of loss is implied, not expressed. Continental policies contain an express promise to pay within so many days after notice of loss. 2 See McArthui; Ed. 2, p. 21, and 21, 22, 89. * As to what is included in the term " assured," see Ocean I. S. Ins. -Assn. v. Leslie (1889), 22 Q. B. D. at pp. 724, 72G, per Mathew, J. B 2 TEE MARINE INSURANCE ACT, 1906. SECT. 1. is called the "premium." But in the case of mutual insurance . ~~~ guarantee or other arrangement may take the place of the premium. 1 The term " loss " includes damage or detriment as well as actual 1 loss of property. 2 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. 3 Marine insurance, in legal theory, is essentially a contract _of indemnity. 1 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. 5 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 1 As to premium, see 52-54, and as to mutual insurance, 85. * As to loss, see 56-66. For a useful discussion of the mercantile meaning of loss, see Moss v. Smith (1850), 19 L. J. C. P. 225, 228. * Cf. Bradford v. Symondson (1881), 7 Q. B. D. at p. 464, per Lord Bramwell. 4 Arnould, Ed. 6, p. 3 ; McArthur, Ed. 2, p. 23 ; per Lord Mansfield, Kent v. Bird (1777), 2 Cowp. at p. 585 (wager policy) ; per Lord Black- burn, Lloyd v. Fleming (1872), L. B. 7 Q. B. at p. 302 (assignment after loss) ; per Lord Blackburn, Anderson v. Morice (1875), L. R. 10 C. P. at p. 615 (insurable interest); per Jessel, M.R., Pitman v. Universal Mills of lading," which are the invention of modern I (commerce. Compare also the definition of "policy of sea insurance," ' 'given by 92 of the Stamp Act, 1891 (54 & 55 Viet. c. 39), post, p. 155. Policies on ships in course of building are to be stamped as voyage, and not as time policies, see 8 of the Revenue Act, 1903 (3Edw. 7, c. 46),^os<, p. 160. Marine 3. (1.) Subject to the provisions of this Act, d? every lawful marine adventure may be the subject of time perils a contract of marine insurance. 6 defined. (2.) In particular there is a marine adventure where (a.) Any ship, goods, or other moveables are exposed to maritime perils. Such property is in this Act referred to as " insurable property : " 7 1 Rodocanaclii v. Elliott (1878), L. E. 8 C. P. 649; affirmed L. R. 9 C. P. 518, Ex. Ch. (goods detained in Paris during siege). 2 King v. Victoria Ins. Co. (1896), A. C. 250 P. C. ; see, too, Dmies v. National Ins. Co. of New Zealand (1891), A. C. 485. 3 Hyderabad Deccan Co. v. Willougliby (1899), 2 Q. B. 530; see, too, Jansonv. Driefontein Consolidated Mines, A. C. (1902) 484 (bullion insured from Transvaal Mines to London). 4 Jacobs v. Gaviller (1902), 7 Com. Cas. 116. * Schloss Brothers v. Stevens (1906), 2 K. B. 665. 6 Arnould, Ed. 6, p. 688 ; Wilson v. Jones (1867), L. R. 2 Ex. 139, Ex. Ch. 7 Arnould, Ed. 6, pp. 18-29; and as to " moveables," see 90, post. MABINE INSURANCE. 5 (b.) The earning or acquisition of any freight, passage SECT - 3 - money, commission, profit, or other pecuniary benefit, or the security for any advances, loan, or disbursements, is endangered by the exposure of insurable property to maritime perils : l (c.) Any liability to a third party may be incurred by the owner of, or other person interested iti or responsible for, insurable property, by reason of maritime perils. 2 "Maritime perils" means the perils consequent 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^whlch may be desig- nated by the policy. 3 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. 4 Lord 1 Me Arthur, Ed. 2 pp. 59, 65; cf. Bankin v. Potter (1873), L. E. 6 H. L. 83 (chartered freight on homeward voyage insured as to outward voyage); Price \. Maritime Ins. Co. (1900), 5 Com. Gas. 332, affirmed (1901) 2 K. B. 412, C. A. (advauces); Momn Galloway & Co. v. Uzielli (1905), 2 K. B. 555 (disbursements). * McArthur, Ed. 2, p. 59 ; Boehm v. Bell (1799), 8 T. R. at p. 161 (damages and costs for illegal capture;; Tatham v. Burr (1898), A. C. at p. 385 (liability for running down another ship) ; Cunard Co. v. Marten (1902), 2 K. B. 624 (liability of shipowner under contract of carriage) ; and see 14, 75. 3 Cf. Thames and Mersey Ins. Co. v. Hamilton (1887), 12 App. Cas. at p. 498, per Lord Herschell. 4 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, and consider the case of re-inturance. See 60, pott. 6 TEE MARINE INSURANCE ACT, 1906. SECT. 3. Esher has sought to reconcile the underlying facts with popular language, by drawing a distinction between the subject insured and the subject-matter of insurance. 1 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 law." 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 ; 3 and illegality in any part of the adventure taints the whole of it. 4 The lawfulness of an English adventure or insurance must be determined by English law. 5 For example, if two foreign states are at warpEEere is nothing unlawful in sending an English ship to run a blockade, though the ship may be liable to confiscation by the blockad- ing belligerent. 6 So, too, as a general rule, English law takes no cognizance of foreign trade or revenue laws. 7 But a distinction must be drawn between the lawfulness of the adventure and the implied warranty of legality by the assured (see 41,.jws<). 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 ajnattor of common know- IcTl^c, 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 aflected thereby. Cf. 18, post. The terms of subsect. (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 the old form of policy. 1 Bayner v. Preston (1881), 18 Ch. D. at p. 9, C. A. 9 Cf. Gedge v. Eoyal Exchange Ass. Corpn. (1900), 2 Q. B. at p. 220. 3 Wetherell v. Jones (1832), 3 B. & Ad. at pp. 225, 226. 4 Arnould, Ed. 6, p. 691. s Cf. Kellner v. Le Mesurier (1803), 4 East, at pp. 402, 403. 6 Arnould, Ed. 6, p. 713, Ex p. Chavasse (18G5), 34 L. J. (Bank.) 17. 7 Wesildke, Private International Law, Ed. 3, 213 ; Lownden, Ed. 2, p. 102; cf. F.ancis v. Sea Ats. Co. (1898), 8 Asp. Mar. Cas. 418. MARINE INSURANCE. 7 The subject-matter, says Lord Blackburn, "is generally described SECT. 3. 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." l See further, 26, 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 oo (2) (&), post, p. 73). 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 fyivp. always been interpreted to refer to perils of a like kind with those already enu- merated j. Perils of a dissimilar kind may be insured against (see, e.g., the note to $2}^ but they must be covered by express terms. 3 . Insurances are sometimes enected against " all risks," or even against all risks by land or by water. 4 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 detention, and all the consequences ot hostilities." (See Owen's Notes and Clauses, Ed. 3, p. 28, et seq.) The result of maritime perils is to cause " marine damage," which, says Lord Herschell, does not mean only damage which has been caused by the seas, " but damage 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." 5 As to the narrower expression " perils of the seas," see Sched. I., rule 7, post, p. 145. 1 Mackenzie v. Whitworth (1875), 1 Ex. D. afp. 40, C. A. 2 Arnould, Ed. 6, p. 789 ; Me Arthur, Ed. 2, p. 136 ; Thames and Mersey Ins. Co. v. Hamilton (1882), 12 App. Cas. at p. 495. 3 See, e.g., Inman v. Sischof (1882), 7 App. Cas. at p. 686 (abatement clause in charter party) ; Thames and Mersey Ing. Co. v. Hamilton (1887), 12 App. Cas. 484, at p. 491 (donkey engine explosion), which gave rise to the " Inchmaree clause," as to which see Oceanic Steamship Co. v. Faber <1906), 11 Com. Cas. 179. 4 Schloss v. Stevens (1906), 2 K. B. 665, and see cases cited ante, p. 4. 5 Thames and Mersey Ins. Co. v. Hamilton (1887), 12 App. Cas. at p. 498. TEE MARINE INSURANCE ACT, 1906. Insurdble Interest. Wagering 4. (1.) Every contract of marine insurance by way or framing ,, . . j contracts of gaming or wagering is void. ? r r Ii d o (2.) A contract of marine insurance is deemed to be LCI. o & y Viet. c. 109, a gaming or^ wager ing contract (a.) Where the assured has not an insurable interest as defined by this jct/ and the contract is entered into with no expectation, of acquiring such an interest : l or (5.) Where the policy is made " interest or no interest," /or " withoutfurthfii^groof of interest than the policy itself," or "without benefit of salvage to the insurer," or subject to auy other like term : Provided that, where there is no possibility of salvage, a policy may be effected without benefit of salvage to the insurer. 2 NOTE. This section appears to reproduce the effect of the 19 Geo. 2, c. 37, 1 to 3, as read with the 8 & 9 Viet. c. 109. The Act of 1845 avoids all policies which are in fact wagering policies- The Act of 1745 (now repealed) avoided policies which bear on the face of them the indicia of wagering, whether in fact they are wagering policies or not. A policy without interest is not necessarily a wager policy. For example, when the assured bond fide expects to have an interest, but [the expectation is not realized, the policy is not a wager policy. 3 - "^Th^ assured cannot recover on the policy, but he may be entitled to a return of the premium ; see 84. Siibsf-ct. (1). See the (iuniin- Act, 1S45 (S !t Viet. c. 10!)), s. 18, which provides that "all contracts or agreements, whether by 1 McArthur, Ed. 2, p. 24 ; Cousins v. Nantes (1811), 3 Taunt. 513 (presumption of interest and averment in pleading) Ex. Ch. ; Wilson v. Jones (1867), L. R. 2 Ex. at p. 141, per Willes, J. See 4-15. Cf. Lucena v. Crauford (1806), 2 B. & P. at p. 310, and note, post. * See, e.g., Andenon v. Morice (1876), 1 App. Cas. 713. INSURABLE INTEREST. 9 parole or in writing, by way of gaming or wagering, shall be null and SECT. 4. void." As to subsect. (2) (6), which reproduces with slight modification the effect of 1-3 of the Marine Insurance Act. 1745 (19 Geo. 2, c. 37), repealed by Sched. TT. of this Act, the following points may be noted : (1.) The statute was confined in terms to British ships, and goods and effects laden thereon. Therefore a jg.p.i. policy on a foreign ship ^\ was not illegal if, as a fact, the insurer had aTlawful interest and could 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 spoke of ships, and goods and effects laden thereon. But a wide construction was put on these terms,^ind the scope of the statute was by judicial decision extended to policies on i profits, and commission on ships and goods, effected, " without benefit -i of salvage." l (3.) The scope of the statute was not confined to the exact terms prohibited. _ Any similar terras avoid the gplicy. | Thus a policy on cash advances, (t full jnterestlulmitted," is void.' J (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 therefore such a policy may lawfully be effected " with- out benefit of salvage." Xine judges, in giving their opinion to the House of Lords in Lucena v. Crauford, 3 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 6f a clause to that effect in ^.policy upon things ivhich were capable of salvage" For example, a man may have an interest, but no property, in the thing iniperilled, and then he has nothing which he can abandon. 4 (5.) The statute further contained two more or less obsolete 1 De Mattos v. North (1868), L. E. 3 Ex. 185 ; AUkins v. Jupe (1877), 2 C. P. D. 375 ; see at p. 388 as to possibility of salvage iii such a case. * Berridge v. Man On 1m. Co. (1887), 18 Q. B. D. 346, C. A. ; see, too, Gedge v. Royal Exchange (1900), 2 Q. B. 214. 3 Lucena v. Crauford (180G), 2 B. & P. at p. 310; 6 R. R. at p. 694. 4 Cf. Wilson v. Jones (1867), L. R. 2 Ex. 139 (policy on successful laying of submarine cable effected by shareholder in company). 10 THE MARINE INSURANCE ACT, 1906. "Seer. 4. exceptions, viz. policies on^ privateers, and policies on ships in the Spanish trade. These are not reproduced. (6.) The statute did not extend to Ireland. 1 The present section extends to the whole United Kingdom. (7.) It is an open question whether an honour policy (e.g. a p.p.i. policy on disbursements) constitutes a breach of a warranty to keep a certain proportion of fhe value of a ship uninsured. 2 insurable 5. (1.) Subject to the provisions of this Act, every defined. person has an insurable interest who is interested in a marine adventure. 3 (2.) In particular a person is interested in a marine adventure where he stands in any legal or equitable relation to the adventure, or to any insurable property at risk therein, in consequence of which he may benefit by the safety or due arrival of insurable property, or may be prejudice^jb^jtsjoss, or by damage thereto, or~by the detention thereof, or may incur liability in respect thereof. 4 Itttutrtftioni. 1. Floating policy for 1200 on goods as interest may appear. The assured, who are canal carriers, have an insurable interest in 1 Keith v. Protector Mar. Ins. Co. (1882), 10 L. R. Ir. 51. 8 Roddick v. Indemnity Mar. Ins. Co. (1895), 2 Q. B. 380, C. A. 3 Arnould, Ed. 6, p. 55; Wilson v. Jones (1867), L. E. 2 Ex. 139, Ex. Ch. 4 Arnould, Ed. 6, p. 101; as to equitable assignee of freight, see Wilson v. Martin (1856), 11 Ex. Ch. 684. Conversely, a prospect or possibility of loss or gain which is not founded on any right or liability in, or in respect of the subject-matter insured, is not ineurable. LucerM v. Crauford (1806), 2 B. & P. 269 ; $ B. R. 623, H. L. ; Seagrave v. Union Mar. Ins. Co. (1866), L. R. 1 C. P. 305, at p. 320 (cargo); Barber v. Fleming ( 1 869), L. R. 5 Q. B. at p. 71 (freight) ; and see, e.g., Manfield v. Maitland (1821), 4 B. & Aid. 582 (loan to shipowner); Devaux v. Steele (1840), 6 Bing. N. C. 358 ; 54 B. B. 818 (expected fishing bounty from French Government) ; Stain- bunk v. Fenniny (1851), 11 C. B. 51 (invalid bottomry bond). IS SUR ABLE INTEREST. 11 respect of their liability for the safe carriage of the goods, and this SECT. 5. interest is sufficiently described as " on goods." 1 2. Policy effected by shareholder in Submarine Cable Co. on the successful laying of the cable. The assured has an insurable interest / in the adventure, although he has no property in the cable. 2 3. A. lends money to B., a small shipowner, whose solvency depends on the safe arrival of his ship, but the loan is not secured on the ship or freight. The loan is not at risk, and A. has no insurable interest which can be covered by a marine policy. 3 4. Policy on freight, chartered or otherwise, per Cambodia from Bombay to Rowlands Island, and thence to a port of discharge in the United Kingdom. Under charter the ship is to go to Rowlands Island in ballast, and then load a cargo for England. On the way to Rowlands Island she is disabled by perils of the seas, so the freight cannot be earned. The assured has an insurable interest, and the risk has attached. 4 5. The agents of a foreign ship effect a policy on disbursements against the risk of total loss only. The ship becomes a constructive total loss. The agents have an insurable interest ia the__adYances they have made to the ship in so far as they could arrest the ship under 6 of the Admiralty Act, 1840 (3 & 4 Viet. Tl>5) for the purpose of founding an action in rem. 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 tendTo narrow 1 Crowley v. Cohen (1832), 3 B. & Ad. 478, 37 R. R. 472 ; see Canard Steamship Co. v. Marten, 2 K. B. (1902), 624, for an insurance in express terms against liability of carrier owing to the omission of the negligence clause in a charter party. As to insurance by a bailee (who is not respon- fiible) by virtue of his special property in the goods bailed, see North British Ins. Co. v. Moffatt (1871), L. K. 7 C. P. 25, 31 (fire insurance). * Wilson v. Jones (1867), L. R. 2 Ex. 139. 3 Cf. Manfield v. Maitland (1821), 4 B. & Aid. 582 ; Allison v. Bristol Marine Ins. Co. (1876), 1 App. Cas. at p. 220. Of course B.'s solvency an be insured by an appropriate contract, but that is not a marine policy. 4 Barber v. Fleming (18G9), L. R. 5 Q. B. 59. * Moran Galloway d Co. v. UzielU (1905), 2 K. B. 555. 12 THE MARINE INSURANCE ACT, 1906. SECT. 5. it, must be accepted with caution. The essence of interest is (a) that there should be a physical object exposed to sea perils, and (ft) that the assured should stand in some relationship, cognizable 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. 1 But would this be the case now that it is established that the statute affects the remedy only and not the right? It is clear, since Wilson v. Jones (1867), L. R. 2 Ex. 139 (insurance by shareholder in an Atlantic Ciwte 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. 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 ha& [^ no legal rights in respect of it after it is posted ? Subsect. (2) is, there- fore, framed as being inclusive, not exhaustive, and its language was somewhat broadened in the Commons Committee. Interest can jiardly 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 produce 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." 2 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 ? " 3 " 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." 4 1 Stockdale v. Dunlop (1840), 6 M. & W. 22*. 2 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. ;J()2. 3 Boehm v. Bell (1799), 8 T. B. 162 (prize insured by captors). 4 Seagrave v. Union Mar. Int. Co. (I860), L. R. 1 C. P. at p. 326. INSURABLE INTEREST. 13 " Any interest may be insured," says "Walton, J., " which is SECT. 5. dependent on the safety of the thing exposed to the risks insured against, still it must in all cases at the time of loss be an interest legal or equitable, and not merely an expectation however probable." l French law formerly drew a distinction between "fret acquis" /\ and " fretafaire, 1 ' 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. 3 6. (1.) The assured must be interested in the When subject-matter insured at the time of the loss, though ^vst* he need not be interested when the insurance is effected. 4 attach - Provided that where the subject-matter is insured, " lost or not lost," the assured may recover although he may not have acquired his interest until after the loss, unless at the time of effecting the contract of insurance the assured was aware of the loss, and the insurer was not. 5 (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. 6 ^""^ determine the exact moment when, under a contract of sale, the risk passes from seller to buyer. Prima facie, the risk passes when the property passes, but under the terms of the contract they may pass at different times. When goods are insured by the buyer, the question is whether, on the true con- struction of the contract, the risk has passed to him at the time the loss occurs. 6 X 1 Anderson v. Morice (1875), L. R. 10 C. P. 609, Ex. Ch , affirmed 1 App.Tas7713, H. L. * Colonial Ins. Co. v. Adelaide Mar. In*. Co. (1886), 12 App. Cas. 128, P.O. 3 Sparkes v. Marshall (1836), 2 Bing. N. C. 761, and see further, Sched. I., rule 1, pott, p. 142. 4 See Chalmers' Sale of Goods Act (1893), 5, and notes thereto. 5 Sullen and Leake, Prec. of Pleading, Ed. 3, p. 611. 6 As to when 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. INSUEABLE INTEREST. 15 7. (1.) A defeasible interest is insurable, as also SE CT- T - is a contingent interesT Defeasible (2.) In particular, where the buyer of goods has ge n c t on insured them, he has an insurable interest, notwith- interest - standing 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. 1 NOTE. As regards contingent interests, the main difficulty is to i determine, not whether there is an interest, but whether the interest j has attached at the time of loss. 2 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 con- tingent. 3 "In Lucena v. Crauford (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 L e insurabje. Freight, respondentia, and bottomry are of this descrip- tion?' And then, after discussing various ancient definitions of in- surance, 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." Re-insurance is a good example of a contingent interest. In Clay 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, now that it is established that stoppage in transit does not, as a rule, rescind the contract ? * The facts, too, were peculiar. In the case provided for by subsect. (2), 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 j "' ME 1 Sparkes v. Marshall (1836), 2 Bing. X. C. 761, as explained in Ander- son v. Morice (1875), L. B. 10 C. P. at p. 620 : Colonial Ins. Go. of New Zealand v. Adelaide Ins. Co. (1886), 12 App. Cas. 128, at p. 140, P. C. 2 Cf. Barber \. Fleming (1870), L. R. 5 Q. B. at p. 73. * Boehm v. Bell (1799), 8 T. R. 154. 4 See Chalmers' Sale of Goods Act, 1893, 48, and notes. 16 THE MARINE INSURANCE ACT, 190G. SECT. 7. Partial interest. Re-insur- ance. u 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 decision. 8. A partial interest of any nature is insurable. ' - ____ _^ ^**" NOTE. An undivided interest in a parcel of goods shipped f.o.b. is insurable. 1 So, too, a shareholder may insure his interest in the adventure of a company engaged in laying a submarine cable ; 2 and a " hotchpot " interest in cargo may be insured. 3 " I do not see," says Heath, J., " why a joint tenant or tenant in has not such an interest in the entirety as will entitle him to t 5 of the Merchant Shipping Act, 1894 (57 & 58 Viet. c. 60), Sp^)S 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. 6 Lloyd's policy (post, p. 138) 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. 9. (1.) The insurer under a contract of marine insurance has an insurable interest in his risk, and may re-insure in respect ojf.it. 6 (2.) UnTessthe policy otherwise provides, the original 1 Inglis v. Stock (1885), 10 App. Cas. pp. 263, 274 (390 tons of sugar sent off to satisfy two contracts, for 200 tons each, without any appro- priation to either contract). 2 Wilson \. Jones (1867), L. K. 2 Ex. 139, Ex. Ch. 3 Ebtworih v. Alliance Mar. Ins. (1873), L. E. 8 C. P. at p. 613. 4 Page v. Fry (1800), 2 B. & P. 240, 243 (cargo). * Bell v. Humphries (1816), 2 Stark. 345 ; Arnould, Ed. 6, p. 160 ; but quaere the effect of s. 14 (2) as amended in the Commons. Arnould, Ed. 7, p. 386; Uzielli v. Boston Mar. Lit. Co. (1884), 15 Q. B. D. at p. 16 ; and cf. Bradford v. Symondson (1881), 7 Q. B. D! at p. 463, C. A. INSUEABLE INTEREST. 17 assured has no right or interest in respect of such re- S CT. 9. insurance. 1 NOTE. Re-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 benall ol an assured on a risk already covered, as to which see 32. 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 Viet. c. 56, 1 (since repealed), and re-insurance is now expressly recognized by 92 of the Stamp Act, 1891 (54 & 55 Viet. c. 39), post, p. 155, and by this Act. 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 mav be paid thereon.'^ Then follow the exceptions, if any. 2 As to specifying in policy that it is a re-insurance , and as to notice of abandonment, see 27 and 62, post. In an action by an original assured against his insurer, the re-insurer cannot be brought iu as a third party against whom indemnity is claimed. 3 ^ 1 McArthur, Ed. 2, p. 332; Arnould, Ed. 7, p. 388. Of. Nelson v. Empress Ins. Co. (1905), 2 K. B. 281, C. A. (re-insurer not liable as third party in action by original assured). 2 As to construction of this provision, see Uzielli v. Boston Mar. Ins. Co. (1884), 15 Q. B. D. C. A. (re-insurer not liable for expenses under sue and labour clauses) ; Ex p. Western Ins. Co. (1892), 2 Ch. 423j^'jmy_ as paid " payment by original insurer not condition precedent) ; Chip- -jmaafiTv. Holt (1895), 65 L. J. Q. B. 104 (re-insurer not bound by improper payment by original insurer) ; Croclcer v. Stunje (1897), 1 Q. B. 330 (re-insurance of portion of risk construction of " final port ") ; China Traders As*n. v. Iloyal Exchange (1898), 2 Q. B. 187, C. AT (right of re- insurer to discovery of ship's papers) ; Lower lildne Ins. Assn. v. Sedgwick ^IBW)7"l Q- B. 199, C. A. (lapse of original policy, and issue of new one) ; Charlesworth v. Falter (1900), 5 Com. Gas. 408 (continuation clause exceeding twelve months' limit for time policy); Maritime Ins. Co. v. Stearns (1901), 2 K. B. 912, 6 Com. Cas. 182 (variation of risk from summer to winter) ; Marten v. StcamsJiip Owners Assn. (1902), 7 Com. _C_as. 195 C'jjay aamay bo paid " = pay as re-assured may be compellable _ to navl : Western Ass. Do. (Toronto) v. Poole (1903), 1 K. B. 37G (rein- surauce against total loss, salvage charges excluded). South British F. & M. Ins. Co. v. Da Costa (1906), 1 K. B. 45G, 11 Com. Cas. 81 (re-insur- ance for 1000 in excess of 500). 3 Nelson v. Empress Ass. Corporation (1905), 2 K. B. 281, C. A. C 18 TEE MARINE INSURANCE ACT, 1906. SECT. 10. Bottomry. Master's and sea- man's wages. 10. The lender of money on bottomry or respon- dentia has an insurable interest in respect of the loan. 1 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 hypothecate the ship for the advances * (sed. qu. now). 2. Policy on bottomry bond in old form. The ship becomes a constructive total loss. The assured -cannot recover, for the bond stands good unless there is an actual total loss. 3 NOTE. By the law of the sea the master may, in case of necessity, and under certain restrictions, raise money on the security of the ship, freight, and cargo. 4 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. 5 As to describing the subject-matter insuredmthe policy, see 26, post. As to the general law of bottomry, see Carver's Carriage by Sea, Ed. 3, 310-319. 11. The master or any member of the crew of a ship has an insurable interest in respect of his wages. NOTE. The law as to the insurability of seamen's wages was doubtful. The master of a ship could always insure his wages, but formerly at any rate a seaman under the rank of master could not (Arnotild, 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." 6 But when this was laid down 1 See McArthur, Ed. 2, pp. 59, 62, 214 ; and 7. 2 StainbanJt v. Fenning (1851), 11 C. B. 51 ; Carver's Carriage by Sea, Ed. 3, 312 ; but see The Haabet (1899), P. 295, per Buckuill, J. ; and Price v. Maritime Inf. Co. (1901), 2 K. B. 412, C. A. 3 Broomfield v. Southern Ins. Co. (1870), L. R. 5 Ex. 192. Modern forms provide for constructive total loss. 4 Abbott on Shipping, Ed. 12, pp. 110, 121. 5 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. 6 Lucena v. Crau/ord (1806), 2 B. & P. at p. 294, H. L. IN SUR ABLE INTEREST. 19 the doctrine prevailed that "freight was the mother of wages," and if SECT. 11. 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 Viet. 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 Viet. c. 60). On the principle cessante ratione cessat ipsa lex, it may be that seamen's wages were insurable in England, but the point is now cleared up by an amendment made in the Commons Committee. The German Commercial Code of 1897, on grounds of public policy, forbids either masters or seamen to insure their wages. 12. In the case of advance freight, the person Advance advancing the freight has an insurable interest, in so ieig far as such freight is not repayable in case of loss. 1 Illustration. Policy by shipowner on freight. Under the charter party, half the freight is to be prepaid and half is to be paid on right delivery of the cargo. The ship is lost, but half the cargo is saved and delivered. No further freight is payable in respect of the half so delivered, inasmuch as it is covered by the prepayment of half the freight. This is a total loss of half the shipowner's freight, the prepaid freight being at the charterer's and not at the shipowner's risk. 2 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. 3 But by special contract it may be repayable, 4 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 1 Arnould, Ed. 6, p. 62 ; McArthur, Ed. 2, p. 65 ; cf. Smith v. Pyman (1891), 1 Q. B. at pp. 744, 745, C. A. 2 Allison v. Bristol Mar. Ins. Co. (1876), 1 App. Cas. 209, see at pp. 235, 238. 3 Allison v. Bristol Ins. Co. (1876), 1 App. Cas. 208, 238, H. L., reviewing the cases. 4 Ibid., at p. 221, citing Hall v. Janson (1855), 4 E. & B. 500. 20 TEE MARINE INSURANCE ACT, 1906. SECT. 12. occasioned by his negligence or fault, and in estimating the damages the amount advanced for freight must be taken into account. 1 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 ; (b) 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. 2 As to the tests for determining within which category a given advance falls, see Carver's Carriage by Sea, Ed. 3, 562, 566. By the law of most foreign countries, prepaid freight is repayable in case of loss. 3 Charges of 13. The assured has an insurable interest in the charges of any insurance which he may effect. 4 NOTE. Ordinarily the charges of insurance consist of the premium, the brokerage, and the stamp. Cf. 16 as to insurable value. Quantum 14. (1.) Where the subject-matter insured is mortgaged, the mortgagor has an insurable interest in the full value thereof, and the mortgagee has an insur- able interest in respect of any sum due or to become due under the mortgage. 5 (2.) A mortgagee, consignee, or other person having an interest in the subject-matter insured may insure on behalf and for the benefit of other persons interested as well as for his own benefit. 6 (3.) The owner of insurable property has an insurable 1 Dufourcet v. Bishop (1886), 18 Q. B. D. 373. 2 The Salacia (1862), Lush. 578, at p. 582. * Byrne v. Schiller (1871), L. E. 6 Ex. at p. 325, Ex. Ch. 4 McArthur, Ed. 2, p. 68 ; Phillips on Insurance, 1221 ; Usher v. Noble (1810), 12 East, 639. As to the premium in case of re-insurance, see Arnould, Ed. 6, p. 104. 5 Arnould, Ed. 6, pp. 84, 118 ; Irving v. Richardson (1831), 2 B. & Ad. 193 ; North British Ins. Co. v. London, etc., Ins. Co. (1877), 5 Ch. D. at pp. 583, 584, C. A. Ebstcorth v. Alliance Ins. Co. (1873), L. R. 8 C. P. 596, at pp. 608 and 641 ; Castellain v. Preston (1883), 11 Q. B. D. at p. 398, C. A. This subsection was inserted in the Commons Committee. 1NSUBABLE INTEREST. 21 interest in respect of the full value thereof, notvvith- SECT - standing that some third person may have agreed, or be liable, to indemnify him in case of loss. 1 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. (2), which was inserted in committee in the Commons, affirms the judgment of Bovill, C.J., and Denman, J., in Ebsworth v. Alliance Mar. Ins. Co., L. K. 8 C. P. 596. The correctness of the rule in the text is assumed by Bowen, L.J., 2 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. 3 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 provision, of course, is confined to interests bond fide intended to be covered ; and see further the note to sect. 23, post. Subsect. (3) generalizes 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. 5 Theoretically, at any rate, the rules as to double insurance, and the 1 Hobbs v. Hannam (1811), 3 Camp. 93. 2 CasteUain v. Preston (1883), 11 Q. B. D. at p. 398, C. A. 3 As to the complications which might arise in the case of double insurance, see McArthur, Ed. 2, p. 63, n. ; but see a solution suggested by Mellish, L.J., in North British Ins. Co. v. London Ins. Co. (1877), 5 Ch. D. at p. 583. 4 Perhaps some light is thrown on this ancient formula by the state- ment that a trustee may insure in his own name, " as the law does not regard the use or trust of a chattel " (Lucena v. Crauford (1806), 2 B. & P. at p. 290 ; 6 R. R. 676 in H. L.). See, too, lonide* v. Pacific Ins. Co. (1871), L. R. 6 Q. B. at p. 678 ; cf. Ocean I. S. Ins. Assn. v. Leslie <1889), 22 Q. B. D. 724, as to the scope of the term " assured." 5 Cf. Dufourcet v. Bislwp (1886), 18 Q. B. D. 373, and Yates v. White <1838), 4 Bing. N. C. 272. As to the insurer's right of subrogation consequent on payment, see 79, post. 22 TEE MARINE INSURANCE ACT, 1906. SECT. 14. r jght O f subrogation, work out the equities resulting from two persons being allowed to insure the same subject-matter for its full value. See 32, 79, and 81. Assign- 15. Where the assured assigns or otherwise parts interest, with his interest in the subject-matter insured, he does not thereby transfer to the assignee his rights under the contract of insurance, unless there be an express or implied agreement with the assignee to that effect. 1 But the provisions of this section do not affect a transmission of interest by operation of law. NOTE. As to the converse case of an assignee insuring for his assignor, see 14. In Rayner v. Preston, cited below, Lord Esher says : " Where the subject-matter of the insurance is sold during the running of the policy, no interest under 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 given effect to either by an assignment of the policy, or by the assignor holding the policy as trustee for the assignee. The ordinary cases of transmission of interest by act of law are death and bankruptcy, but the subrogation of the insurer to the rights of the assured on payment of the claim may perhaps be regarded as coming under this category. As to assignment of policy, see 50, post, and as to assignment of interest, see 51, post. Insurable Value. Measure of 16. Subject to any express provision or valuation value? ' in the policy, the insurable value of the subject-matters insured must be ascertained as follows : (1.) In insurance 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 1 Arnould, Ed. 6, p. 115 ; Lowndes, Ed. 2, p. 8 ; Powles \. Innes (1841), 11 M. & W. 10 (sale of shares in a ship) ; North of England Oil Cake Co. v. Archangel Mar. Ins. Co. (1875), L. K. 10 Q. B. 249 (sale of cargo) ; Ifayner v. Preston (1881), 18 Ch. D. at p. 12, C. A. IN SUB ABLE VALUE. 23 seamen's wages, and other disbursements (if SE CT any) incurred to make the ship fit for the voyage or adventure contemplated by the policy, plus the charges of insurance upon the whole ; x The insurable value, in the case of a steam- ship, includes also the machinery, boilers, and 'coals and engine stores, if owned by the assured, and in the case of a ship engaged in a special trade, the ordinary fittings requisite for that trade : 2 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 (3.) In insurance on goods or merchandise, the in- ^ surable value is the prime cost of the property insured, plus the expenses of and incidental to shipping and the charges of insurance upon the whole : 4 (4.) In insurance on any other subject-matter, the insurable value is the amount at the risk of the assured when the policy attaches, plus the charges of insurance. 5 1 McArthur, Ed. 2, p. 67; Lowndes, Ed. 2, p. 56; Brough v. Whitmore (1791), 4 T. K. 206 (stores and provisions for crew); Moran Galloway & L'o. v. UzieUi (1905), 2 K. B. at p. 558 (disbursements). 2 See McArthur, Ed. 2, p. 67, and as to fittings, see Hogarth v. Walker (1900), 2 Q. B. 283, C. A. 3 McArthur, Ed. 2, p. 68 ; Palmer v. Blackburn (1822), 1 Bing. 61 ; United States Shipping Co. v. Empress Assurance Corpn. (1906), Times, December 6 (gross not net freight) ; Report of Commission on Unseaworthy Ships, 1874, vol. 2, p. xvi. 4 McArthur, Ed. 2, p. 68 ; Utlier v. Noble (1810), 12 East, 639, as to charges of insurance, see at p. 6iJ. 5 McArthur, Ed. 2, p. 69. 24 THE MARINE INSURANCE ACT, 1906. SECT. 16. Illustrations. 1. Policy on ship in usual form. This does not cover fishing-tackle for the Greenland trade. Such tackle must be insured specially, as it is no part of the outfit of the ship. 1 2. Time policy on ship in usual form, the ship being generally engaged in the grain trade. This policy covers separation cloths and dunnage mats as part of the ship's outfit, even though at the time of loss the cloths and mats were not in use. 2 NOTE. A clear delimitation of insurable value is necessary, (a) 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 be 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 not undertaken the adventure. According to others, he ought to be put in the same position as if the adventure had been carried to a successful issue. 3 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 antici- pated 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 ." The words, "if owned by the assured," are inserted in the second paragraph of subsect. (1) because it may happen that coals and engine stores are the property of the charterer and not of the shipowner. 1 Hotlcins v. Pickersgill (1783), 3 Dougl. 222 ; cf. Hill v. Patten (1807), 8 East, 373. 1 Hogarth v. Walker (1900), 2 Q. B. 282, C. A. 3 McArthur, Ed. 2, p. 67, citing Benecke, Principles of Indemnity. DISCLOSURE AND REPRESENTATIONS. 25 It appears that a policy on " hull and machinery " covers less than SECT. 16. a policy on " ship," e.g. it may not cover coals and stores. 1 As to measure of indemnity, see further, 67-78. Disclosure and Representations. 17. A contract of marine insurance is a contract insurance based upon the utmost good faith, and, if the utmost ma fidei. good faith be not observed by either party, the contract may be avoided by the other party. 2 NOTE. The general principle is stated in this section because the special sections which follow are not exhaustive. Insurance is a contract uberrimce 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," 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." 3 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.* It follows from the nature of the contract that even in litigation Ships' both parties must play with the cards on the table ; hence the full papers. discovery allowed as to ships' papers and other material documents. 5 1 Roddick \. Indemnity Mutual Mar. Ins. Co. (1895), 2 Q. B. at p. 386, C. A. 2 Arnould, Ed. 6, pp. 5, 513, 548; Pothier, Traite d' Assurance, 280 to 290 ; cf. Seaton v. Heath (1899), 1 Q. B. at p. 792, C. A. 3 Carter v. Boehm (1765), 3 Burr. 1905. 4 Morrison v. Universal Ins. Co. (1873), L. K. 8 Ex. 187, Ex. Ch. 5 Boulton v. Holder Brothers (1904), 1 K. B. 784, C. A. (ships' papers action by underwriters for misrepresentation) ; Harding v. Bussell (1905), 2 K. B. 83, C. A. (ship's papers mixed sea and land risk). ^tf ^ 26 TEE MARINE INSURANCE ACT, 1906. SECT. is. 18. (1.) Subject to the provisions of this section, Disclosure the assured must disclose_to the insurer, before the by assumi. con ^ rac ^. j g concluded, every material circumstance which *-'~ i * JtJ - 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. 1 yj / (2.) Every circumstance is material whichjvouldjn- fluence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk. 2 (3.) In the absence of inquiry the following circum- ^j^-wxy^-^ stances need not be disclosed, namely : ^ V^^ JLc*. (a.) Any circumstance which diminishes the risk : 3 _^J /U/ (b.) Any circumstance which is known or presumed J...JF to be known to the insurer. The insurer is $1 * -7 J C J ~ *" ^ >^jtt~^ presumed to know matters of common notoriety r knowledge, and matters which an insurer in ij the ordinary course of his business, as such, ought to know : 4 (c.) Any circumstance as to which information is _ waived by the insurer : 5 > Arnould, Ed. 6, p. 548; Partons on Insurance, TO!, i. p. 467; v. Fender (1874), L. R. 9 Q. B. at p. 537, per Blackburn, J. As to facts which assured ought to know, see Proudfoot v. Montefiore (1867), L. R. 2 Q. B. 511, 519; Xlacltburn v. Vigors (1887), 12 App. Cas. at pp. Ji~t 6 ^ 537, 541. As to Lloyd's agents abroad, see Wilton v. Salamandra Ais. Co., Co Times, Feb. 10, 1903. '3 * Ritaz v " Geruisi ( 188 ) c Q- B - D - at P- 229 . P er Lord Esher ; Tate v. Hyslop (1885), 15 Q. B. D. at p. 379, per Lord Bowen. .3 Arnould, Ed. 6, pp. 579, 591 ; Carter v. Boelim (1766), 3 Burr, at ' C . 11] P' 1910, per Lord Mansfield. 4 Arnould, Ed. 6, p. 579 ; Carter v. Boelim (1766), 3 Burr, at p. 1910 ; Hurrower v. Hutchinson (1870), L. R. 5 Q. B. at p. 590. Arnould, Ed. 6, p. 587 ; Phillips on Insurance, 568 ; Carter v. Boehm (1766), 3 Burr, at pp. 1910, 1911; cf. Laing v. Union Ins. Co. (1895), 11 Times L. R. 359. DISCLOSURE AND REPRESENTATIONS. 27 (d.) Any circumstance which it is superfluous to SECT. is. disclose by reason of any express or implied warranty : x (4.) Whether any particular circumstance, which is not disclosed, be material or not is, in each case, a question of fact. 2 (5.) The term " circumstance " includes any com- munication made to, or information received by, the assured. 3 Illustrations. 1. Insurance on ship. Lloyd's List contains an entry that a ship of a similar name had stranded. The broker, after inquiry, 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. 4 2. Policy on goods which are grossly over- valued. The assured does not disclose the over-valuation. The insurer may avoid the contract. 5 ^->- 6^ /L-^-y - ^ && ^f /: ?<* '- 19> section as to circumstances which need not be disclosed, Disclosure where an insurance is effected for the assured by an effecting 9 agent, the agent must disclose to the insurer (a.) Every material circumstance which is known to i^^ 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 : l and (Z>.) Every material circumstance which the assured is bound to disclose, unless it come to his knowledge too late to communicate it to the agent. 2 Illustrations. 1. Time policy on ship. The broker 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. 3 2. A., who has insured an overdue ship, instructs his Glasgow brokers to re-insure it. The Glasgow brokers effect an insurance with B. through their London agents, having received some material information about the ship which they do not disclose. Afterwards A. effects another policy with B. through R., his London agent, who knows nothing of the news about the ship, so that both parties act honestly. A. can recover on the latter policy from B. 4 3. Plaintiff, in Glasgow, employs a broker there to re-insure an overdue ship. The Glasgow broker employs a broker in London to effect the re-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. 5 1 Blackburn v. Vigors (1887), 12 App. Cas. at p. 541 ; Blackburn v. Haslam (1888), 21 Q. B. D. 144. - Blackburn v. Vigors (1887), 12 App. Cas. at p. 537. 3 Russell v. Thornton (1859), 4 H. & N. 788 ; affirmed 6 H. & N. 140, Ex. Oh. 4 Blackburn v. Vifjors (1887), 12 App. Cas. 531. 5 Blackburn v. Haslam (1888), 21 Q. B. D. 144. 30 TEE MAE1NE INSURANCE ACT, 1906. SECT. 19. NOTE. The knowledge of an agent to insure, who does not effect the particular insurance, is immaterial, 1 but if an agent to insure employs a sub-agent, all material facts known to the agent must be communicated to the sub-agent. 2 If before the contract is made the assured hears of a loss, but has not time to communicate with his agent, the contract would stand. The assured must use " due diligence " to communicate with his agent. 3 Represen- 20. (1 .) Every material representation made by tations . . , , pending the assured or his agent to the insurer during the of contract" negotiations for the contract, and before the contract is concluded, must bejtrue. If it be untrue the insurer may avoid the contract. 4 (2.) A representation is material which would in- fluence the judgment j)f_a pruo!ent insurer in fixing the premTum, or determining whether he will take the risk. 5 (3.) A representation may be either a representation as to a matter of fact, or as to a matter of expectation or belief. 6 (4.) A representation as to a matter of fact is true, if it be substantially correct, 7 that is to say, if the difference between what is represented and what is actually correct would not be considered material by a prudent insurer. 8 (5.) A representation as to a matter of expectation or belief is_true if it be made in goodjaith. 9 1 Blackburn v. Vigors (1887), 12 App. Gas. 530. 2 Blackburn v. Haslam (1888), 21 Q. B. D. 144. 3 Cory v. Patton (1872), L. R. 7 Q. B. at p. 308. 4 Arnould, Ed. 6, pp. 519, 520; Anderson v. Pacific Mar. Ins. Co. (1872), L. R. 7 C. P. at p. 68, per Willes, J. ; lonides v. Pacific Ins. Co. (1871), L. R. 6 Q. B. at p. 683, per Blackburn, J. 4 Arnould, Ed. 6, p. 518 ; Rivaz v. Gerussi (1880), 6 Q. B. D. at p. 229. 8 Arnould, Ed. 6, p. 514. 7 Ibid., pp. 518, 521 ; Pawson v. Watson (1778), 2 Cowp. 785. As to a warranty, see 33 (2). 8 Macdowell v. Frazer (1779), 1 Doug. 260, 261. 9 Arnould, Ed. 6, p. 524. DISCLOSURE AND REPRESENTATIONS. 31 (6.) A representation may be withdrawn or corrected SECT - 20 - before the contract is concluded. 1 (7.) Whether a particular representation be material or not is, in each case, a question of fact. 2 Illustrations. 1. Insurance on ship. The assured falsely informs the insurer that he has partially insured the ship elsewhere on certain specified terms. The insurer, relying on this, gives a policy on similar terms. The insurer may avoid the contract. 3 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. 4 3. Policy on goods to be 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. 5 NOTE. Sibbald v. Hillf where the contract was avoided, though the representation had no direct bearing on the particular risk, was a case of fraud, but according to Rivaz v. Gerussi? it seems that the rule would apply whether there was fraud or not. Lord Esher, in a later case, MVS : " 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. His other obligation is this, that if he is asked a question whether 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." 8 Arnould, Ed. 6, pp. 514, 530, specifies a further class of repre- sentation, viz. a communication of information which the assured has 1 Arnould. Ed. 6, pp. 538, 544. 2 Rivaz v. Gerussi (1880), G Q. B. I>. at p. 229, C. A. 3 Sibbald v.'ffill (1814), 2 Dow. H. L. 263. 4 Anderson v. Thornton (1853), 8 Exch. 425. 5 lonides v. Fender (1871), L. K. 6 Q. B. 674, 683. 6 Sibbald v. Hill (1814), 2 Dow. H. L. 263. " Eivaz v. Gemssi (1880), 6 Q. B. D. 222, 229. 8 The Bedouin (1894), P. at p. 12, C. A. 32 TEE MARINE INSURANCE ACT, 1906. SECT. 20. 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). The cases seem generally to assume that it is sufficient if a repre- sentation as to expectation or belief is made in good faith, but there was an obiter dictum by Blackburn, J., that the assured must have reasonable ground for his belief. 1 This section deals with representations 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. 2 The policy is the final expression of the contract, and extrinsic evidence is inadmissible to contradict its terms. A repre- sentation differs from a warranty in this a warranty must be literally complied with, while it is sufficient if a representation is substantially correct. See 33-41 as to warranties. 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. The assured, or his agent, is not bound to give his opinion to the insurer on any matter relating to the adventure. 3 The assured is bound to disclose facts within his knowledge and not the opinions which he forms on those facts. For example, the assured may think that war between two States is imminent ; but unless he has special information, he may leave the insurer to form his own judgment on the matter. If the assured chooses to give his opinion, he must, of course, give it honestly. 4 When con- 21. A contract of marine insurance is deemed to be deemed to concluded when the proposal of the assured is accepted eluded ^7 the 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 note or other customary memorandum of the contract, although it be unstamped. 5 1 lonides v. Pacific Ins. Co. (1871), L. R. 6 Q. B. at pp. 683, 684. 2 Behn v. Burness (1863), 32 L. J. Ex. 204, 205, Ex. Ch. and 33. 3 Andfrton v. Pacific In*. Co. (1872), L. K. 7 C. P. 65, 69. 4 Cf. The Bedouin (1894), P. at p. 12, per Lord Esher. 4 Arnould, Ed. 6, p. 259; lonides v. Pacific Mar. Ins. Co. (1871), L. B. 6 Q. B. at p. 684. See further, 89, as to slip as evidence. TEE POLICY. 33 NOTE. " In effecting marine insurance," says the Court of SECT. 21. Exchequer Chamber, " the matter is considered 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." 1 In Cory v. Patton, 2 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, post, and see further, notes to 22, 23, 89. The Policy. 22. Subject to the provisions of any statute, a Contract contract of marine insurance is inadmissible in evidence Bodied unless it is embodied in a marine policy in accordance in P lic y' with this Act. The policy may be executed and issued either at the time when the contract is concluded or afterwards. 3 Illustration. Policy or ship in mutual association. The ship is accepted as in- surable in February, and after this a loss occurs. The policy may be issued in October, taking effect from February, although when the policy is executed it is known to both parties that the loss has occurred. 4 NOTE. No action can be maintained in the United Kingdom upon the implied promise to grant a policy when the slip is initialled. 5 It is otherwise where revenue laws do not interpose. 6 1 Morrison v. Universal Mar. Ins. Co. (1873), L. B. 8 Ex. at p. 199. - Cory v. Patton (1874), L. R. 9 Q. B. 577, Ex. Ch. 3 See McArthur, Ed. 2, pp. 21, 29 and notes to next section. As to issuing a policy after notice of loss, see Mead v. Davison (1835), 3 A. & E. 303. 4 Mead v. Darison (1835), 3 A. & E. 303, 42 E. E. 401. 5 FisJier v. Liverpool Mar. Ins. Co. (1874), L. E. 9 Q. B. 418 Ex. Ch. 6 Bliugwandass v. Netherlands Sea Ins. Co. (1888), 14 App. Cas. 83 P. C. (Eangoon foreign policy). D 34 THE MABINE INSURANCE ACT, 1906. SECT. 22. When a stamped policy has been duly issued, then reference may be 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 21, 23, 89. What policy must specify. 23. A marine policy must specify (1.) The name of the assured, or of some person who effects the insurance on his behalf : l (2.) The subject-matter insured and the risk insured against : 2 (3.) The voyage, or period of time, or both, as the case may be, covered by the insurance : (4.) The sum or sums insured : (5.) The name or names of the insurers. NOTE. Subsect. (1). The Marine Insurance Act, 1788 (28 Geo. 3, c. 56), was construed as merely prohibiting insurances in blank or to bearer, and is, therefore, sufficiently reproduced by this subsection. Where different interests are concerned it is common practice, as Blackburn, J., points out, for the broker to enter into the policy in his own name " but on behalf of and to protect the interests of different constituents." A policy is often effected by J. S. " and [or] as agent." 3 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 otheF person to whom the same doth, may, or shall appertain." But this provision is confined to interests intended to be covered. For example, A. & Co. charter a ship from the owners. The owners 1 broker effects a policy on the ship in the ordinary form, with a collision clause. The charterers after long litigation have to pay damages to another ship for collision. There being no evidence 1 See Arnould, Ed. 6, pp. 107-109; McArlhur, Ed. 2, p. 29; and the common form of Lloyd's policy. As to ratification by assured, see 86. 2 Of. Edicards v. Aberayron Mutual Ins. Society (1875), 1 Q. B. D. 563, Ex. Ch. (mutual insurance), at p. 573 ; and see 26. * lonidet v. Pacific Ins. Co. (1871), L. R. 6 Q. B. at p. 678 ; cf. Ocean I. S. Ins. Assn. v. Leslie (1889), 22 Q. B. D. 724 as to scope of the term " assured." THE POLICY. 35 of any intention by the owners to insure on A. & Co.'s behalf, they SECT. 23. cannot recover on this policy in reliance on the general words. 1 Subsects. (2) to (5). By 93 of the Stamp Act, 1891 (54 & 55 Viet. c. 39), set out post, p. 156, a policy is invalid unless it specifies " the particular risk or adventure, the names of the subscribers or underwriters, and the sum or sums insured." Where under an open cover the insurer undertook to re-insure the plaintiffs to the extent of the excess over certain amounts upon risks which plaintiff had undertaken, or might undertake, on goods by certain ships, with a limit of 4000, it was held that the cover could not be stamped as a policy, inasmuch as it did not specify the sum or sums insured. 2 Although the requirement that a contract of marine insurance must be embodied in a policy was before this Act contained in a Kevenue Act, it is more than a fiscal rule. The rule is clearly stated in the Guidon de la Mer in 1600, and may be regarded as a general rule of public policy. The Continental codes contain minute regulations as to the particulars to be inserted in marine policies. 3 An error in describing the name of the ship is not usually material. 4 The error then comes under the maxim falsa demonstratio non nocet. 24. (1.) A marine policy must be signed by or on Signature behalf of the insurer, provided that in the case of a corporation the corporate seal may be sufficient, but nothing in this section shall be construed as requiring the subscription of a corporation to be under seal. 5 (2.) Where a policy is subscribed by or on behalf of two or more insurers, each subscription, unless the 1 Boston Fruit Co. v. British and Foreign Mar. Ins. Co. (1905), 1 K. B. 637, C. A., affirmed A. C. (1906), 336 H. L. - Home Mar. Ins. Co. v. Smith (1898), 2 Q. B. 351, C. A. 3 See, for example, French Commercial Code, Art. 332 ; Netherlands Commercial Code, Art. 592. Art. 605 of the Italian Commercial Code provides that, where possible, the name of the master, and the nationality and tonnage of the ship must be inserted in the policy. It has also been suggested that a policy should specify the place where it is made (Me Arthur, Ed. 2, p. 29, n.). 4 lonides v. Pacific Ins. Co. (1871), L. K.6 Q. B. 674, affirmed L. K. 7 Q. B. 517. 5 Arnould, Ed. 6, p. 271, and compare 91 of the Bills of Exchange Act, 1882 (45 & 46 Viet. c. 61). 36 THE MARINE INSURANCE ACT, 1906. SECT. 24. contrary be expressed, constitutes a distinct contract with the assured. 1 Issue of policy. Voyage and time policies. [1 Edw. 7, c.7.] 2. In a recent case, 2 underwriters formed a syndicate, and an ordinary Lloyd's policy was subscribed " The S. Syndicate, C. Manager ; " afterwards followed the names of the members and the amounts of their subscriptions. Held, that the contract of the members was several, and not joint. A marine policy, like every other instrument, is incomplete and revocable until delivery to, or for the benefit of, the person entitled to hold it. In the case of Lloyd's underwriters the assured's broker gets the signatures, so that no difficulty arises. In the case of a company's policy delivery is presumed on very slight evidence. 3 25. (1.) Where the contract is to insure the subject-matter at and from, or from one place to another or others, the policy is called a " voyage policy," and where the contract is to insure the subject-matter for a definite period of time the policy is called a " time policy." A contract for both voyage and time may be included in the same policy. 4 (2.) Subject to the provisions of 11 of the Finance Act, 1901, a time policy which is made for any time exceeding twelve months is invalid. 5 NOTE. A ship may be insured " from London to Hong Kong for six months," or " from London to New York, and thirty days after arrival." Subsect. (2) reproduces 93 of the Stamp Act, 1891 (54 & 55 1 Arnould, Ed. 6, pp. 150, 250; Lloyd's Act, 1871 (34 & 35 Viet. c. xxi.), Eule 4 in schedule ; and see per Walton, J., in Anglo-Calif ornian Bank v. London & Prov. Mar. Ins. Co. (1904), 10 Com. Cas. at p. 8. 2 Tyser v. Shipowners' Syndicate (1896), 1 Q. B. 135. * Xenos v. Wickham (1867), L. R. 2 H. L. 296 (policy executed by two directors, and ordered to lie in the office till assured called for it) ; see to like effect, Roberts v. Security Co., Ltd. (1897), 1 Q. B. Ill, C. A. (accident policy). 4 Arnould, Ed. 6, pp. 230, 373 ; and Gambles \. Ocean Ins. Co. (1876), 1 Ex. D. 141, C. A. * See 54 & 55 Viet. c. 39, 93, 94, 96; and as to calculation of dates, see South Staffordshire Tramways v. Sickness Ass. Assn. (1891), 1 Q. B. 402. THE POLICY. 37 Viet. c. 39), post, p. 156. The rule prohibiting time policies for a SECT. 25. longer period than twelve months dates from the Stamp Act of 1795. 1 The prohibition was held to apply to a continuation clause, as well as to the original policy, 2 but the rigour of this rule has been mitigated by 11 of the Finance Act, 1901, post, p. 159. For stamp purposes policies on ships in course of building, &c., are deemed to be voyage and not time policies, see 8 of the Revenue Act, 1903 (3 Edw. 7, c. 46), post, p. 160. A voyage policy which covers a ship for thirty days after arrival may be stamped as a voyage policy only, but if any longer period be covered it must be stamped both as a voyage and time policy. See 94 of the Stamp Act, 1891, post, p. 156. Time policies sometimes give rise to difficult questions where the cause of loss comes into operation before the policy expires, but the actual loss occurs after it expires. 3 As to calculating time, when ship's time differs from English time, see note to 91. 26. (1.) The subject-matter insured must be desig- Designation , . . . , , . . of subject- nated in a marine policy with reasonable certainty. 4 matter. (2.) The nature and extent of the interest of the assured in the subject-matter insured need not be specified in the policy. 5 (3.) Where the policy designates the subject-matter insured in general terms, it shall be construed to apply ** T * ^ *"-* * to the interest intended by the assured to be covered. 6 (4.) In the application of this section regard shall be had to any usage regulating the designation of the subject-matter insured. 7 1 Stewart v. Merchants 1 Mar. Ins. Co. (1885), 16 Q. B. D. at p. 622. . , / - Charletworth v. Faber (1900), 5 Com. Cas. 408 ; Royal Exchange v. Vega (1901), 2 K. B. 567, affirmed 2 K. B. (1902), 384, C. A. 3 See the cases reviewed in Lidgett v. Secretan (1870), L. E. 5 C. P. 190 ; and see Rule 5 of First Sched., post, p. 144. 4 Arnould, Ed. 6, c. 49 ; Me Arthur, Ed. 2, p. 61 ; Mackenzie ,v. Whit- worth (1875), 1 Ex. D. 36, at p. 40, C. A. '- Mackenzie v. Whittoorth (1875), 1 Ex. D. at p. 41. 6 Allison v. Bristol Mar. Ins. Co. (1876), 1 App. Cas. at pp. 216, 235 ; but cf. McSwinney \. Royal Exchange (1850), 14 Q. B. 634, where " profits on rice " was under the circumstances held an insufficient description. 7 Mackenzie \. Whitworth (1875), 1 Ex. D. at p. 40. 38 TEE MARINE INSURANCE ACT, 1906. SECT. 26. NOTE. In Mackenzie v. Whitworth, 1 in 1875, a policy of re- insurance was effected simply as a policy " on cotton." It was held to be sufficient, and that it was unnecessary to specify that it was a re-insurance. The decision at the time was supposed to be opposed to the ordinary understanding and practice, and the Lords Select Committee in 1896 proposed to alter the rule there laid down. But having regard to the length of time during which this decision has been unquestioned law, it was thought better not to disturb it. If an insurer does not know whether a proposed insurance is original or by way of re-insurance, he can always ask the question. The quantum of the assured's interest need not be specified in the policy. Thus it is not necessary to specify whether the assured insures for himself or as trustee for another, as full owner, or as mortgagor or mortgagee. The subject-matter is usually very briefly described as being " on ship," " on goods," " on freight," " on advances on coolies," "on emigrant money," and so on; but the description must not be misleading, thus a policy on " piece goods " will not cover a loss on hats ; l so, too, a policy " on freight " will not cover passage money. 2 Prospective profits may be insured apart from the goods out of which they are expected to arise, but in that case they must be specifically described as profits. " The subject-matter of this insurance is on rice," says Blackburn. J., " and though that is to be construed liberally as covering any interest in the rice, it cannot be construed as covering an interest in profits that might arise collate- rally from a contract relating to the rice." 3 "In some cases," says Blackburn, J., "the nature of the interest in the thing insured is such as to vary the nature of the risk, and then it should be stated ... in all cases when the peculiar nature of the interest alters the risk, it may probably be said that such interest is the subject-matter of the insurance," and he then goes on to instance a case of profits dependent on various contingencies. 4 But it is difficult to see how the nature of the interest of the assured in the subject-matter can vary the risk. The true question seems to be 1 Mackenzie \. Whitworth (1875), 1 Ex. D. at p. 40. 2 Denoon v. Ecme and Colonial Ass. Co. (1872), L. E. 7 C. P. 351. As to what is covered by the wide term " disbursements," see Buchanan \. Faber (1899), Times L. E. 684; 4 Com. Cas. 223; Laicther v. Black (1901), 6 Com. Cas. 5 ; affirmed by C. A., ibid., p. 197 ; and as to what is, or is not, covered by " goods," see ckeJ. I., Eule 17, post. 3 Anderson v. Morice (1875), L. E. 10 C. P. at p. 621, Ex. Ch. 4 Mackenzie v. Whitworth (1875), 1 Ex. D. at p. 41 ; cf. Wilson v. Jones (1867), L. E. 2 Ex. at p. 151 (submarine cable). THE POLICY. 39 whether, having regard to usage, the subject-matter is sufficiently SECT. 26. described. Loans on bottomry and respondentia, must, it seems, be insured as such. 1 27. (1.) A policy may be either valued or un- Valued; valued. 2 policy ' (2.) A valued policy is a policy which specifies the /agreed value of the subject-matter insured. 3 (3?) Subject to the provisions of this Act, and in the absence of fraud, the value fixed by the policy is, asljetween the insurer and assured, conclusive of the insurable value of the subject intended to be insured, whether the loss be total or partial. 4 (4.) Unless the policy otherwise provides, the value fixed by the policy is not conclusive for the purpose of determining whether there has been a constructive, total loss. 5 Illustrations. 1. A ship is insured with one company for 1700, and with another company for 2000. In both policies she is valued at 3000. The assured, in case of total loss, is not entitled to recover more than 3000 in all. 6 2. Ship and freight valued at 3000, with running-down clause under which insurers were to pay such proportion of three-fourths of 1 Mackenzie v. IVhittcorth (1875), 1 Ex. D. at p. 43, citing Glover v. Slack (1765), 3 Burr. 1394. * Arnould, Ed. 6, pp. 301-309 ; Mo Arthur, Ed. 2, p. 71 ; Irving v. Manning (1847), 1 H. of L. Gas. at pp. 305, 307. 3 Ibid. ; and as to distinctly specifying the valuation, see Wilson v. Nelson (1864), 33 L. J. Q. B. 220. As to reforming a defective valuation, see Rankin v. Potter (1873), L. K. 6 H. L. at p. 114. * Arnould, Ed. 6, p. 301 ; Barker v. Janton (1868), L. K. 3 C. P. 303 ; The Main (1894), P. at p. 325. As to concealment of over-valuation, see 18 and notes. 5 Arnould, Ed. 2, p. 309 ; Irving v. Manning (1847), 1 H. of L. Cas. at p. 305 ; but it is now common to provide that the insured value is to be taken us the repaired value, see, e.g., Angel v. Merchants' Mar. Ins. flSjrnOTsliTCTsr-- . 6 Irving v. Pichardson (1831), 2 B. & Ad. 193. 40 TEE MARINE INSURANCE ACT, 1906. SECT. 27. any damages paid by the assured as the sum insured bore to the value of the ship insured and freight. The assured had to pay 2110 damages for running down another ship. His ship was sold under a decree of the Admiralty Court to satisfy these damages. Held, that an underwriter for 100 must pay 52 15s. 1 3. Ship valued at 9000 is insured for 2000. By another policy the same ship is valued at 8000, and insured for 8000. The insurer on the second policy pays for total loss. The insurer on the first policy is liable to pay 1000. 2 4. A ship at sea is insured by time policy for 6000, and valued at 8000. At the time the policy is effected, the ship has been sea- damaged to the extent of 5000, but the assured is not aware of the fact. Afterwards, during the currency of the policy, she is totally lost. The assured can recover the full 6000. 3 5. A ship valued at 6000 is insured for 6000. Her real value is 9000. She is run down by another ship and lost. 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. 4 6. Ship insured by same insurer in two successive valued policies. The first policy covers her to Calcutta and for thirty days after arrival. The second policy covers her at and from Calcutta to London. On the voyage out she is damaged by storms. While she is being repaired at Calcutta, and after the thirty days have expired, she is destroyed by fire. The insurer must pay on the first policy for the partial loss, and on the second policy for the total loss, without deduct- ing what was paid on the first policy. 5 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. 6 1 Thompson v. Reynolds (1857), 26 L. J. Q. B. 93; cf. Xenos v. Fox (1868), L. R. 3 C. P. at p. 636 to like effect. 3 Bruce v. Jones (1863), 32 L. J. Ex. 132 ; discussed McArthur, Ed. 2, p. 73. s Barker v. Janson (1868), L. R. 3 C. P. 303; cf. The Main (1894), P. 320 (freight). 4 North of England Ins. Assn. v. Armstrong (1870), L. R. 5 Q. B. 244; but Lord Blackburn has thrown doubts on this case in Bur nurd v. Rodocanachi (1882), 7 App. Cas. at p. 342, and see at p. 335. But see 81 as to under insurance. 4 Lidgett v. Seeretan (1871), L. R. 6 C. P. 616. 6 Denoon v. Home and Colonial Ass. Co. (1872), L. R. 7 C. P. 341. TEE POLICY. 41 8. Policy on freight valued at 5500. The ship is detained by an SECT. 27. accident, and, during this delay, there is a great fall in freights. When a full cargo is loaded, the freight conies 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. l 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. 2 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. 3 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. 4 12. Policy for 3000 on ship valued at 17,500. The ship is much injured by storms, and it is shown that it would cost 10,500 to repair, and that her market value when repaired would be 9000. The assured, notwithstanding the valuation, is entitled to abandon the ship and claim for a total loss. 5 NOTE. An unvalued policy is commonly spoken of by lawyers yas an " open policy," but as that term is applied in mercantile language ( to a iloating 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 1 The Main (1894), P. 320. The assured must, of course, also deduct any sum which he has received on any other policy. - Mulrhead \. Forth Mutual Ins. Assn. (1894), A. C. 72 H. L. 3 Woodside v. Globe Ins. Co. (1896), 1 Q. B. 105. 4 Steamship "Balmoral" v. Marten (1900), 2 Q. B. 748; affirmed A. C. (1902), 511 H. L. 5 Irving v. Manning (1847), 1 H. of L. Cas. 287. 42 THE MARINE INSURANCE ACT, 1906. SECT. 27. subject-matter insured, "just as if the parties admitted it at the trial." 1 Speaking of a total loss, the judges in Irving v. Manning say, " In an open policy the compensation must be ascertained by evidence ; in a valued policy the agreed total value is conclusive.'' 2 It is com- monly said that the valuation is conclusive " for the purposes of the policy." It is probably more correct to say that it is conclu- sive for a purposes relating to the insurable value of the subject- matter insured by a given policy. 3 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. 4 'In lonides v. Fender 5 it was held that non-disclosure of an 'excessive valuation was ground for avoiding a policy ; but. that was a gross case of fraud. Non-disclosure of an over-valuation made in good faith would presumably be immaterial. 6 But grossly excessive valuation, if not disclosed, would, of course, always be evidence of fraud. As to mistake, see 91, post. For a useful discussion of the English law of valuation, see Keport of Commission on Unseaworthy Ships, 1874, vol. 2, p. xvi., and a memorandum by Mr. Justice Willes, p. 426. Under the Continental Codes the policy valuation is only jyrima facie evidence of the real value. Unvalued 28. An unvalued policy is a policy which does not specify the value of the subject-matter insured, but, subject to the limit of the sum insured, leaves the 1 Lewis v. Eucker (1761), 2 Burr. 1167, see at p. 1171 (partial loss) ; cf. Irving v. Manning (1847), 1 H. of L. Cas. at p. 305 ; Lidgett v. Secretan (1871), L. K. 6 C. P. at p. 627, per Willes, J. * Irving v. Manning (1847), 1 H. of L. Cas. at p. 307. * Cf. Burnand \. SodocanacM (1882), 7 App. Cas. at p. 335, per Lord Selborne. 4 As to disproving interest entirely, see Seatjrave v. Union Ins. Co. (1866), L. R. 1 C. P. 31G-320; as to short interest, see Denoon v. Home, and Colonial Ass. Co. (1872), L. R. 7 C. P. 351 ; Williams v. North China, Ins. 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. Cb. ; TJie Main (1894), P. 320. 8 lonides v. Fender (1874), L. E. 9 Q. B. 531. 6 See The Main (1894), P. 320, 325, where the unreported caso, Company of South African Merchants v. Harper, is discussed. TEE POLICY. 43 instirable value to be subsequently ascertained, in the SECT - 28 - manner herein-before specified. 1 29. (1.) A floating policy is a policy which describes Floating the insurance in general terms, and leaves the name of ship li- the ship or ships and other particulars to be defined by shlps> subsequent declaration. 2 (2.) The subsequent declaration or declarations may be made by indorsement on the policy, or in other customary manner. 3 (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 iu good faith.* (4.) Unless the policy otherwise provides, where a declaration of value is not made until after notice of loss or arrival, the policy must be treated as an unvalued policy as regards the subject-matter of that declaration. 5 . The legality of the practice under floating policies was affirmed in England in 1794 (Arnould, Ed. 6, p. 337). When two or more floating policies, effected with different insurers, are open, it 1 Arnould, Ed. 6, p. 318 ; HcArthur, Ed. 2, p. 67 ; Irting v. Manning (1847), 1 H. L. Cas. at p. 307. As to insurable value, see 16 ; and as to measure of indemnity, see 68-71. 2 Arnould, Ed. 6, p. 337 ; McAithur, Ed. 2, p. 77. 3 Ibid. 4 Arnould, Ed. 6, p. 337; and Stephens v. Australasian Inf. Co. (1872), L. E. 8 C. P. 18 ; Imperial Mar. Ins. Co. v. Fire Ins. Corporation (1879), 4 C. P. D. 166 ; cf. Varies v. National Ins. Co. of New Zealand (1891), A. C. at p. 491 (form of policy requiring double declaration). 5 McArthur, Ed. 2, p. 78; Gledstanes v. Royal 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. 44 TEE MARINE INSURANCE ACT, 1906. SECT. 29. 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." l 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 (McArthur, Ed. 2, p. 78). Construe- 30. (1.) A policy may be in the form in the First * ion of Schedule to this Act. terms in policy. (2.) Subject to the provisions of this Act, and unless the context of the policy otherwise requires, the terms and expressions mentioned in the First Schedule to this Act shall be construed as having the scope and meaning in that schedule assigned to them. 2 NOTE. It would be beyond the scope of an Act of Parliament to attempt to reproduce the many decisions which interpret particular terms in particular policies. But the rules in the schedule record the interpretation 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. In subsect. (2) the words " Subject to the provisions of this Act " were added in the Commons Committee, and the word " may " was altered into " shall." Premium 31. (!) Where an insurance is effected at a premium arranged * ^ e arrau g e d, au d no arrangement is made, a reasonable 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. 3 1 Arnould, Ed. 6, p. 340 ; note that in the cases cited the declaration was made before loss, and see the cases cited for subsect. (3). 2 See Lloyd's policy set out, post, p. 138, and the main rules for its construction, post, p. 142. 3 Cf. Hyderabad (Deccan) Co. v. Willoughby (1899), 2 Q. B. at p. 535 (deviation clause); and Greenock Steamship Co. v. Maritime Ins. Co. (1903), 1 K. B. 367 at p. 374 (any breach of warranty or unprovided incidental risk). DOUBLE INSURANCE. 45 % NOTE. This section is hardly covered by express decision, but it SECT. 31. accords with the mercantile understanding, and follows the analogy of "reasonable price " in the case of contracts of sale. 1 Policies 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. 32. (1.) Where two or more policies are effected Double by or on behalf of the assured on the same adventure msuran ' and interest or any part thereof, and the sums insured exceed the indemnity allowed by this Act, the assured is said to be over-insured by double insurance. 2 (2.) Where the assured is over-insured by double insurance (a.) The 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 of the indemnity allowed by this Act ; 3 (6.) 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 ; 4 (c.) Where the policy under which the assured claims 1 Chalmers' Sale of Goods Act, 1893, 8, and notes thereto. - Arnould, Ed. 6, p. 327, and Ed. 7, p. 396 ; McArthur, Ed. 2, p. 73; North British Ins. Co. v. London and Globe Ins. Co. (1877), 5 Ch. D. at p. 583, C. A. 3 Arnould, Ed. 6, p. 328 ; Newly v. Eeed (1763), 1 W. Bl. 416, Lord Mansfield ; Morgan v. Price (1849), 4 Exch. 621. 4 Arnould, Ed. 6, p. 332 ; Bruce v. Jones (1863), 1 H. & C. 769. 46 THE MARINE INSURANCE ACT, 1906. f SECT. 32. j s an unvalued policy he must give credit, as against the full insurable value, for any sum received by him under any other policy ; 1 (d.) Where the assured receives any sum in excess of the indemnity allowed by this Act, he is deemed to hold such sum in trust for the insurers, according to their right of contri- bution among themselves. 2 NOTE. The following case may be put in illustration. Suppose a merchant to have 3000 by one policy, and 2000 by another, on cotton, 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 and from the other policy two-fifths of this total, -'or he may claim from either policy as if the other did not exist. 3 For further illustrations, see the illustrations to 27 ; and see also 80 (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 in Loivndes 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 27. As to under insurance, see 81, post. 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. 4 The question of 1 Arnould, Ed. 6, p. 329 ; Park on Insurance, p. 423. As to insurable value, see 16. 2 This is consequential. See 80 supplementing this provision. * Lowndes, Ed. 2, p. 35 (unvalued policy). 4 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. WAEEANTIES, ETC. 47 mortgagor and mortgagee, among others, is discussed by Mellish, L.J., SECT. 32. 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 wharfinger's insurers, as the wharfinger was liable 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 property. 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 insure 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 offices with whom they insure, one office 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." 1 Warranties, etc. 33. (1.) A warranty, in the following sections, ^Nature of relating to warranties, 2 means a promissory warranty, 1 North British Ins. Co. v. London and Globe Ins. Co. (1877), 5 Ch. D. at p. 583. * See 34-41. 48 TEE MARINE INSURANCE ACT, 1906. SECT. 33. that is to say, a warranty by which the assured under- takes that some particular thing shall or shall not be done, or that some condition shall be fulfilled, or whereby he affirms or negatives the existence of a particular state of facts. 1 (2.) A warranty may be expressed or implied. 2 (3.) A warranty, as above defined, is a condition which must be exactly complied with, whether it be material to the risk or not. If it be not so complied with, then, subject to any express provision in the policy, the insurer is discharged from liability as from the date of the breach of warranty, but without prejudice to any liability incurred by him before that date. 3 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. 4 2. A ship is insured from New York to Quebec, 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 reaching that port. The insurer is liable. 5 3. Policy on ship, with warranty not to be in Gulf 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, having waived the breach of warranty. 6 1 Arnould, Ed. 6, p. 599 ; Marshall on Insurance, p. 353. 2 Arnould, Ed. G, p. 648 ; cf. Quebec Mar. Ins. Co. v. Commercial Bank of Canada (1870), L. E. 3 P. C. 234. 3 Arnould, Ed. 6, pp. 602, 604 ; McArthur, Ed. 2, p. 36 ; Lownde*, Ed. 2, p. 93 ; Pawson v. Watson (1778), 2 Cowp. 785 ; De Halm v. Hartley (1786), 1 T. K. 343. As to the final words of proviso, see note next page. 4 De Hahn v. Hartley (1786), 1 T. R. 343 ; 1 R. R. 221. s Baines v. Holland (1855), 10 Exch. 802. 6 Provincial Ins. Co. v. Leduc (1874), L. R. 6 P. C. 224. See 34 (3) as to waiver. WARRANTIES, ETC. 49 NOTE. The use of the term " warranty " as signifying a condition SECT. 33. precedent is inveterate in marine insurance, but it is unfortunate, because in other branches of the law of contract the term has a different meaning. 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. 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 final words of subsect. (3) represent the American rule. 1 The point is said by Arnould not to have been decided in England. 2 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. 3 When a breach of warranty is proved, the insurer is discharged from further liability, unless the assured proves that the breach has been waived. A special clause is often inserted holding the assured covered in the event of breach of warranty at a premium to be arranged (see 31, ante). 34. (1.) Non-compliance with a warranty is excused when when, by reason of a change of circumstances, the war- ta^nty ranty ceases to be applicable to the circumstances of excusedi the contract, or when compliance with the warranty is rendered unlawful by any subsequent law. 4 1 Phillips on Insurance, 771. * Arnould, Ed. 6, p. 604 ; but see Lowndes, Ed. 2, p. 93, citing Baines v. Holland (1855), 10 Exch. 802, which seems in point. 3 Barnard \. Faber (1893), 1 Q. B. 340, C. A. (fire policy). 4 Arnould, Ed. 6, p. 605 ; McArthur, Ed. 2, p. 37. E 50 THE MAE1NE INSURANCE ACT, 1906. SECT. 34. (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. 1 (3.) A breach of warranty may be waived by the insurer. 2 NOTE. The cases, in terms, assume that there is no distinction between the effects of an express and an 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. 3 See further, the illus- tration to 33. Express 35. (1.) An express warranty may be in any form ies< of words from which the intention to warrant is to be inferred. 4 (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. 5 (3.) An express warranty does not exclude an implied warranty, unless it be inconsistent therewith. 6 NOTE. The following are instances of express warranties which in recent years have been the subject of judicial interpretation : " Warranted [50] per cent, uninsured." 7 1 De Halm v. Hartley (1786), 1 T. E. 343 (express warranty) ; Quebec Mar. Ins. Co. v. Commercial Sank of Canada (1870), L. E. 3 P. C. 234 (implied warranty). * See Quebec Mar. Ins. Co. v. Commercial Bank of Canada (1870)^ L. E. 3 P. C. at p. 244 ; Provincial Ins. Co. v. Leduc (1874), L. E. 6 P. C. at p. 243 ; and see Owen's Notes and Clauses, Ed. 3, p. 120. 3 See Hore v. Whitmore (1778), 2 Cowp. 784 (effect of embargo). 4 Arnould, Ed. 6, p. 601 ; cf. De Halm v. Hartley (1786), 1 T. E. 343 r Behn v. Burness (1863), 32 L. J. Ex. 204, 205 ; Bentsen v. Taylor (1893), 2 Q. B. at p. 281, C. A. 5 Arnould, Ed. 6, p. 600, and Bean v. Stupart (1778), 1 Dougl. 11. 6 Quebec Mar. Ins. Co. v. Bank of Canada (1870), L. E. 3 P. C. 234 ; Sleigh v. Tyser (1900), 2 Q. B. 333 (seaworthiness). 7 Eoddiclt v. Indemnity Mutual Ins. Co. (1895), 2 Q. B. 380 (subsequent honour policy) ; General Ins. Co. of Trieste v. Cory (1897), 1 Q. B. 335 (insolvency of insurer). WARRANTIES, ETC. . 51 " Warranted, no iron or ore in excess of registered tonnage." l SECT. 35. " Warranted not to sail for North America after August 15." 2 " Warranted, no St. Lawrence between October 1 and April 1." 3 " Warranted not to proceed east of Singapore." 4 " Sailing on or after March 1st." 5 36. (1.) Where insurable property, whether ship or Warranty goods, is expressly warranted neutral, there is an implied t rafty". condition that the property shall have a neutral character at the commencement of the risk, and that, so far as the assured can control the matter, its neutral character shall be preserved during the risk. 6 (2.) Where a ship is expressly warranted " neutral " there is also an implied condition that, so far as the assured can control the matter, she shall be properly documented ; 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. 7 Illustrations. 1. Policy on a Dutch ship warranted neutral, at and from A. to B. After the ship sails war breaks out between England and Holland, 1 Hart v. Standard Mar. Ins. Co. (1889), 22 Q. B. D. 499, C. A. (' iron " includes steel). - Cochrane v. Fisher (1835), 1 C. M. & E. 809, Ex. Ch. (time policy). 3 Birrell v. Dryer (1884), 9 App. Cas. 345. 4 Simpson Steamship Co. v. Premier Underwriting Association (1905), 10 Com. Gas. 198). s 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 ; Loimdes, Ed. 2, p. 94. 6 Arnould, Ed. 6, pp. 621, 622. 7 Ibid., p. 680. As to documents, see Arnould, Ed. 6, p. 681, and Trinder v. Thames and Mertey Mar. In*. Co. (1898), 2 Q. B. at p. 128, per Collins, L.J. ; and as to simulated papers, see Arnould, Ed. 6, p. 685. 52 THE MARINE INSURANCE ACT, 1906. SECT. 36. and the ship is captured by the English. There is no breach of the warranty of neutrality. 1 2. Policy on goods. Ship and goods belong to the same owner, and are both warranted Danish (i.e. neutral). The master commits a breach of the laws of neutrality by forcibly resisting search, and the ship and goods are captured and condemned as prize. The assured cannot recover on the policy. 2 3. Policy on goods from America to England with leave to carry simulated papers. The ship and goods are in fact American, but she carries irregularly simulated British papers, and is captured by a priva- teer belonging to a Power at war with England, and is condemned on the ground of having false papers. The insurer is liable for this loss. 3 NOTE. In an old case a ship not properly documented was held unseaworthy ; but the case seems to come under this section. 4 The implied conditions may of course be negatived or varied by the terms of the particular express warranty. The conditions of maritime commerce and war 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. 6 No implied 37. There is no implied warranty as to the nation- of'natioif- ality of a ship, or that her nationality shall not be allty> changed during the risk. 6 In Dent v. Smith, decided in 1869, Lush, J., points out that the fact that there was no decision on any such implied warranty was very good evidence that no such warranty existed. The facts were as follows : Policy on a parcel of gold shipped on the ss. Dutchman, which was a British ship. Next day the ship was transferred to Eussian owners. In consequence of damage to the ship the gold had to be landed in Turkey, and deposited with the Russian consul. In Turkish territory 1 Eden v. Parkinson (1781), 2 Dougl. 732, Lord Mansfield. Point not raised that there can be no insurance against British capture. * Garreh v. Kensington (1799), 8 T. B. 230. 3 Belief. Bromfield (1812), 15 East, 364. 4 Steel v. Lacey (1810), 3 Taunt. 285. 5 See Arnould, Ed. 6, pp. 620, G98 ; also Owen's Declaration of War, p. 386. 6 Dent v. Smith (1869), L. R. 4 Q. B. 414. WARE AN TIES, ETC. 53 all matters relating to shipping have to be decided by the consular SECT. 37. court of the country to which the ship belongs. The Russian Con- sular court made the shippers pay salvage charges, which would not have been payable by English law, as a condition to releasing the gold. Held, that the risk had not been varied, and that the assured Avas entitled to recover these charges as a loss by perils of the seas. But suppose the shipper had also been the shipowner ? Possibly in that case it would be held that the loss was the consequence of his own act, and not of the perils of the seas. As to the express warranty of nationality, see Arnould, Ed. 6, pp. 122, 136, 620. 38. Where the subject-matter insured is warranted Warranty " well " or " in good safety " on a particular day, a fft. it is sufficient if it be safe at any time during that day. 1 39. (1.) In a voyage policy there is^an implied^ Warranty warranty that at the commencement of the voyage the worthiness ship shall be seaworthy for the purpose of the particular of shlp * adventure insured. 2 (2.) Where the policy attaches while the ship is in port, there is also an implied warranty that she shall, at the commencement of the risk, be reasonably fit to encounter the ordinary perils of the port. 3 (3.) Where the policy relates to a voyage which is ., performed in different stages, during which the ship requires different kinds of or further preparation or equipment, there is an implied warranty that at the commencement of each stage the ship is seaworthy in 1 See Lowndes, Ed. 2, p. 94 ; BlacUiurst v. CocMl (1789), 3 T. B. 360 (ship). 2 Arnould, Ed. 6, p. 648 ; McArthur, Ed. 2, p. 13 ; Lowndes, Ed. 2, p. 98; Biccard v. Shepherd (1861), 14 Moore P. C. at p. 493. 3 Quebec Mar. Ins. Co. v. Commercial Bank of Canada (1870), L. K. 3 P. C. at p. 241 ; cf. Haughton v. Empire Mar. Ins. Co. (1866), L. K. 1 Ex. 206 (overlapping policies). / r 54 THE MARINE INSURANCE ACT, 1906. SECT. 39. reg p ec t o f such preparation or equipment for the purposes of that stage. 1 (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. 2 (5.) In a time policy there is no implied warranty that the ship shall be seaworthy at any stage of the adventure, 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. 3 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.* 2. Steamer, built for inland navigation in Trinidad, is insured from 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. 5 1 Bouillon v. Lupton (1864), 33 L. J. C. P. at p. 43; Quebec Mar. Ins. Co. v. Commercial Bank of Canada (1870), L. E. 3 P. C. at p. 241 ; The Vorticjern (1899), P. 140, C. A. (coals); Greenock Steamship Co. v. Mari- time Int. Co. (1903), 2 K. B. 657, C. A. (insufficient coal). This subsection was amended and redrafted in the Commons Committee. * Dixon v. Sadler (1839), 5 M. & W. at p. 414; Bouillon v. Luj>tn (1864), 33 L. J. C. P. at p. 43. This includes manning, equipment, and stowage. A Commons amendment inserting these words was cut out in the Lords as unnecessary. McArthur, Ed. 2, p. 15 ; Faiccus v. Sarsfiehl (1856), 6 E. & B. 192; Dudgeon v. Pembroke (1877), 2 App. Cas. 284, H. L. 4 Quebec Mar. Ins. Co. \. Commercial Bank of Canada (1870), L. K. :! P. C. 234. Turnlull v. Janeon (1877), 3 Asp. Mar. Cas. 433, C. A. Aliter if all reasonable means had been used, Clapham v. Langton (1864), 5 B. & S 729, Ex. Ch. WAS HAN TIES, ETQ. 55 3. Voyage policy on freight. The ship, being badly damaged, has SECT. 39. 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. 1 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. 2 5. Time policy on ship, lost or not lost, is effected in London in November, but to take effect from the 25th September previous. On the 24th September the ship was in the Indian Ocean badly damaged, but the assured did not know this when he effected this policy. The insurer is liable. 3 6. Time policy on ship lying in her owner's yard. She is sent to sea in an unseaworthy condition, and lost. The owner did not know she was unseaworthy. The insurer is liable. 4 7. Voyage policy on " wine in casks on or under deck." The wine is all stowed on deck. The effect of this is to endanger the safety of the ship in rough weather, unless the wine be jettisoned, but the wine is so stowed as to be easily jettisoned. The ship meets with bad weather in the Bay of Biscay and the wine is jettisoned. The ship was not seaworthy at the time of sailing, and the insurer is not liable. 5 8. Policy on copper from Port II. arid Port N. to S. At H. 150 tons are loaded, and at N. 250 tons more are loaded. The additional load is too heavy for the ship, she sinks, and the copper is lost. The insurers are liable for the first 150 tons, but not for the second load of 250 tons. 9. Policy on round voyage from England to port or ports in South America, with liberty to call at any ports, and back again to England. The ship calls at Monte Video, but neglects to take in sufficient coal to bring her to St. Vincent, her next port, so that some of her fittings and cargo have to be burnt as fuel. For coaling purposes this voyage is necessarily divided into stages. When she leaves Monte Video she is not seaworthy as to her coaling equipment, and the loss incurred 1 De Cuadra \. Swann (1864), 16 C. B. N. S. 771, 3rd plea. - Dixon v. Sadler (1839), 5 M. & W. 414, affirmed 8 M. & W. 895. This -\vould equally apply to a voyage policy, ibid. 3 Gibson v. Small (1853), 4 H. L. Cas. 352. 4 Dudgeon v. Pembroke (1877), 2 App. Cas. 284. Daniel* v. Harris (1874), L. E. 10 C. P. 1. 6 Biccanl v. Shepherd (1861), 14 Moore P. C. 471. 56 THE MARINE INSURANCE ACT, 1906. SECT. 39. by burning the fittings and cargo cannot be recovered under the policy. 1 NOTE. The implied warranty, unless expressly waived, attaches to every voyage policy, whether on ship, freight, cargo, profits, commission, or any other interest. 2 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. 3 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." 4 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. As the Privy Council says, " 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. 5 So, too, a ship may be seaworthy of herself, but not seaworthy for the purpose of the particular adventure, e.g. carrying deck cargo. 15 On the other hand, if the insurer knows the nature of the risk it is sufficient if every reasonable precaution be taken." Subsection (3) was redrafted in the Commons Committee. It 1 GreenocJc Steamship Co. v. Maritime Ins. Co. (1903), 1 K. B. 367 ; affirmed 2 K. B. (1903) 657, C. A., and following The Vortigern (1899), P. 140 (contract of affreightment). 2 Daniels v. Harris (1874), L. K. 10 C. P. at p. 5 ; cf. Knill v. Hooper (1857), 26 L. J. Ex. 377, 379 (policy on salvage of abandoned ship) ; Bic- card v. Shepherd (1861), 14 Moore P. C. at p. 494 (goods). 3 Law v. Hollingworth (1797), 7 T. K. 160; disapproved, Dixon v. Sadler (1839), 5 M. & W. at p. 408 ; Sadler v. Dixon (1841), 8 M. & W. at p. 900, Ex. Ch. 4 Dixon v. Sadler (1839), 5 M. & W. at p. 414. 6 Quebec Mar. Ins. Co. v. Commercial Sank of Canada (1870), L. E. 3 P. C. at p. 241. And see per Collins, M.E., in The Vortigern (1899), P. at p. 160, C. A. 6 Daniels v. Harris (1874), L. K. 10 C. P. 1 (policy on wine stowed on deck). " Surges v. WicTcham (1863), 33 L. J. Q. B. 17 (river steamer sent across the sea to her destination). WAREANTIES, ETC. 57 originally provided, in accordance with the older dicta, that the ship SECT. 39. must be seaworthy, i.e. seaworthy in all respects, at the commence- ment of each stage, but having regard to the implied coaling warranty in the case of round voyages it was narrowed to its present form. It is usual to pay " innocent shippers " as a matter of honour, though the ship be unseaworthy. 1 There is no implied warranty that the lighters in which the goods are landed shall be seaworthy. 2 The burden of proving unseaworthiness rests on the insurer, 3 but Evidence cases might arise where the maxim res ipsa loquitur would apply.* of unsfi a- ,_ . r ., . f mu worthiness. In Anderson v. Monce the insurance was on a cargo ot rice, ihe ship sank while loading at her moorings in the river near Rangoon in ordinary weather. Evidence was given that the ship had been recently overhauled and repaired. The jury found that she was seaworthy, and the courts refused to disturb the verdict. In Pickup v. Thames Ins. Co. 6 the insurance was on freight. The vessel left Rangoon and met with heavy weather. Eleven days after sailing she had to put back, and was then found to be strained and unseaworthy. Held, that these facts did not establish the presump- tion of unseaworthiness when she sailed ; it was a question for the jury. In Ajum Ghulam v. Union Mar. Ins. 7 the insurance was on cargo. The ship capsized and sank twenty-four hours after leaving Port Louis, but there was no evidence to explain why she did so. Some evidence was given tending to show that the ship was sea- worthy when she started. Held, that the evidence of unseaworthiness was not made out. 40. (1.) lu a policy on goods or other moveables NO implied T i T 11 warranty there is no implied warranty that the goods or moveables that goods are seaworthy. 8 1 See McArthnr, 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. K. 1 C. P. 412. Arnould, Ed. 7, 725 ; PicJcup v. Thames Ins. Co. (1878), 3 Q. B. D. 594, C. A. 4 Cf. Pickup v. Thames Ins. Co. (1878), 3 Q. B. D. at p. 600, per Lord Esher. 5 Anderson v. Morice (1875), L. E. 10 C. P. 58, 609, affirmed on this point (1876), 1 App. Cas. at p. 752. 6 Pickup v. Thames Ins. Co. (1878), 3 Q. B. D. 594, C. A. 7 Ajum Ghulum v. Union Mar. Ins. Co. (1901), A. 0. 362, P. C. 8 Arnould, Ed. 6, p. 650 ; Koebel v. Sounders (1864), 33 L. J. C. P. 310 (cocca-nut oil) ; cf. Boyd v. Dubois (1811), 3 Camp. 13i>. 58 THE MARINE INSURANCE ACT, 1906. SECT. 40. ^2.) In a voyage policy on goods or other inoveables there is an implied warranty that at the commencement of the voyage the ship is not only seaworthy as a ship, but also that she is reasonably fit to carry the goods or other moveables to the destination contemplated by the policy. 1 NOTE. Under a voyage policy the shipper, equally with the shipowner, is responsible for the seaworthiness of the ship. See note to last section. Though the shipper does not warrant the seaworthiness of goods insured, the insurer is not liable for any loss occasioned by vice prqpre. 11 Questions of seaworthiness frequently arise in cases between shipper and shipowner ; 3 but such cases must be applied with caution to insurance law. A ship might be seaworthy as between shipowner and insurer on ship, though unseaworthy as between shipowner 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. 4 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 (cf. Loivndes, Ed. 2, p. 99). Suppose a ship is insured from Malta to London. She calls at Gibraltar, and there takes on board a consignment of apes for the Zoological Gardens. If the apes are insured, the ship must, for the purposes of the policy on apes, be reasonably fit (i.e. in the matter of appliances) to carry the animals safely to their destination, that is to say, she must be " ape-worthy " as well as being seaworthy qua ship. This implied condition is commonly included in the warranty of seaworthiness, but that seems rather a strain upon language, and it is better to regard the condition as a supplementary warranty by the assured on goods. The Californian Code, 2687, provides that "u ship which is seaworthy for the purpose of an insurance upon ship, may nevertheless, by reason of being unfitted to receive the cargo, be unseaworthy for the purpose of insurance upon cargo." 1 Cf. The Maori King (1895), 2 Q. B. 550, 558, C. A. (frozen meat case). 2 Koebel v. Sautulers (1864), 33 L. J. C. P. 310 ; and see 55, post. 3 Sec Carver's Carriage by Sea, Ed. 3 (1900), 17-22. 4 Cf. The Maori Kimj (1895), 2 Q. B. 550, 558, C. A. WARRANTIES, ETC. 59 41. There is an implied warranty that the adventure SECT. 41. insured is a lawful one, and that, so far as the assured warranty can control the matter, the adventure shall be carried of le s allt F- out in a lawful manner. 1 Illustrations. 1. Time policy ou ship. The master, with the connivance of the owner, engages in smuggling. The ship is arrested in England. The insurer is not liable. 2 2. Policy on freight, from a British port abroad to Liverpool. The master, unknown to the owner, stows a part of the cargo (timber) on deck, and sails without a certificate from the clearing office, thereby contravening the statute 16 & 17 Viet. c. 107. The timber is lost by perils of the seas. The assured can recover. 3 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. 4 4. Policy on a French ship, effected in England, capture and seizure being among the perils insured against. After the policy is effected war breaks out between France and England, and the ship is captured by a British cruiser. The assured cannot recover on this policy. 5 XOTE. " 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 East India Company Acts, or the general Navigation 1 Arnould, Ed. G, p. 686 ; McArthur, Ed. 2, p. 19 ; Dudgeon v. Pembroke (1874), L. R. 9 Q. B. at 586. - Pipon v. Cope (1808), 1 Camp. 434, as explained, Trinder v. Thames ! Jlem-y Ins. Co. (1898), 2 Q. B. at p. 129, C. A. If the master smuggles without the owner's connivance it is barratry, Cory v. Burr (1883), 8 App. Cas. at p. 399. 3 Wilwn v. Ranlcin (1865), L. E. 1 Q. B. 162, Ex. Ch. Aliter, if the owner was privy to the illegality; Cunard v. Hyde (1860), 29 L. J. Q. B. 6 (policy ou goods). 4 Gedge v. Boyal Exchange (1900), 2 Q. B. 214, at p. 222. 5 Kellner \. Le Mesurier (1803), 4 East, 396, and Gambx v. Le Mesurier (1803), 4 East, 407. See note to 91 (2), pout. 60 TEE MARINE INSURANCE ACT, 1906. SECT. 41. Act (6 Geo. 4, c. 109), which statutes were made with reference to the general policy of the realm." 1 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. 2 An insurance on enemies' goods or against British capture is illegal. See notes to 91 (2}, post, and see further, notes to 3 and 4, ante, and Owen's Declaration of War, p. 405. The Voyage. implied 42. (1.) Where the subject-matter is insured by as n tocom- a v y a g e P lic 7 " 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. 3 (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 waived the condition. 4 Illustration. Floating policy on cargo by a particular ship for twelve months from May llth. A declaration of a cargo of coals having been made under this policy the insurers, on August 2nd, effected a reinsurance of the coals by that ship from the Tyne to Lulea at a specified premium. The vessel did not sail on the insured voyage till September 25th, and was lost with her cargo on October 2nd. The reinsurer is 1 Eedmond v. Smith (1844), 7 M. & Gr. at p. 474. - Waugh v. Morris (1873), L. K. 8 Q. B. 202. 3 De Wolf v. Archangel Ins. Co. (1874), L. K. 9 Q. B. 451 (summer risk turned into winter risk). 4 This seems fair, but before the Act was a somewhat doubtful proposi- tion. See ibid, at p. 457, and see Arnould, Ed. 6, p. 409, as to usage. THE VOYAGE. 61 not liable on this policy, for the delay alters the risk from a summer SECT. 42. risk to a winter risk. 1 NOTE. As to the attachment of a policy in ordinary form under " from " and " at and from " risks, see further, Rules 2 and 3 in Sched. I., post, p. 142. Reasonable time is a question of fact ; see 88. Where the assured abandons the adventure insured, the contract of marine insurance is determined. 2 The abandonment of the adven- ture by not commencing the voyage within 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 note to 60, post. 43. Where the place of departure is specified by Alteration the policy, and the ship instead of sailing from that place sails from any other place, the risk does not attach. 3 NOTE. By usage, it is said, an intermediate voyage may be inter- posed, but the evidence of such a usage would have to be very clear.* Suppose a ship is insured from London to New York. If she starts from Southampton to Liverpool it is a wholly different risk. Unless the ship starts from the terminus a quo it is clear that the risk cannot attach. 44. Where the destination is specified in the policy, Sailing for and the ship, instead of sailing for that destination, sails destina- for any other destination, the risk does not attach. 5 tlon> 1 Maritime Ins. Co. v. Stearns (1901), 2 K. B. 912, 6 Com. Cases, 182. 2 Grant \.King (1802), 4 Esp. 175 (delay of six months, policy not avoided); Palmer v. Penning (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); Nickelh v. London and Prov. Mar. Ins. Co. (1900), Times, November 17 (abandon- ment of voyage under apprehension of hostilities) ; Owen's Declaration of War, p. 39. 3 Arnould, Ed. 6, p. 452 ; Way v. Modigliani (1787), 2 T. R. 30. 4 Arnould, Ed. 6, p. 409. 5 Sellar v. McVicar (1804), 1 B. & P. (N. R.) 22; 8 R. R. 744, as explained, Phillips on Insurance, 930; Simon Israel & Co. v. Sedg- wick (1893), 1 Q. B. 303, C. A. 62 TEE MARINE INSURANCE ACT, 1906. SECT. 44. Illustration. Policy on ship from the Mersey to any port or ports west of Gibraltar. The ship sails from Liverpool for Carthagena, which is east of Gibraltar. The policy does not attach, and a clause authorizing change of voyage does not come into operation. 1 Change of 45. (1.) Where, after the commencement of the risk, the destination of the ship is voluntarily changed from the destination contemplated by the policy, there is said to be a change of voyage. 2 (2.) Unless the policy otherwise provides, where there is a change of voyage the insurer is discharged from liability as from the time of change, that is to say, as from the time when the determination to change it is manifested ; and it is immaterial that the ship may not in fact have left the course of voyage contemplated by the policy when the loss occurs. 3 Illustration. Policy on ship at and from Cadiz to Liverpool. Afterwards, with- out the consent of the insurer, the destination of the ship is changed to Newfoundland. The ship is stranded and burnt in the bay of Cadiz. The insurer is discharged from liability. 4 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. See 43 and 44. Secondly, a 1 Simon Israel & Co. v. Sedgurick (1893), 1 Q. B. 303, C. A.; distin- guished in the case of a warranty, Simpson v. Premier Underwriting Association (1905), 10 Com. Cas. 198. * Arnould, Ed. 6, pp. 453, 458 ; Me Arthur, Ed. 2, p. 84 ; Woolridge v. Soydell (1778), Dougl. 16 ; Tudor, Mar. Cas. Ed. 3, p. 125 ; Bottomley v. Bovill (1826), 5 B. & C. 210; Simon Israel & Co. v. SednwicJt (1893) 1 Q. B. 303, C. A. 3 Ibid.; and Tasker -v. Cunningham (1819), 1 Bligh H. L 87- ^0 R R. 33. 4 Tasker v. Cunniiujham (1819), 1 Bligh H. L. 87, 102. THE VOYAGE. 63 ship may start on the voyage insured, but afterwards change her SECT. 45. destination. There is then a change of voyage. In that case the risk attaches, but is afterwards 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. 1 A clause, holding the assured covered ia case of deviation or change of voyage at a premium to be arranged, is often inserted in the policy. 46. (1.) "Where a ship, without lawful excuse, Deviation. ' ^i ^ / deviates from the voyage contemplated by the policy, the insurer is discharged from liability as from the time of deviation, and it is immaterial that the ship may have regained her route before any loss occurs. 2 (2.) There is a deviation from the voyage contem- plated by the policy : (.) Where the course of the voyage is specifically / designated by the policy, and that course is 3 departed from ; d or (&.) Where the course of the voyage is not specifically designated by the policy, but the usual and customary course is departed from. 4 (3.) The intention to deviate is immaterial ; there must be a deviation in fact to discharge the insurer from his liability under the contract. 5 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 1 As to distinction between deviation and change of voyage, see further, Arnould, Ed. 6, p. 452. * Arnould, Ed. 6, pp. 451, 462 ; McArtlmr, Ed. 2, pp. 18, 84. 3 Arnould, Ed. 6, p. 463. 4 Davis v. Garrett (1830), 6 Bing. 716; Arnould, Ed. 6, p. 462. s Arnould, Ed. 6, pp. 453, 455; cf. Middlewood v. Slakes (1797), 7T. K. at p. 168; 4 E. E. 409. 64 TEE MARINE INSURANCE ACT, 1906. SECT. 46. 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. 1 2. Policy on ship from her " port of lading in North America to Liverpool." She loads part of her cargo at K., proceeds to B., which is seven miles off, to complete her cargo, and returns to K. for pro- visions, and then sails for England, and is lost on the voyage. The proceeding^ B. and back again is a deviation, and the insurer is not 3. Time policy against 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. 3 4. Insurance on salvage pumps from A. to the ss. Alexandra ashore in the neighbourhood of D., " and while there engaged at the wreck and until again returned to A." The pumps are lost on the wreck while it is being towed to N., a port of safety. This is a deviation. 4 NOTE. It is immaterial that the insurer may not be prejudiced by the deviation, see Arnould, Ed. 6, p. 450. As to usage to call at intermediate ports, see Arnould, Ed. 6, p. 462. As to causes which justify deviation, see 49, post. As to change of voyage, see 45, ante. Several 47. (1.) Where several ports of discharge are discharge, specified by the policy, the ship may proceed to all or any of them, 5 but in the absence of any usage or suf- ficient cause to the contrary, she must proceed to them 1 Middlewood v. BlaJces (1797), 7 T. K. 162. 2 Brown v. Tayleur (1835), 4 A. & E. 241 ; 43 E. R. 331. 3 Pearson v. Commercial Union Ass. Co. (1876), 1 App. Cas. 498. 4 Wingate v. Fotter (1878), 3 Q. B. D. 582 ; followed Difiori v. Adams (1884), 53 L. J. Q. B. 437. 4 Arnould, Ed. 6, p. 460 ; McArthur, Ed. 2, p. 85 ; Loumdes, Ed. 2, p. 48. As to the meaning of " port " in a policy, see McArthur, Ed. 2, p. 486, and Hunter v. Korthern Mar. Ins. Co. (1888), 12 App. Cas. 720. TEE VOYAGE. 65 or such of them as she goes to, in the order designated SECT - 47> by the policy. If she does not, there is a deviation. 1 (2.) Where the policy is to "ports of discharge," within a given area, which are not named, the ship must, in the absence of any usage or sufficient cause to the contrary, proceed to them, or such of them as she goes to, in their geographical order. If she does not there is a deviation. 2 NOTE. In a case where three ports of discharge were specified in the policy, Lord Ellenborough says, " I think that the voyage insured to Palermo, Messina, and Naples meant a voyage to all or any of the places named ; with this reserve only, that if the ship went to more than one place she must visit them in the order described in the policy." 3 48. In the case of a voyage policy, the adventure Delay in voyage. insured must be prosecuted throughout its course with reasonable despatch, and if without lawful excuse it is not so prosecuted, the insurer is discharged from liability as from the time when the delay became unreasonable. 4 Illustration. A ship is insured from England to the coast of West Africa, and " during her stay and trade there," and back to England. After com- pleting her cargo for homeward voyage, she delays sailing for a month to salve the cargo of another ship which has been wrecked. On the voyage home she is lost The assured cannot recover. 5 1 Arnould, Ed. G, pp. 464, 466. 2 Ibid., p. 466; McArthur, Ed. 2, p. 85; cf. Metcalf v. Parry (1814), 4 Camp. 123. 3 Marsden v. Reid (1803), 4 East, at p. 576. 4 Arnould, Ed. 6, pp. 462, 486-493 ; Company of African Merchants v. British Ins. Co. (1873), L. E. 8 Ex. 154, Ex. Ch.; cf. Samuel v. Royal Exchange (1828), 8 B. & C. 119 (delay in entering port of destination caused by ice held justified). 3 Arnould, Ed. 6, pp. 462, 486-493 ; Company of African Merchants v. British Ins. Co. (1873) L. R. 8 Ex. 154, Ex. Ch. ; and cf. Pearson v. Commercial Union Ass. Co. (1876), 1 App. Cas. 498. F 66 TEE MARINE INSURANCE ACT, 1906. SECT. 48. NOTE. Unjustifiable delay in prosecuting the voyage is usually classed under the heading of deviation ; but it seems clearer to draw a distinction between time and locality. Compare Rule 5 in the Sched., post, p. 144, as to the termination of risk on goods. Excuses for 49. (1.) Deviation or delay in prosecuting the voyage contemplated by the policy is excused : (a.) Where authorized by any special term in the policy ; * or (&.) Where caused by circumstances beyond the control of the master and his employer ; 2 or (e.) Where reasonably necessary in order to comply with an express or implied warranty ; 3 or (d.) Where reasonably necessary for the safety of the ship or subject-matter insured ; 4 or (e.) For the purpose of saving human life, or aiding a ship in distress where human life may be in danger ; 5 or (/) Where reasonably necessary for the purpose of obtaining medical or surgical aid for any person on board the ship ; 6 or (g.) Where caused by the barratrous conduct of the master or crew, if barratry be one of the perils insured against. 7 1 Arnould, Ed. 6, p. 486 ; Putter v. Glover (1810), 12 East, 124 ; Naylor v. Taylor (1829), 9 B. & C. 718 ; Hyderabad Co. \. Willoughby (1899), 2 Q. B. 530. * Arnould, Ed. 6, p. 499; Elton v. Brogden (1740), 2 Stra. 1264 (master forced out of his course by crew); Delany v. Stoddart (1776), 1 T. E. 22 (stress of weather). 9 Generalized from Bouillon v. Lupton (1863), 15 C. B. (N. S.) 113 delay to make ship seaworthy for a particular stage of the voyage). Arnould, Ed. 6, p. 508. 5 Scaramanga Stamp (1880), 5 C. P. D. 295, C. A. ; Arnould, Ed. 6, p. 507. 6 Said to be so held in United States, and agreed to by insurers in Lord Chancellor's Committee. 7 ROM v. Hunter (1790), 4 T. E. 33. ASSIGNMENT OF POLICY. 67 (2.) When the cause excusing the deviation or delay SECT - 49 - ceases to operate, the ship must resume her course, and prosecute her voyage, with reasonable despatch. 1 Illustrations. 1. Ship insured from Lyons to Galatz. She starts from Lyons on July 24th, properly equipped for the river voyage. She is detained for three weeks at Marseilles to equip herself for the open sea voyage. This delay is justifiable. 2 2. Ship wan-anted " free from capture in port." To avoid capture she slips her cable before she is ready for sea, and then proceeds to a port out of her direct course to load. She is afterwards wrecked. The insurer is not liable. 3 Sed qu. since the Act ? NOTE. Where a policy contains a permissive clause, the scope of that clause must be determined in each case by the wording of the particular clause. For special clauses authorizing deviation or change of voyage at an additional premium to be arranged, see Owen's Notes and Clauses, Ed. 3, pp. 35, 120. Assignment of Policy. 50. (1.) A marine policy is assignable unless it When and contains terms expressly prohibiting assignment. It js^Xn- may be assigned either before or after loss. 4 able - (2.) Where a marine policy has been assigned so as to pass the beneficial interest in such policy, the assignee of the policy is entitled to sue thereon in his own name ; and the defendant is entitled to make anv defence 1 Arnould, Ed. 6, p. 500 ; and see 49. 2 Bouillon v. Lupton (1863), 15 C. B. N. S. 113. 3 O'Reilly v. Royal Exchange Ass. Co. (1865), 4 Camp. 246, criticized Phillips on Insurance, 578. Sub-clause (cZ) perhaps overrides this decision. 4 Lloyd v. Fleming (1872), L. E. 7 Q. B. 299 (action by executor of assignee after loss). AB to policy prohibiting assignment, see Parsons on Insurance, p. 60 ; Laurie v. West Hartlepool Indemnity Assn. (1899), Times L. R. v. 15, p. 486 (mutual association). 68 THE MARINE INSURANCE ACT, 1906. SECT. 50. arising out of the contract which he would have been to make if the action had been brought in the y/rJ name of the person by or on behalf of whom the policy -^-was effected. (^') ^ marine policy may be assigned by indorse- -, i ment thereon or in other customary manner. NOTE. Some American policies require the insurer's assent to assignment. Subsect. (2) reproduces 1 of the Policies of Marine Insurance Act (31 & 32 Viet. c. 86), which is repealed by this Act. That Act in terms only applied to policies on ship, freight, or goods ; but it would probably have been held to extend to all marine policies. The words " arising out of the contract " are inserted to give effect to Pellets v. Neptune Ins. Co. (1879), 5 C. P. D. 34, C. A., where it was held that a mere 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 owa.name. 1 The difficulty arose in the case of an assignee. Subsect. (3) reproduces the effect of 2 of the Act, which in addition prescribed an optional form of indorsement. The subsection is permissive in its terms, and presumably a marine policy may be assigned in any way by which an ordinary chose in action may be assigned. 2 Assured 1 51. Where the assured has parted with or lost his no Merest i n * er est in the subject-matter insured, and has not, before or at the time of so doing, expressly or impliedly agreed to assign the policy, any subsequent assignment of the /\ policy is inoperative. 3 Provided that nothing in this sectio x n affects the assignment of a policy after loss. 4 1 Browning v. Provincial Ins. Co. (1874), L. K. 5 P. C. at p. 272. 2 See Judicature Act, 1873 (36 & 37 Viet. c. 66, 25 (6) ; Parsons on Insurance, p. 52. 3 North of England Oil Cake Co. v. Archangel Mar. Ins. Co. (1875> L. R. 10 Q. B. 249, and authorities cited for 15. 4 Lloyd v. Fleming (1872), L. E. 7 Q. B. 299. THE PREMIUM. 69 Illustrations. SECT.J.I. 1. A., B., and C. 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 C., but no arrangement is made as to the policy. The ship is lost. On this policy only A.'s share (250) can be recovered. 1 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 arrival. 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. 2 NOTE. After loss, the right to indemnity accrues and is fixed, and 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 be 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 saying that the sale of the damaged hull put an end to the right to recover an indemnity for the partial loss." 3 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. Primd facie, property and risk pass together. The Premium. 52. Unless otherwise agreed, the duty of the assured or his agent to pay the premium, and the duty of the insurer to issue the policy to the assured or his agent, are concurrent conditions, and the insurer is not bound to issue the policy until payment or tender of the premium. 4 NOTE. The term " agreed " includes a binding usage, for usage is binding as being an implied term of the agreement. Payment, it is 1 Powles v. Junes (1841), 11 M. & W. 10. 2 North of Etigland Oil Cake Co. v. Archangel Mar. Ins. Co. (1875), L. K. 10 Q. B. 249. 3 Lloyi v. Fleming (1872), L. E. 7 Q. B. at p. 302, per Lord Blackburn. 4 Arnould, Ed. 6, pp. 195, 196 ; cf. Xenos v. Wickham (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. Maspons (1883), 8 App. Gas. at p. 878. As to issue of policy, see note to 24, ante. 70 THE MARINE INSURANCE ACT, 1906. SECT. 52. 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. The broker in drawing up a policy is not the insurer's agent, or responsible to him for any want of care. 1 Policy 83. (1.) Unless otherwise agreed, where a marine effected policy is effected on behalf of the assured by a broker, broker. the. broker is directly responsible to the insurer for the premium, and the insurer is directly responsible to the assured for the amount which may be payable in respect of losses, or in respect of returnable premium. 2 (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 ; 3 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 which may be due to him from such person, unless when the debt was incurred he had reason to believe that such person was onlyjmjigent. 4 Illustration. A, instructs B., a broker at Hartlepool, to insure his ships. B. employs C., another broker at Liverpool, to effect the insurances. C. 1 Empress Ass. Corporation v. Boicring (1905), 11 Com. Cas. 107. * See Arnould, Ed. 6, pp. 193, 194; and Universal Ins. Co. v. Merchants Mar. Ins. Co. (1897), 2 Q. B. at pp. 97, 98 (premium) ; cf. Hine v. Steam- ship Ins. Syndicate (1895), 7 Agp. Mar. Cas. 558, C. A. ; Sweeting v. Pearce (1859), 29 L. J. C. P. 265 (losses). 3 Arnould, Ed. 6, pp. 211, 214; McArthur, Ed. 2, p. 40; Fisher v Smith (1878), 4 App. Cas. 1, H. L.; and cf. Mildred v. Mapous (1883), 8 App. Cas. at p. 879. 4 As to lien for general balance, see Arnould, Ed. 6, p. 212 ; Westicood v. Sell (1815), 4 Camp.,349; cf. Cahill v. Davidson (1857), 3 C. B. (N. S.) 106 ; Juarez v. Williamt (Feb. 3, 1903), Shipping Gazette. The lien is confined to insurance business, Dixon v. Stantfeld (1850), 10 C. B. 398 ; and cf. Elgood v. Harris (1896), 2 Q. B. 491, as to effect of bankruptcy on a set-off. TEE PREMIUM. 71 has a lien on the policies for the premiums and charges, even though SECT. 53. A. may have paid B. 1 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. 2 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 undenvriter for the premium ; by a fiction he is deemed to have paid the underwriter, and to have borrowed from him the money with which he pays." As regards payment of the premium, the London practice is for the underwriter to allow abatements of 5 per cent, and 10 per cent., known respectively as brokerage and discount, to the assured or his broker. If no broker is employed, the assured has the benefit of both abatements. If he employs a broker, the 5 per cent, is retained by the broker as his remuneration. Thus : s. d. Premium '.. ... 300 Brokerage, 5 per cent. ... ... 030 2 17 Discount, 10 per cent. ... ... 058 The underwriter receives net ... 2 11 4 If a broker is employed, the broker receives from the assured 2 14s. 4c?., and pays the underwriter 2 11s. 4d. The 10 per cent, discount is allowed nominally on the condition of the premium being paid when due, the due date being, in the case of insurance com- panies, the eighth day of the month next following that in which the insurance has been effected. In the case of Lloyd's underwriters, the due date is nominally the same. 1 FMier v. Smith (1878), 4 App. Cas. 1, H. L. 2 Universo Ins. Co. v. Merchants' Mar. Ins. Co. (1897), 1 Q. B. 205, affirmed 2 Q. B. (1897) 93, C. A. 72 TEE MARINE INSURANCE ACT, 1906. SECT. 54. 54. Where a marine policy, effected on behalf of Effect of the assured by a broker, acknowledges the receipt of the policy. 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. 1 NOTE. The acknowledgment is not conclusive as between the insurer and the broker. 2 Probably then it is not conclusive 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. 3 Loss and Abandonment. Included 55. (1.) Subject to the provisions of this Act, and ex- eluded and unless the policy otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he is not liable for any loss which is not proximately caused by a peril insured against. 4 (2.) In particular, (a.) The insurer is not liable for any loss attributable to the wilful misconduct of the assured, but, unless the policy otherwise provides, he is liable for any loss proxi- mately caused by a peril insured against, even though the 1 Arnould, Ed. 6, p. 197, and note to 53. 2 Taylor on Evidence, 774. 3 See further, note to last section, and cf. Roberts v. Security Co. Ltd. (1897), 1 Q. B. Ill (accident policy). 4 Arnould, Ed. 6, p. 727 ; Broom's Legal Maxims, Ed. 7, p. 175 ; Carver's Carriage by Sea, Ed. 3, 87-90; Decaux v. Salvador (1835), 4 Ad. & El. at p. 431 (collision) ; Jackson v. Union Mar. Ins. Co. (1874), L. K. 10 C. P. at p. 148, Ex. Ch. (freight) ; Cory v. Burr (1883), 8 App. Cae. at p. 398 (barratry) ; Beischer v. Borwick (1894), 2 Q. B. at p. 550, C. A. (collision); Trinder v. Thames and Mersey Mar. Ins. Co. (1898), 2 Q. B. at p. 124, C. A. (negligent navigation) ; Brankelow v. Canton Ins. Office (1899), 2 Q. B. 178, 186, C. A. (loss of freight due to form in which bills of lading were given). LOSS AND ABANDONMENT. 73 loss would not have happened but for the misconduct or SECT. 55. negligence of the master or crew. 1 (&.) Unless the policy otherwise provides, the insurer on ship or goods is not liable for any loss proximately caused by delay, although the delay be caused by a peril insured against. 2 (c.) Unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear, ordinary leakage and breakage, inherent vice or nature of the subject- matter insured, or for any loss proximately caused by rats or vermin, or for any injury to machinery not proximately caused by maritime perils. 3 Illustrations. 1. Policy on goods, which consists 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. 4 2. Policy on cargo warranted " free from all consequences of hostilities." During the American war the Confederates extinguish \ Me Arthur, Ed. 2, p. 143 ; Arnould, Ed. 6, p. 731 ; Thompson v. Hopper (1858), E. B. & E. at p. 1047, Ex. Ch. (act of assured himself) ; Dixon v. Sadler (1839), 5 M. & W. 405 (bad seamanship of master) ; Trinder v. Thames and Mersey Ins. Co. (1898), 2 Q. B. 114, C. A. (negligent navigation by master and co-owner). - Tatham v. Hodgson (1796), 6 T. K. 656 (mortality among slaves) ; Taylor v. Dunbar (1869), L. R. 4 C. P. 206 (cargo of meat); Pink v. Fleming (1890), 25 Q. B. D. 356 (cargo of fruit) ; cf. Shelbourne v. Law Investment Corpn. (1898), 2 Q. B. at p. 629 (collision, delay during repairs). See note, post, as to freight. 3 McArthur, Ed. 2, p. 141 ; The Xantho (1887), 12 App. Cas. at p. 509 (wear and tear, sea damage) ; Thames and Mersey Mar. Ins. Co. v. Hamilton (1887), 12 App. Cas. 484 (donkey-engine explosion); Koebel v. Saunders (1864), 33 L. J. C. P. 310 (vice propre). As to rats, see Hunter v. Potts (1815), 4 Camp. 203; Laveroni v. Drury (1852), 22 L. J. Ex. 2 ; but see Hamilton \^Pandorf (18S7), 12 App. Cas. 518, where the action of the rats wasTnot the proximate cause of loss. 4 Montoya v. London Assurance (1851), 6 Exch. 451. 74 THE MARINE INSURANCE ACT, 1900. SECT. 55. the light on Cape Hatteras. Owing to the absence of the light, the /iJ). Asa 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. 1 Thus, where a ship was delayed by the operation of perils of the seas, and the charterer justifiably refused to load, it was held to be a loss of freight by perils of the seas. 2 On the other hand, in the City of Paris case, 3 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 delay. 4 Loss of time-freight, resulting from detention for repair of general average damage, is not allowed in general average. 3 Subsect. (2) (c). The final words at the end of subsect. (2) (c) are awkward. They were inserted to cover the decision in the Inchmaree case (illustration 9), 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 ou dry land, and therefore the 1 See SeJamieson (1895), 2 Q. B. at p. 95. - Jackson v. Union Mar. Ins. Co. (1874), L. R. 10 C. P. 125, Ex. Ch. ; see, too, The Alps (1893), P. 109 ; and The Bedouin (1894), P. 1, C. A., also cases of chartered freight. 3 Inman v. Bischo/ (1882), ?' App. Cas. 670. See to like effect Manchester Liners v. British and Foreign Mar. Ins. Co. (1901), 7 Com. Cas. 26. 4 See, e.g., Bensaude v. Thames and Mersey Ins. Co. (1897), A. C. 609, H. L. ; Turnbull v. Hull Underwriters' Association (1900), 2 Q. B. 402 (warranty, free from any claim consequent on loss of time). 5 The Leitrim (1902), P. 25G. 78 THE MARINE INSURANCE ACT, 1906. SKCT. 55. insurer was not liable. So, too, a distinction must be drawn between the actual operation of a peril insured against, and the apprehension of its operation. As Willes, J., says in one case, the insurer is not liable for a loss caused by the prudence of the master or owner. 1 " 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." 2 Partial 56. (1.) A loss may be either total or partial. f n g s. total Any loss other than a total loss, as hereinafter defined, is a partial loss. 3 (2.) A total loss may be either an actual total loss, or a constructive total loss. 4 (3.) Unless a different intention appears from the terms of the policy, an insurance against total loss includes a constructive, as well as an actual, total loss. 5 (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. 6 (5.) Where goods reach their destination in specie, but by reason of obliteration of marks, or otherwise, they are incapable of identification, the loss, if any, is partial and not total. 7 1 Philpott v. Swann (1861), 11 C. B. (N. S.) at p. 282. 2 Pankin v. Potter (1873), L. K. 6 H. L. at p. 122. McArthur, Ed. 2, p. 242 ; Arnould, Ed. 6, p. 1016. * Arnould, Ed. 6, pp. 951, 988 ; Ronx v. Salvador (1836), 3 Bing. N. C. at p. 285, Ex. Ch. * Adam9 v. Mackenzie (1863), 13 C. B. (N. S.) 446; Sailing Ship Iftdirmore v. Macredie (1898), A. C. at p. 598 ; and see Fortcood v. North Wales Ins. Co. (1880), 9 Q. B. D. 732, C. A. as to by-laws of a mutual society. 8 Arnould, Ed. 6, p. 1163 ; Benson v. Chapman (1849), 2 H. L. C. 696 ; King v. Walker (1864), 2 H. & C. 384. 7 Spence v. Union Mar. Ins. Co. (1868), L. K. 3 C. P. 427, and note to 57. LOSS AND ABANDONMENT. 79 NOTE. A loss must be either total or partial. A total loss of SECT. 56. 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 72 and 76 (1). Prima facie, and the presumption is a sti'ong one, an insurance against total loss covers a constructive, as well as an actual, total loss. But the presumption may be rebutted, see McArthur, Ed. 2, p. 312. 57. (1.) Where the subject - matter insured is Actual destroyed, or so damaged as to cease to be a thing of total loss> the kind insured, or where the assured is irretrievably deprived thereof, there is an actual total loss. 1 (2.) In the case of an actual total loss no notice of abandonment need be given. 2 Illustrations. 1. Hides are insured from Valparaiso to Bordeaux. In conse- quence of sea damage they arrive at Rio 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. 3 Sed qu. now ? 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 remains 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. 4 3. A ship is deserted in a sinking condition. She is afterwards 1 Arnould, Ed. 6, pp. 951, 988 ; McArthur, Ed. 2, p. 145 ; Fleming v. Smith (1848), 1 H. of L. Gas. at 535 ; Lohre v. Aitchison (1878) 3 Q. B. D. at p. 562 ; Cowman v. West (1887), 13 App. Cas. 160 ; EanUn v. Potter (1873), L. E. 6 H. L. at p. 127. 2 Kaltenbacli v. Mackenzie (1878), 3 C. P. D. at p. 471, C. A. ; cf. Rarikin v. Potter (1873), L. E. 6 H. L. at p. 106. 3 Roux v. Salvador (1836), 3 Bing. N. C. 266, Ex. Ch. ; cf. Farnworth v. Hyde (1865), 18 C. B. (N. 8.) 835, as dealt with L. E. 2 C. P. at p. 226. 4 Francis v. Boulton (1895), 65 L. J. Q. B. 153. 80 TEE MARINE INSURANCE ACT, 1906. SECT. 57. towed into port by salvors and sold, by order of the Court, for less than the salvage costs. This is an actual total loss. 1 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 chartered 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. 2 NOTE. Where by a peril insured against the goods of different owners are damaged and become so inextricably mixed as to be incapable of identification (e.g. marks obliterated), the loss is partial, not total. 3 See further, the note to 60. Before the Act the rule as to goods was stated thus goods are deemed to be an actual total loss where they are so damaged as to cease to exist in specie, or as that they cannot be rendered capable of arriving at their destination in specie. Goods cease to exist in specie when they no longer answer to the commercial denomination under which they were insured. 4 A subsection to this effect was cut out in Committee, and the possible result may be, that goods which still exist in specie, though they could not be rendered capable of arriving at their destination in specie, must henceforth be regarded as a constructive total loss. Missing 58. Where the ship concerned in the adventure is missing, and after the lapse of a reasonable time no news of her has been received, an actual total loss may be presumed. 5 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. 1 Cotvman v. West (1887), 13 App. Gas. 160, P. C. reviewing the cases. * Asfar v. Blundell (1896), 1 Q. B. 123, C. A. Semble an actual total loss. But distinguish Williams v. Canton Ins. Office, A. C. (1901) 462 H. L. 3 Spence. v. Union Mar. Ins. Co. (1868), L. K. 3 C. P. 427, and 56 (5). 4 McArthur, Ed. 2, p. 146 ; Soux v. Salvador (1836). 3 Bing. N. C. 266, 287, Ex. Ch. ; Asfar v. Blundell (1896), 1 Q. B. at p. 127, C. A. 4 Green v. Brown (1744), 2 Stra. 1199 ; McArtliur, Ed. 2, p. 109. LOSS AND ABANDONMENT. 81 59. Where, by a peril insured against, the voyage SECT - 59 - is interrupted at an intermediate port or place, under Effect of such circumstances as, apart from any special stipulation ^Int, ^ in the contract of affreightment, to justify the master in landing and re-shipping the goods or other moveables, or in transhipping them, and sending them on to their destination, the liability of the insurer continues, not- withstanding the landing or transhipment. 1 NOTK. The English rules as to transhipment are not very well settled. 2 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. Concerning the master's authority or duty to tranship as between 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. 3 60. (1.) Subject to any express provision in the Construc- policy, there is a constructive total loss where the subject- } l oss matter insured is reasonably abandoned on account of defined> its actual total loss appearing to be unavoidable, or because it could not be preserved from actual total loss without an expenditure which would exceed its value when the expenditure had been incurred. 4 (2.) In particular, there is a constructive total loss, (i.) Where the assured is deprived of the possession 1 ArnouU, Ed. 6, p. 358 ; McArthur, Ed. 2, p. 263 ; cf. Bold v. Rotlier- ham (1846), 8 Q. B. at p. 808. 2 Hansen v. Dunn (1906), 11 Com. Gas. 100 (general principles as to transhipment), is the most recent exposition. 3 Carver's Carriage by Sea, Ed. 3, 204 ; and see Cammell v. Sewell (1860), 29 L. J. Ex. 350, Ex. Ch. (power to sell). 4 Arnould, Ed. 6, p. 951 ; McArthur, Ed. 2, p. 146 ; Kaltenbach v. Mackenzie (1878), 3 C. P. D. at pp. 473 and 479, per Lord Esher ; Shepherd v. Henderson (1884), 7 App. Cas.at p. 70, per Lord Blackburn; cf. Moss v. Smith (1850), 19 L. J. C. P. at p. 228. G 82 THE MABINE INSURANCE ACT, 1906. SECT. 60. of his ship or goods by a peril insured against, and (a) it is unlikely that he can recover the ship or goods, as the case may be, or (I) the cost of recovering the ship or goods, as the case may be, would exceed their value when recovered ; 1 or (ii.) In the case of damage to a ship, where she is so damaged by a peril insured against, that the cost of repairing the damage would exceed the value of the ship when repaired. 2 In estimating the cost of repairs, no deduction is to be made in respect of general average contributions to those repairs pay- able by other interests, but account is to be taken of the expense of future salvage operations and of any future general average contributions to which the ship would be liable if repaired. 3 (iii.) In the case of damage to goods, where the cost L %/ \bJL*. 1 Arnould, Ed. 6, pp. 1041, 1058; Roux v. Salvador (1836), 3 Bing. N. C. at p. 286 (goods) ; Eodocanachi v. Elliott (1874), L. K. 9 C. P. 518, Ex. Ch. (goods in besieged town) ; Sailing Ship Blairmore v. Macredie (1898), A. C. 593 ; and see illustrations to 62. 2 McArthur, Ed. 2, pp. 147, 149; Arnould, Ed. 6, p. 1031; Moss v. Smith (1850), 19 L. J. C. P. 225 ; Lohre v. Aitchison (1878), 3 Q. B. D. at pp. 562, 563, affirmed on this point, Aitchison v. Lohre (1879), 4 App. Cas. at p. 762 ; Rankin v. Potter (1873), L. E. 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, and 28 (4) ante. Cf. , I Anr^ v. Merchants' Mar. Ins. Co. (19031 1 K. B^rUOjL (value of wreck I not to be added to cost of repairs! As to construe tion~of a special clause, " the insured value to be taken as the repaired value," see North Atlantic Steamship Co. v. Sarr (1904), 9 Com. Cas. 164. 8 Kemp v. Halliday (1866), L. E. 1 Q. B. 520, Ex. Ch. Conversely, freight which has been earned is not to be taken into account, Parker v. Budd (1896), 2 Com. Cas. 133 ; see further McArthur, Ed. 2, p. 148. This subsection was redrafted in Committee. LOSS AND ABANDONMENT. 83 of repairing the damage and forwarding the SECT - 6 - goods to their destination would exceed their value on arrival. 1 Illustrations. 1. Policy on ship. The ship gets on a rock and the master bond Ship. fide conies to the opinion that she cannot be saved. He therefore sells her for 18. The buyer gets her off the rock and repairs her at a cost of 750, when she is worth 1200. This is not a total loss. 2 2. 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 ineffectual. There is only a partial loss. 3 3. Ship of a special class and size is valued at 17,000. In con- sequence of sea damage she puts into Mauritius, where she is sold for 1400. Her cost four years before the insurance was 20,000. The cost of repairing her would have been 10,500, and her selling value when repaired would have been 7500 ; but a ship of that class and size, fitted for the particular trade, could not be built or bought for 10,500. The assured can only claim for a partial loss. 4 4. Policy on ship with stipulation that if the ship is stranded for six months, and it is impracticable to save her, the assured may abandon her. The ship strands and remains stranded for more than six months, but it would be practicable to save her eventually. This is a constructive total loss under the policy. 5 5. Policy on ship valued at 23,000, the insured value to be taken as the repaired for purpose of C. T. L. The ship strands in Sicily, and ^^_j^ notice of abandonment is given but not accepted. She is got off, / temporarily repaired, and brought home. The cost of permanent repairs is estimated at 22,500. The value of the wreck, unrepaired, is 7000 only. This cannot be taken into account. She is not a constructive total loss. 6 1 Me Arthur, Ed. 2, pp. 150, 152; Farnworth v. Hyde (1866), L. R. 2 '2 r *' C C. P. 294, Ex. Ch. (sea damage to goods). / 2 Gardner v. Salvador (1831), 1 Moo. & R. 116; 42 R. R. 767. Y' 3 Fleming v. Smith (1848), 1 H. L. Cas. 513. , i,^ Grainger v. Martin (1862), 2 B. & S. 456; affirmed 4 B. & S. 9, '^ Ex. Ch. \kM * v 5 Rowland v. Maritime Insurance Co. (1901), 6 Com. Cas. 160. $. 6 Angel v. Merchants' Mar. Ins. Co. (1903), 1 K. B. 811, C. A. 84 TEE MAEINE INSURANCE ACT, 1906. SECT. 60. 6. Policy on goods. The ship becomes a constructive total loss, G ~, 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 (minus the original freight] would exceed their value on arrival. 1 7. 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. 2 8. 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 costs. This is a partial loss, not a constructive total loss. 3 Freight. 9, Policy on freight valued at 2000. The ship strikes on a rock. The master puts into Pernambuco, and, instead of abandoning as he might have done, repairs the ship at a cost exceeding her repaired value, borrowing the money on bottomry. The ship arrives with her cargo. On arrival the ship is sold to satisfy the claim of the lender on bottomry, and the freight also is paid to him. The owner cannot repudiate the acts of the master, and, as freight has been earned, there is no loss of freight. 4 10. Policy on freight. The ship becomes a constructive total loss at her port of destination, but freight is earned. On the abandonment of the ship by the assured, the freight passes to insurers on ship. The assured cannot claim for a loss of freight, for it has been earned/' 11. Policy on chartered freight from Chittagong to Dundee. The ship is wrecked fifty miles from Dundee, and notice of abandonment is properly given in respect of ship, cargo, and freight. Underwriters employ salvors, who bring the cargo into Dundee. This is a total loss 1 Farnworth v. Hyde (1866), L. R. 2 C. P. 204, Ex. Ch. Average adjusters are agreed that this case is commercially wrong so far as relates to the deduction of freight; Me Arthur, Ed. 2, p. 151; Lowndes, Ed. 2, p. 137 ; Goio on Insurance, p. 157. - Roflocanachi v. Elliott (1873), L. E. 8 C. P. 649 ; affirmed L. R. 9 C. P. 520, Ex. Ch. 3 De Mattos v. Sounders (1872), L. K. 7 C. P. 570 ; cf. Meyer v. RalU (1876), 1 C. P. D. 358. 4 Benson v. Chapman (1849), 2 H. L. C. 696, 723. s Scottish Maritime Insurance Co. v. Turner (1853), 1 Macq. H. L. Cas. 334. LOSS AND ABANDONMENT. 85 of freight. No freight is earned, because the goods are brought to their SECT. 60. destination under a salvage contract, and not under the contract of affreightment. 1 NOTE. For further illustrations, see 62, and compare 57. The Bill originally contained a subsection dealing with freight, which was agreed to by the Lord Chancellor's Committee, but it was contended that it was too broadly expressed, and it was afterwards cut out. Constructive total loss of freight is therefore now governed by the general provision contained in subsection (1) of this section. 2 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." 3 It is commonly laid down that, for the purpose of determining whether the assured is entitled to treat a loss as a constructive total loss, regard must be had to the course which would be pursued by a prudent uninsured owner under the circumstances of the case. 4 But as decisions multiply " the prudent uninsured owner " 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. When the test is applicable, the question is, not what the particular owner, if uninsured, would do, but what a man of average prudence ought to do under similar circumstances. 5 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 1 Guthrie v. North China Ins. Co. (1902), 7 Com. Cas., 130, C. A. - See as to freight, McArthur, Ed. 2, p. 152 ; Moss v. Smith (1850), 19 L. J. C. P. 225 ; Banldn v. Potter (1873), L. K. 6 H. L. at pp. 102, 104 ; Jacteon v. Union Marine Inf. Co. (1873), L. R. 8 C. P. 572 ; Ee Jamieson (1895), 2 Q. B. at p. 95, C. A. 3 McArthur, Ed. 2, p. 146. 4 Eoux v. Salvador (1836), 3 Bing. N. S. at p. 286 (goods); Irving v. M-nuiing (1847), 1 H. of L. Cas., at p. 306 (ship) ; Bankin v. Potter (1873), I,. K. 6 H. L. at p. 155 ; Sailing Ship Blairmore v. Macredie (1898), A. C. 503 H. L. (ship); but perhaps the test does not apply to freight; see Philpot v. Suann (1861), 11 C. B. (N. S.) at p. 282, per Willes, J. * The prudent or reasonable man of English law corresponds with the Z>onu8 pater familias of Roman law. The standard is an objective one, and any personal equation must be excluded from consideration ; cf. Angel \. Merchants' Mar. In*. Co. (1903), 1 K. B. at p. 819, C. A. 86 THE MARINE INSURANCE ACT, 1906. SECT. 60. 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 con- structive total loss. Again, when there is a warranty F.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 law 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 make 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. 1 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- ture seems to cover goods, freights, 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." 2 With the object of avoiding the uncertainty 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 1 NOBS v. Smith (1850), 19 L. J. C. P. at p. 228, per Maule, J. ; cf. liankin v. Potter (1873), L. R. 6 H. L. at p. 104. * Rodocanachi v. Elliott, L. R. 9 C. P. at p. 522, Ex. Ch. See illus- tration 7. LOSS AND ABANDONMENT. 87 provides, there is a constructive total loss if the damage to a ship SECT. 60. exceeds 50 per cent, of her repaired value. (Phillips on Insurance, 1539.) In France, among other conditions, the assured may abandon when the damage to the subject-matter insured amount to three- fourths of its value. (Code de Commerce, art. 369.) Mr. Justice Willes in 1867 furnished a memorandum on construc- tive total loss and valuation to the Royal Commission on Unseaworthy Ships. 1 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 definition : (a) 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. (&) 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 unreason- able, having regard to the adventure on which it is insured, there is a constructive total loss of the subject. 2 61. Where there is a constructive total loss the Effect of assured may either treat the loss as a partial loss, or tf ~ abandon the subject-matter insured to the insurer and loss - treat the loss as if it were an actual total loss. 3 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." 4 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 56 (3), ante. 1 Report, 1874, Vol. II., App. No. Ivii., p. 426. 2 International Law Association, 18th Eeport, 1899, pp. 106, 172. 3 Arnould, Ed. 6, pp. 951-953 ; Roux \. Salvador (1836), 3 Bing. N. C. at pp. 286, 287, Ex. Ch. ; Fleming v. Smith (1848), 1 H. of L. Cas. 513 ; Rankin v. Potter (1873), L. E. 6 H. L. at pp. 118, 131, 135; and Kaltenbach v. Mackenzie (1878), 3 C. P. D. 467,479, C. A., where abandon- ment and notice of abandonment are distinguished. As to election, see ibid., and Browning v. Provincial Ins. Co. (1873), L. R. 5 P. C. 263. 4 Kaltenbach v. Mackenzie (1878), 3 C. P. D. at p. 479. 88 TEE MARINE INSURANCE ACT, 1906. SECT. 62. 62. (1.) Subject to the provisions of this section, Notice of where the assured elects to abandon the subject-matter me^t. 01 insured to the insurer he must give notice of abandonment. If he fails to do so the loss can only be treated as a partial loss. 1 (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 his insured interest in the subject-matter insured uncon- ditionally to the insurer. 2 (3.) Notice of abandonment must be given with reasonable diligence after the receipt of reliable informa- tion of the loss, but where the information is of a doubtful character the assured is entitled to a reasonable time to make inquiry. 3 (4.) 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. 4 (5.) The acceptance of an abandonment may be either express or implied from the conduct of the insurer. The mere silence of the insurer after notice is not an acceptance. 5 (6.) Where notice of abandonment is accepted the 1 Arnould, Ed. 6, pp. 953-970 ; Me Arthur, Ed. 2, p. 153. As to origin of notice of abandonment, see Kaltenbach v. Mackenzie (1878), 3 C. P. D. at p. 471, C. A., where the whole subject is discussed. 8 Arnould, Ed. 6, p. 957 ; Currie v. Bombay Ins. Co. (1869), L. B. 3 P. C. at p. 78. 3 Arnould, Ed. 6, p. 960 ; Currie v. Bombay Ins. Co. (1869), L. E. 3 P. C. at p. 79 ; Ranlcin v. Potter (1873), L. R. 6 H. L. at p. 105 ; Kaltenbach v. Mackenzie (1878), 3 C. P. D. at pp. 472, 478. * Me Arthur, Ed. 2, p. 156 : and illustrations below. 5 Arnould, Ed, 6, pp. 968, 969; Provincial Ins. Co. v. Leduc (1874), L. E. 6 P. C. 224. LOSS AND ABANDONMENT. 89 abandonment is irrevocable. The acceptance of the SEOT - 62 - notice conclusively admits liability for the loss and the sufficiency of the notice. 1 (7.) 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. 2 (8.) Notice of abandonment may be waived by the insurer. 3 (9.) Where an insurer has re-insured his risk, no notice of abandonment need be given by him. 4 Illustrations. 1. Policy on ship. On the 7th 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. 5 2. A ship is captured by the enemy. The owner, hearing of this capture, gives notice of abandonment. The ship is recaptured and restored to her owner before action brought. The notice of abandon- ment is ineffectual. This is only a partial loss. 6 3. 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 1 Arnould, Ed. 6, p. 968 ; Provincial Ins. Co. v. Leduo (1874), L. K. 6 P. C. 224 (implied acceptance, waiver of breach of warranty). Where notice of abandonment is not accepted, there is a conflict between the English and Scottish rules. See note, post, p. 91. 2 Arnould, Ed. 6, p. 959 ; Farnworth v. Hyde (1865), 18 C. B. (N. S.), 835; Eanltin v. Potter (1873), L. E. 6 H. L. 83; Kaltenbach v. Mackenzie (1878), 3 C. P. D. 467, C. A. 3 Arnould, Ed. 6, p. 958; Houstman v. Thornton (1816), Holt N. P. 242. 4 Uzielli v. Boston Mar. Ins. Co. (1884), 15 Q. B. D. 11, C. A. 5 Kaltenbach v. Mackenzie (1878), 3 C. P. D. 467, C. A. 6 Bainbridge v. Neilson (1808), 10 East, 329; cf. -Dean v. Hornby (1854), 3 E. & B. 180, 190. 90 THE MARINE INSURANCE ACT, 1906. SECT. 62. ship. This is a valid abandonment, and the assured can recover for a total loss. 1 4. A ship is sunk in deep water in harbour. Notice of abandon- ment is given, but not accepted, and then the underwriter, on his o\vu initiative, and at great expense, recovers the ship before action brought. The notice is valid, and the assured can recover for a total loss. 2 5. Chartered freight on homeward voyage is insured by policy en 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 6. Policy on chartered freight from Pensacola to England. The ship gets into Havannah as a constructive total loss, and is aban- doned. The cargo is brought home by the insurers. The adjustment is made at Liverpool, but by agreement in accordance with the law of Havannah. Under that law pro rata freight to Havannah is payable. The insurer is entitled to this freight. 4 7. Policy on freight from New Zealand to San Francisco. The (ship strands [ne&i- 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 costs would have been more than its worth. There is a total loss of freight, and no notice of abandon- ment 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 equivalent 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 x of 1 Ruyt v. Royal Exchange (1897), 2 Q. B. 135, reviewing previous cases. Aliter it seems in Scotland, Sailimj Ship Blairmore v. Macredie (1898), A. C. 593, at pp. 606, 609. See note next page. 2 Sailing Ship Blairmore v. Macredie (1898), A. 0. 593. 3 Rankin v. Potter (1873), L. R. 6 H. L. 83. 4 London Assurance v. Williams (1893), Times L. R. 97; affirmed, ibid. p. 257, C. A. 5 Trinderv. Thames and Mersey Mar. Ins. Co. (1898), 2 Q. B. at p. 119, C. A. LOSS AND ABANDONMENT. 91 whatever remains of the subject-matter insured when the insurer SECT. 62. settles for a total loss ; see Note D., post, p. 166. Suppose notice of abandonment is given, and the insurer does not either refuse or accept it. Can the assured withdraw the notice ? Lord Blackburn's language appears to imply that he cannot, on the ground that an election once made is determined for ever. 1 But with the assent of the insurer the notice may be withdrawn. Cuilibet licet renunciare juri pro se irdroducto? It is an open question whether notice must be given if the subject- j matter must inevitably perish before notice could be received and acted on, though the subject-matter exists when the election to/ abandon is made. 3 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 pledgee of the policy, but it can be given by a joint owner who manages for the rest. 4 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. 5 According to the law of Scotland and 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 pro- ceedings 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. A subsection embodying the English rule was cut out in Committee on objection taken bv the Scottish members. 1 Cf. EanUn v. Potter (1873), L. E. 6 H. L. at p. 119. 2 See Arnould, Ed. 6, pp. 968, 970. 3 Kaltenbach \. MacJcenzie (1878), C. P. D. at p. 475, per Brett, L.J. 4 Arnould, Ed. 6, p. 956 ; Jardine v. Leathly (1863), 32 L. J. Q. B. 132. 5 Stringer v. Eng. Mar. Ins. Co. (1870), L. R. 5 Q. B. 599, at p. 604. 6 Sailimj Ship Blairmore v. Macredie (1898), A. C. at p. 610. See at pp. 606, 609 as to Scottish rule. 92 TEE MASJNE INSURANCE ACT, 1906. SECT. 63. 63. (1.) Where there is a valid abandonment, Effect of the insurer is entitled to take over the interest of the men". 01 assured in whatever may remain of the subject-matter insured, and all proprietary rights incidental thereto. 1 (2.) 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, 2 less the expenses of earning it incurred after the casualty ; and where the ship is carrying the owners' goods the insurer is entitled to a reasonable remuneration for the carriage of them subse- quent to the casualty causing the loss. 8 Illustrations. 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. 4 2. Policy on ship. The ship halfway 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. 5 1 Arnould, Ed. 6, p. 973 ; McArthur, Ed. 2, p. 157 ; Stewart v. Greenock Ins. Co. (1848), 2 H. of L. Gas. at p. 183 ; Eankin \. Potter (1873), L. E. 6 H. L., at pp. 118, 144 ; and 80. 2 Sea Ins. Co. v. Hodden (1884), 13 Q. B. D. 706, C. A. 3 Miller v. Woodfall (1857), 27 L. J. Q. B. 120 ; see at p. 123 as to the American rule of apportionment. 4 Stewart v. Greenock Ins. Co. (1848), 2 H. of L. Cas. 159 ; on these facts there i no loss of freight for which assured can claim against insurer on freight, Scottish Mar. Ins. Co. v. Turner (1853), 1 Macq. H. L. 334. 4 Hickie v. Eodocanachi (1859), 28 L. J. En. 273. But the insurer is entitled to pro rata freight earned under a foreigti contract of affreight- ment ; see London Assurance v. Williams (1893), Times L. E. 97, affirmed Hid., p. 257, C. A. LOSS AND ABANDONMENT. 93 3. Policy on ship, which has been chartered. The ship is injured SECT. 63. by collision and cannot earn freight. Her injuries are such that she 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. 1 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. 2 NOTE. As to effect of under-insurance, see 81, and see 79. 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 62 and notes. In the second place, can the insurer disclaim an onerous property which is properly abandoned to him? See that question discussed in the note to 79, and see further, Note D on abandonment, post, p. 166. An amendment made in the Commons Committee to subsect. (1) strengthens the view that he can disclaim. The words " is entitled to whatever remains " were altered to " is entitled to take over, etc." The proprietary rights which pass to the insurer on a valid abandon- ment must be distinguished from the fuller rights which pass to the insurer when he pays for a total loss. As Lord Blackburn says, " 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 the same principle it does pass to the underwriters who have satisfied a claim for a partial loss, though no property in the ship passes." 3 It has been suggested by text writers that abandoned freight should be apportioned between the insurer on ship and the insurer on freight : see a curious case where this was done by consent. 4 1 Sea Ins. Co. v. Hadden (1884), 13 Q. B. D. 706, C. A. - The Red Sea (1896), P. 20, C. A. 3 Arnould, Ed. 7, pp. 1388, 1392; Simpson v. Thomson (1877), 3 App. Cas. at p. 292. 1 Sharpe v. Gladstone (1805), 7 East, 35. 94 THE MARINE INSURANCE ACT, 1906. SECT. 63. Upon abandonment, any act or thing done subsequent to the casualty causing the loss by the assured or his agents for the pro- tection of the subject-matter insured, is at the risk of the insurer and for his benefit, provided such an act or thing be done in good faith and reasonably. 1 Partial Losses (including Salvage and General Average and Particular Charges). Particular 64. (1.) A particular average loss is a partial loss ?oss ge f the subject-matter insured, caused by a peril insured against, and which is not a general average loss. 2 (2.) Expenses incurred by or on behalf of the assured for the safety or preservation of the subject-matter insured, other than general average and salvage charges, Particular are called particular charges. Particular charges are not included in particular average. 3 NOTE. The expression " particular 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 in- cidence. The former is a partial loss, voluntarily incurred for the common safety, and made good proportionally by all parties concerned in the adventure ; the latter is a partial loss, fortuitously caused by a maritime 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 particuliere mate'rielle " and " avarie particuliere en frais." 6 As to particular charges, see 65 (2), 76 (2) and 78 ; and as to 1 Eankin v. Potter (1873), L. K. 6 H. L. at p. 119. 2 Arnonld, Ed. 6, p. 927 ; Gow on Insurance, p. 189 ; Me Arthur, Ed. 2, pp. 163, 212, 241 ; Kidston v. Empire Ins. Co. (1866), L. R. 1 C. P. at p. 544; Price v. A 1 Small Damacje Assn. (1889), 22 Q. B. D. at p. 590, C. A. 3 Ibid., and McArthur, Ed. 2, p. 201 ; Arnould, Ed. 7, p. 978. 4 McArthur, Ed. 2, p. 163. 5 Gow on Insurance, p. 221. PARTIAL LOSSES. 95 particular average warranties (or franchises, as they are sometimes SECT. 64. inaccurately called), see 76. See further, Note C on definition of " average," post, p. 1C4, and the illustrations to 69, 71 and 76. 65. (1.) Subject to any express provision in the Salvage policy, salvage charges incurred in preventing a loss by c perils insured against may be recovered as a loss by those perils. 1 (2.) " Salvage charges " means the charges recoverable under maritime law by a salvor independently of con- tract. 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. 2 Illustrations. 1. A ship valued at 2600 is insured with D. for 1200. After encountering very bad weather, the ship is rescued by a steamer, with which no contract is made, and which afterwards obtains an award of 800 as salvage money. The owner does not abandon the ship, but elects to repair her. D.'s proportion of the expenses of repair comes to 1200 ; that is to say, the full sum insured. He is not liable for any portion of the salvage or general average expenses in excess of the 1200. 3 1 JIcArthur, Ed. 2, pp. 171, 312 ; Aitchiton v. Lohre (1879), 4 App. Cas. at p. 765; cf. Steamship Balmoral v. Marten (1901), 2 K. B. at p. 904, C. A. This subsection was redrafted in Committee. 2 McArthur, Ed. 2, pp. 171, 261 ; cf. Anderson v. Ocean Mar. Ing. Co. (1884), 10 App. Cas. 107. As to the meaning of "salvage," see Aitchison v. Lohre (1879), 4 App. Cas. at pp. 765, 766; Carver's Carriage by Sea, 361-445. 3 Aitchison v. Lohre (1879), 4 App. Cas. 755; discussed Montgomery v. Indtmnity Mutual Mar. In*. Co. (1901), 1 K. B. at p. 152. 96 TEE MARINE INSURANCE ACT, 1906. SECT. 65. 2. 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 steamer 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. 1 NOTE. The decision of the House of Lords in 1879 (Aitchison v. Lohre), 2 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, who inter- vene voluntarily and not under contract, are not the agents of the assured, for English law does not recognize the foreign doctrine of " agents of necessity." The practical effect of the decision is this. As salvage charges, strictly so called, are recoverable under the policy, and not under the sue and labour clause, they cannot, like particular charges, be recovered in addition to the sum insured, but the total liability of the insurer is limited to the sum insured. 3 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 Rules, 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 "without benefit of salvage," or when a loss is referred to as a "salvage loss." 4 Life salvage, apart from the salvage of property, is the creation of modern statutes, and the shipowner's liability therefore is not covered 1 Ballantyne v. McKinnon (1896), 2 Q. B. 455, C. A. 2 AitcJiison v. Lolire (1879), 4 App. Gas. at p. 765 ; and cf. UzielU v. Boston Mar. Ins. Co. (1884), 15 Q. B. D. 11, C. A. 3 Cf. Montgomery v. Indemnity Mutual Mar. Ins. Co. (1901), 1 K. B. at p. 152, per Mathew, J. 4 Cf. Sharpe v. Gladstone (1805), 7 East, at p. 37. PARTIAL LOSSES. 97 by the ordinary form of policy on ship. It must be covered by a SECT. 65. special insurance. 1 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 and 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 Roman 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 enter- prise, the nature of sea perils, and the fact that the thing saved was saved under great stress and exceptional circumstances." 2 As to the adjustment of salvage charges, see 73 (2), post. 66. (1.) A general average loss is a loss caused by General or directly consequential on a general average act. It includes a general average expenditure as well as a general average sacrifice. 3 (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 property imperilled in the common adventure. 4 (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 1 Nourse v. Liverpool Sailing Ship Association (1896), 2 Q. B. 16, C. A. ; cf. 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. 3 McArthur, 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, C. A. ; Soemden v. Wallace (1884), 13 Q. B. D. at p. 84, C. A. 4 Ibid. ; Iredale v. China Traders' Ins. Co. (1900), 2 Q. B. at p. 519, C. A. The usual phrase is " ship and cargo " instead' of " common adventure," but cases might be put where there was a common adventure, but no cargo, e.g. ship in ballast going out to earn chartered freight. H 98 TEE MARINE INSURANCE ACT, 1906. SECT. 66. f rom the other parties interested, and such contribution is called a general average contribution. 1 (4.) Subject to any express provision in the policy, where the assured has incurred a general average expenditure, 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 enforced his right of contribution from the other parties liable to contribute. 2 (5.) Subject to any express provision in the policy, where the assured has paid, or is liable to pay, a general average contribution in respect of the subject insured, he may recover therefor from the insurer. 3 (6.) 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 purpose of avoiding, or in connection with the avoidance of, a peril insured against. 4 (7.) Where ship, freight, and cargo, or any two of those interests, are owned by the same assured, the liability of the insurer in respect of general average losses or contributions is to be determined as if those subjects were owned by different persons. 5 1 Lovmdes on Average, Ed. 4, p. 301 ; Svensden v. Wallace (1885), 10 App. Cas. at p. 415. * McArthur, Ed. 2, p. 134; Dickinson v. Jardine (1868), L. R. 3 0. P. 639 ; The Mary Thomas (1894), P. at p. 125, 0. A. 8 McArthur, Ed. 2, p. 206 ; The Brigella (1893), P. 198 ; 7 Asp. Mar. Cas. at p. 405. 4 Harris v. Scaramanga (1872), L. E. 7 C. P. at p. 496. 5 Montgomery v. Indemnity Mutual Marine Ins. Co. (1901), 1 K. B. 147; affirmed 1 K. B. (1902) 734, C. A. This subsection was redrafted in Committee. The word " subjects " more correctly should be " interests." PARTIAL LOSSES. 99 SECT. 66. 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. 1 2. Policy on ship from London to Liverpool and thence to Calcutta, The ship strands on a bank in Ireland. Half the cargo, consisting 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. 2 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 Constantinople. Average is adjusted according to the law prevail- ing 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. 3 4. Policy on goods. Both ship and goods belong to the same owner. In stormy weather the mast has to be cut away for the safety of ship and cargo. The shipowner is entitled to a general average contribution from the insurer on goods in respect of the general average sacrifice. 4 5. Policy on ship. Under charter party the ship sails in ballast for Savannah, where she is to load a cargo of cotton for England. On the voyage out the ship grounds, and a general average loss is incurred in respect of the ship's machinery. The chartered freight is 1 Dickinson v. Jardine (1868), L. K. 3 C. 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 Clauses, Ed. 3, p. 249. 2 Fletcher v. Alexander (1868), L. E. 3 C. P. 375. 3 Marro v. Ocean Mar. Ins. Co. (1875), L. E. 10 C. P. 415, Ex. Ch.; cf. The Mary Thomas (1894), P. 808, C. A. ; and De Hart v. Compania Anonima Aurora (1903), 1 K. B. 109 (general average payable as per foreign statement, stipulation in charter party as to general average). 4 Montgomery v. Indemnity Mutual Mar. Ins. Co. (1901), 1 K. B. 147 ; affirmed (1902), 1 K. B. 734, C. A. 100 THE MARINE INSURANCE ACT, 1906. SECT. 66. liable to contribute, and the amount of the contribution can be deducted from the sum due under the policy on ship. 1 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." 2 Subsects. (1) to (3) are merely explanatory, and perhaps belong Imore 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, but the underwriters have the right to contribution from the various contributories, and, subject to certain differences of values, the result to the underwriters should be practically the same as if the assured had only claimed his contribution from them." 3 Subsect. (7) was twice altered during the passage of the Bill through Parliament, and is not now very happily expressed. It was intended to affirm the recently established rule that there might be a claim on the insurer for a loss in the nature of a general average loss though there were no contributing interests, owing to single ownership. But take this case. A mast is jettisoned for the benefit of ship and cargo. If they are owned by different owners the assured on ship gets the full value of the mast from the underwriter on ship, but the latter then becomes entitled to contribution from the cargo owner. 4 But where the shipowner is the same person as the cargo owner it would be absurd to pay him the full value of the mast and thereby become entitled to claim from him the cargo contribution. No doubt 1 Steamship Carisbroolce Co. v. London and Provincial Mar. Ins. Co. (1901), 6 Com. Cas. 291. 2 BirMey v. Presgrave (1801), 1 East, at p. 228. 3 Tlie Briijella (1893), P. at p. 195 ; 7 Asp. Mar. Cas. at p. 404. 4 Dickinson v. Jardine (1868), L. K. 3 C. P. 369. PARTIAL LOSSES. 101 as a matter of adjustment the contributory value of the cargo will have SECT. 66. to be deducted. The whole subject of general average is in an unsatisfactory condition. 1 The liability to contribute is a common law liability, independent 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 warranty 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 pay- able 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. 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 with the contract of affreight- ment." The York-Antwerp Rules, 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. 2 Concerning general average as between ship, freight, and cargo, see Carver's Carriage by Sea, Ed. 3 (1900), 361-445. It is the duty of the shipowner 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. 3 1 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. 2 See Carver's Carriage by Sea, Ed. 3, 394-396, distinguishing salvors, properly so called, who intervene voluntarily, from salvors em- ployed by the ship. 3 McArthur, Ed. 2, p. 199; Lowndes on Average, Ed. 4, p. 335; OocA-8 v. Allan (1879), 5 Q. B. D. 38; approved St rang, Steel & Co. v. Scott (1889), 14 App. Cas. at p. 607. ^W^l^f THE MARINE INSURANCE ACT, 1906. * SECT. 67. Measure of Indemnity. Extent of 67. (1.) The sum which the assured can recover insurf/for * n re spect of a loss on a policy by which he is insured, loss. j n the case of an unvalued policy, to the full extent of the insurable value, or, in the case of a valued policy, to the full extent of the value fixed by the policy, is called the measure of indemnity. (2.) Where there is a loss recoverable under the policy, the insurer, or each insurer if there be more than one, is liable for such proportion of the measure of indemnity 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. 1 NOTE. Insurance is a contract of indemnity, but in marine insurance the indemnity is conventional, and the following sections supply the standard or measure for ascertaining it. The adjustment of marine losses proceeds upon the hypothesis that the subject-matter insured is fully covered by insurance. Suppose a ship valued at 10,000 is insured for 1000 only. The shipowner is said to be " his own insurer " for 9000, and any loss which occurs must be adjusted on this basis, see 81. 2 The following cases may be put in illustration of this principle : 1. A cargo valued at 10,000 is insured for 1000 ty 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. 2. A ship valued at 5000 is insured for 1000. The ship is 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. 1 Cf. Lolire \. Aitchison (1878), 3 Q. B. D. at pp. 564, 565, C. A. affirmed on this point, but reversed on another, 4 App. Gas. 759. 2 Fire insurance losses are adjusted on a different basis. See post, p. 1G2. See principle explained by Walton, J., in Anglo-Californian Bank v. London and Prov. Mar. Ins. Co. (1906), 10 Com. Cas. at pp. 8, 9. MEASURE OF INDEMNITY. 103 It is immaterial whether the real value of the ship be 4500 or SECT. 67. 5500. 1 As to the suing and labouring clause, which is a distinct engage- ment in the policy, see 79 ; and for a quasi exception, see 74. 68. Subject to the provisions of this Act, and to Total loss, any express provision in the policy, where there is a total loss of the subject-matter insured : (1.) If the policy be a valued policy, the measure of indemnity is the sum fixed by the policy. 2 (2.) If the policy be an unvalued policy, the measure of indemnity is the insurable value of the subject-matter insured. 3 NOTE. As to valued and unvalued policies, see 27 and 28, and as to insurable value and the rules for determining it, see 16. 69. 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, 4 but not ex- ceeding the sum insured in respect of any one casualty. 5 (2.) Where the ship has been only partially repaired, the assured is entitled to the reasonable cost 1 See Me Arthur, Ed. 2, p. 269 ; and 78, post. 2 Arnould, Ed. 6, p. 1157; Irving v. Hanniwj (1847), 1 H. of L. Cas. at pp. 305, 307 ; Sailing Ship Blairmore v. Macredie (1898), A. C. at p. 610. 3 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. 4 As to the customary deductions, see post, p. 154. s Me Arthur, Ed. 2, pp. 212, 219; Aitchison v. Lolire (1879), 4 App. Cas. at p. 762 ; Pitman v. Universal Mar. Ins. Co. (1882), 9 Q. B. D. at p. 208. 104 TEE MARINE INSURANCE ACT, 1906. of such repairs, computed as above, and also to be indemnified for the reasonable deprecia- tion, if any, arising from the unrepaired damage, provided that the aggregate amount shall not exceed the cost of repairing the whole damage, computed as above. 1 (3.) Where the ship has not been repaired, and has not been sold in her damaged state during the risk, the assured is entitled to be indemni- fied for the reasonable depreciation arising from the unrepaired damage, but not exceed- ing the reasonable cost of repairing such damage, computed as above. 2 Illustrations. 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 be recovered under the policy on ship. 3 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 time in dock. The insurer must pay the whole expenses of docking the ship. 4 NOTE. In the case of wooden ships, except on first voyage, the custom is to make an arbitrary deduction of " one-third new for old " from the cost of the repairs. 5 But this rule is inapplicable_to iron ships, and the practice is to provide for them by special clauses. Lloyd's 1 McArthur, Ed. 2, p. 220 ; cf. Stewart v. Steele (1852), 5 Scott N. K. 927, at p. 948. 2 Ibid. Field Steamship Co. v. Burr (1899), 1 Q. B. 579, C. A. 4 Rudbon Steamship Co. v. London Assurance (1900), A. C. 6 H. L., distinguishing the Vancouver Case (1886), 11 App. Cas. 573. 5 See McArthur, 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, C. A. MEASURE OF INDEMNITY. 105 clause for steamers and iron ships runs, " No thirds to be deducted SECT. 69. except as regards hemp rigging and ropes, sails, and wooden deck." l The " customary deductions " are set out, post, p. 154. They were originally set out as a schedule to the Bill, but the schedule was cut out afterwards as it was thought better to leave it to custom, which ' f< may alter from time to time to meet new needs. The Act does not provide for the case where the ship is not repaired but is sold in her damaged state during the risk. In that case accord- ing to the majority of the Court in Pitman v. Universal Mar. Ins- Co., 2 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. Lord Esher dis- sented 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 deprecia- tion. 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 ? The matter must be left for future decision. As to total loss following a partial loss, see 77, post. 70. Subject to any express provision in the policy, Partial loss where there is a partial loss of freight, the measure of indemnity is such proportion of the sum fixed by the policy, in the case of a valued policy, or of the insurable value, in the case of an unvalued pblicyTasthe proportion of freight lost by the assured bears to the whole freight at; the risk of the assured under the policy. 3 1 See Me Arthur, Ed. 2, pp. 313, 403. 2 Pitman v. Universal Mar. Ins. Co. (1882), 9 Q. B. D. 192, at pp. 218, 219, C. A.; McArthur, Ed. 2, p. 220; cf. Stewart \. Steele (1852), 5 Scott N. E. 927, at p. 948. 3 See McArthur, Ed. 2, p. 235 ; Lowndes, Ed. 2, p. 195 ; Denoon v. Home and Col. Ins. Co. (1872), L. K. 7 C. P. at p. 351 ; The Main (1894), P. 320; United States Shipping Co. v. Empress Assurance Corpn. (1906), Times, December 6. As to the facts which constitute a partial, as distin- guished from a total loss of freight, see Ranldn v. Potter (1873), L. K. 6 H. L. at pp. 98-100, per Brett, J. 106 THE MAE1NE INSURANCE ACT, 1906. SECT. 70. NOTE. As to insurable value in the case of freight, see 16 (2), ante. Partial loss 71. Where there is a partial loss of goods, mer- men-ban- chandise, or other moveables, the measure of indemnity, disc, etc. su }jj ec t to any express provision in the policy, is as follows : (1.) Where part of the goods, merchandise, or other moveables insured by a valued policy is totally lost, the measure of indemnity is such proportion of the sum fixed by the policy as the insurable value of the part lost bears to the insurable value of the whole, ascertained as in the case of an unvalued policy. 1 (2.) Where part of the goods, merchandise, or other moveables 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. 55 (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 such proportion of the sum fixed by the policy, in the case of a valued policy, or of the insurable value in the case of an unvalued policy, as the difference between the gross sound and damaged values at the 1 McArthur, Ed. 2, p. 246; Lewis v. Ruclcer (17G1), 2 Burr. 1U!7; Irving v. Manning (1847), 1 H. of L. Cas. at p. 305. 2 McArthur, Ed. 2, p. 246; Lewis v. Euclter (17G1), 2 Burr. 1167; Irving v. Manning (1847), 1 H. of L. Caa. at p. 305 ; cf. Tobin v. Harfuid (1863), 32 L. J. C. P. 134, 136 ; see 16 (3) as to insurable value. MEASURE OF INDEMNITY. 107 place of arrival bears to the gross sound SECT. 71. value. 1 (4.) " Gross value " means the wholesale price, or, if there be no such price, the estimated value, with, in either case, freight, landing charges, and duty paid beforehand ; provided that in the 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. 2 Illustrations. 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. 3 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 1 Me Arthur, Ed. 2, p. 247; Johnson v. Sheddon (1802), 2 East, 580 (the "brimstone case"). As to estimating the value of jettisoned goods, cf. Fletcher v. Alexander (1868), L. K. 3 C. P. 375 (general average case). The values must, of course, be reduced to the same cash basis. McArthur, Ed. 2, p. 253; cf. Gow on Insurance, p. 198; Eules of Practice of Association of Average Adjusters, 1906, post, p. 173. Where any sale or other preliminary 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 subse- quently recoverable from the insurer as " extra charges." McArthur, Ed. 2, p. 271 ; cf. Goto on Insurance, p. 125 ; Francis v. Boulton (1895), 65 L. J. Q. B. 153 (conditioning charges). * Usher v. AoWe (1810), 12 East, 639, and 16, ante. The test adopted excludes the rise or fall of the London market. 108 THE MARINE INSURANCE ACT, 1906. SECT. 71. 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 jetti- soned, and the rest damaged to the extent shown by the sale of the whole. 1 3. Policy on 1700 packages of tea, valued at 6000. Part of the 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. 2 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 whole 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. 3 NOTE. The policy of the rules contained in subsects. (3) and (4) 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. 4 Such cases are usually provided for by special clauses. See, further, 75, post. As to insurable value, see 16 (3). Apportion- 72. (1.) Where different species of property are valuation, insured under a single valuation, the valuation must be apportioned over the different species in proportion to their respective insurable values, as in the case of an un- valued 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 1 Spence v. Union Mar. Ins. Co. (1868), L. B. 3 C. P. 427. * Cator v. Great Western Ins. Co. (1873), L. E. 8 C. P. 552, 561. There was a special warranty as to sea-damage, but the judgment establishes the general principle. See this case distinguished, Brown Brothers v. Fleming (1902), 7 Com. Gas. 245 (policy on cases of whisky, damage to labels and packing by sea perils). 3 Lysaght v. Coleman (1895), 1 Q. B. 49, C. A. 4 Cf. British Columbia Co. v. Nettleship (1868), L. E. 3 C. P. 499 (measure of damage against shipowner) ; and see 75, post. MEASURE OF INDEMNITY. 109 value of the whole ascertained in both cases as provided SECT. 71. by this Act. 1 (2.) Where a valuation has to be apportioned, and particulars of the prime cost of each separate species, quality, or description of goods cannot be ascertained, the division of the valuation may be made over the net arrived sound values of the different species, qualities, or descriptions of goods. 2 NOTE. As to "insurable value," see 16 (3), ante; and for the mode of ascertaining the value referred to in subsect. (1), see sect. 71 as read with sect. 16. 73. (1.) Subject to any express provision in the General policy, where the assured has paid, or is liable for, any contri^u- general average contribution, the measure of indemnity is slivage D the full amount of such contribution if the subject-matter charges. liable to contribution is 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 payable by the insurer must be reduced in proportion to the under insurance, and where there has been a particular average loss which constitutes a deduc- tion from the contributory value, and for which the in- surer is liable, that amount must be deducted from the insured value in order to ascertain what the insurer is liable to contribute. 3 1 McArthur, Ed. 2, pp. 244-246; Gow on Insurance, p. 191; Bules of Practice of Association of Average Adjusters, 1906, post, p. 173; and see 76, post. 2 Ibid. 3 See McArthur, Ed. 2, pp. 206, 210 ; Gow on Insurance, p. 301 ; Kules of Practice of Association of Average Adjusters, 1906. 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 contribution by goods where ship is a con- structive total loss, see Henderson v. SlianUand (1896), 1 Q. B. 525, C. A. 110 TEE MARINE INSURANCE ACT, 1906. SECT. 73. (2.) Where the insurer is liable for salvage charges the extent of his liability must be determined on the like principle. 1 Illustration. Policy on ship valued at 33,000, for that sum. Her real value is 40,000. The ship incurs certain general average and salvage ex- penses which are adjusted abroad on her real value. The assured can only recover thirty-three fortieths of the amount so adjusted from the insurer. 2 NOTE. This section deals with adjustment. As to liability, see 66, 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. See 81 as to under insurance. Liabilities 74. Where the assured has effected an insurance in parties. express terms against any liability to a third party, the measure of indemnity, subject to any express provision in the policy, is the amount paid or payable by him to such third party in respect of such liability. 3 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 contract, very 1 See footnote ( 3 ) on p. 109. 2 Steamship Balmoral v. Marten (1901), 2 K. B. 896, C. A. ; affirmed A. C. (1902) 511, H. L. 3 Arnould, Ed. 6, pp. 23, 24, and 730 ; McArthur, Ed. 2, pp. 320, 370, and the ordinary forms of running-down clauses ; The Niobe (1891), A. C. 401, H. L. (collision); cf. Joyce v. Kennard (1871), L. E. 7 Q. B. 78 (lighterman's liability) ; Cunard Steamship Co. v. Marten (1902), 2 K. B. 624, 629 (carriers' liability). MEASURE OF INDEMNITY. Ill different from the contract of insurance in its ordinary form ; and SECT. 74. the liability under it does not depend upon the ordinary perils covered by the policy, but upon the special matters mentioned in the clause itself." i Kunning-down clauses were introduced into policies in consequence of the decision in Devaux v. Salvador, 2 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. 3 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. 4 The construction of a collision or running-down clause depends entirely on the language used by the parties in the particular clause in question. 5 Though the shipowner's liability for collision under British law is limited by statute, he is expressly authorized to insure : see Merchant Shipping Act, 1894 (57 & 58 Viet. c. 60), 506, post, p. 159. 75. (1.) Where there has been a loss in respect of General any subject-matter not expressly provided for in the fore- asto' S1 going provisions of this Act, the measure of indemnity shall be ascertained, as nearly as may be, in accordance 1 Xenos v. Fox (1868), L. R. 3 C. P. at p. 635 ; affirmed L. R. 4 C. P. 665. - Devaux v. Salvador (1836), 4 Ad. & E. 420. 3 See Tatham v. Burr (1898), A. C. at p. 38.1. 4 Davidson v. Burnand (1868), L. K. 4 C. P. at p. 121, per Willes, J. As to the scope to be given to the term " collision." see Chandler v. Blogg (1897), 1 Q. B. 32 (collision with sunken barge); The Niche (1891), A. C. 401 (collision with tug) ; and cases cited in next note. 3 The undermentioned recent cases may be referred to : The Niche (1891), A. C. 401 (tug and tow regarded as identical) ; The Munroe (1893), P. 248 (meaning of sunken wreck) ; Union Mar. Ins. Co. v. Borwiclc (1895), 2 Q. B. 279 (" piers or similar structures " include artificial bank); Shelbourne v. Laio Investment Ins. Corpn. (1898), 2 Q. B. 626 (loss by detention during repairs not recoverable) ; Tatham v. Burr (1898), A. C. 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); Margelts v. Ocean Guarantee Corporation (1901), 2 K. B. 792 (collision with anchor of another vessel). 112 THE MARINE INSURANCE ACT, 1906. SECT. 75. with those provisions, in so far as applicable to the par- ticular case. 1 (2.) Nothing in the provisions of this Act relating to the] measure of indemnity shall affect the rules relat- ing to double insurance, or prohibit the insurer from dis- proving 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. 2 Particular 76. (1.) Where the subject-matter insured is warranted free from particular average, the assured cannot recover for a loss of part, other than a loss incurred by a general average sacrifice, unless the con- tract contained in the policy be apportionable ; but, if the contract be apportionable, the assured may recover for a total loss of any apportionable part. 3 (2.) Where the subject-matter insured is warranted free from particular average, either wholly 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. 4 1 See notes to 71 and 74, and such oises as Baring v. Marine Ins. Co. (1893), W. N., p. 164 (stock sent abroad by registered letter). 2 See 32 (double insurance), and note to 27 as to short interest. 3 McArthur, Ed. 2, pp. 242, 341 ; Gow on Insurance, p. 191 ; Sail I v. Janson (1856), 6 E. & B. 422 (bags of seed), read with Duffy. Mackenzie (1857), 3 C. B. (N. S.) 16 (master's effects), and Gator v. Great Western Int. Co. (1873), L. R. 8 C. P. at p. 559. In Duff v. Mackenzie it was held that where the goods were different in specie the contract was apportioii- able, but it is submitted that this is only one test of severability. For cases on the F.P.A. warranty, see Hagedorn v. Whitmore (1816), 1 Stark. 157; Navone v. Haddon (1850), 9 C. B. 30; Kidston v. Empire Ins. Co. (1866), L. K. 1 C. P. at p. 548 (reviewing cases); De Mattos v. Saunders (1872), L. K. 7 C. P. 570. 4 McArthur, Ed. 2, p. 312 ; Kidston v. Empire Ins. Co. (1866). L. E. 1 C. P. 535 ; aud 79. MEASURE OF INDEMNITY. 113 (3.) Unless the policy otherwise provides, where the SE CT. 76. subject-matter insured is warranted free from particular average under a specified percentage, a general average loss cannot be added to a particular average loss to make up the specified percentage. 1 (4.) For the purpose of ascertaining whether the specified percentage has been reached, regard shall be had only to the actual loss suffered by the subject-matter insured. Particular charges and the expenses of and incidental to ascertaining and proving the loss must be excluded. 2 Illustrations. 1. Policy oa master's effects, " free of all average." The effects include articles of different species, e.g. feather bed, chronometer, spy- glass, etc. Some of the effects are totally lost by perils of the seas, others are saved. The assured can recover for those/which are totally lost. 3 2. Policy on iron rails, warranted "free from particular average unless the ship be stranded." The ship is not stranded, but becomes a constructive total loss. The rails are saved, landed, and sent on to their destination in another ship at an increased freight. The assured cannot recover the extra freight he has had to pay. 4 3. Policy on 2000 bags of linseed " warranted free from average, unless general, etc." 1000 bags are so sea-damaged as to become rotten and valueless. The insurer is not liable. This is not a 1 Price v. A 1 Small Damage Assn. (1889), 22 Q. B. D. 580, C. A. ; and cf. Oppenheim v. Fry (1863), 3 B. & S. at p. 884. The decision has been criticized as being contrary to the mercantile understanding. See Me Arthur, Ed. 2, pp. 135, 386. * As to two last paragraphs, see Rules of Practice of Association of Average Adjusters, 1906. The expenses of protest, survey, and other proofs of loss are not included in the o per cent. See post, p. 177. * Duff v. Mackenzie (1857), 3 C. B. (X. S.) 16. 4 Great Indian Peninsula Railway v. Saunders (1861), 1 B. & S. 41 ; affirmed 2 B. & S. 266 ; discussed and explained Kidston v. Empire Ins. Co. (1866), L. R. 1 C. P. at p. 548. 114 THE MARINE INSURANCE ACT, 1906. SECT. 76. separate insurance of each bag, but of the whole of the linseed, and the warranty applies accordingly. 1 4. Policy on disbursements and advances warranted free from all average. The disbursements include outlay, before the ship sails, on provisions, stores, port dues, and insurance. The ship was chartered to take a cargo to South America, and the intention of the assured was to obtain a homeward cargo there. On the voyage out the ship catches fire, and the assured abandons the voyage and brings the ship home for repairs. This is an average and not a total loss. 2 5. Policy on ship from London to Calcutta warranted " free from average under 3 per cent., etc." The ship loses a boat, and after- wards sustains other sea damage, which, if added to the loss of the boat, brings up the total to more than 3 per cent. The losses can be aggregated. 3 6. Time policy on ship warranted " free from average under 3 per cent, etc." The ship makes several distinct voyages during the currency of this policy, and on the several voyages incurs small damages. These cannot be added together to make up the 3 per cent. 4 7. Policy on ship warranted " free from average under 3 per cent., etc." The ship goes into dock to have her bottom cleaned in ordinary course. It is then discovered that her stern post has been broken while at sea. This takes eight days to repair. The cleaning would have taken only three days. The dock dues can be apportioned, so as to bring up the particular average loss to more than 3 per cent. 5 NOTE. A policy, or rather the contract contained in it, is appor- tionable where the policy itself provides for apportionment, or where by usage it is treated as apportionable. The particular average warranty is sometimes spoken of as a franchise, but in England it is a condition, and not a limitation or 1 BalH v. Janson (1856), 6 E. & B. 422, Ex. Ch. 8 Lawther v. Black (1900), 6 Com. Cas. 5, aff. 6 Com. Cas. 19G, C. A. ; cf. Price v. Maritime Insurance Co. (1901), 2 K. B. 412, C. A., as to distance freight. 3 BlacJcettv. Royal Exchange (1832), 2 Cr. & J. 244. 4 Stewart v. Merchants' Mar. Ins. Co. (1885), 16 Q. B. D. 619, C. A. But cf. McArthur, Ed. 2, p. 297. * Marine Ins. Co. v. China Trans-Pacific Co. (1886), 11 App. Cas. 573; discussed Rudbon Steamship Co. v. London Assurance (1900), A. C. 6, H. L. See Rules of Practice of Association of Average Adjusters in this connection, post, p. 173. MEASURE OF INDEMNITY. 115 franchise. Thus if a ship, warranted free from average under 3 per SECT. 76. cent., is damaged to the extent of 5 per cent, the assured is entitled to recover the whole 5 per cent, and not merely the balance of 2 per cent. 1 In the case of a voyage policy, successive losses may be added together to make up the specified percentage. 2 In the case of a time policy, successive losses on the same voyage may be added together, but losses occurring on different voyages cannot be added together to make up the specified percentage. 3 These rules have been questioned on the ground of expediency, and sub-clauses embodying them were cut out from the Bill. 77. (1.) Unless the policy otherwise provides, and Successive subject to the provisions of this Act, the insurer is liable for successive losses, even though the total amount of such losses may exceed the sum insured. 4 (2.) Where, under the same policy, a partial loss, which has not been repaired or otherwise made good, is followed by a total loss, the assured can only recover in respect of the total loss. Provided that nothing in this section shall affect the liability of the insurer under the suing and labouring clause. 5 Illustrations. 1. A ship is insured against perils of the seas, but not against fire. She is sea-damaged, but the sea-damage is not repaired. Afterwards she is destroyed by fire. The assured cannot recover anything on this policy. 1 As to the French " franchise," see Gow, p. 195. 2 McArthur, p. 295 ; and illustration 5. 3 Stewart v. Merchants' Mar. Ins. Co. (1885), 16 Q. B. D. 619, C. A. ; see this case criticized, McArthur, Ed. 2, p. 297. 4 Arnould, Ed. 6, p. 985; Le Cheminant v. Pearson (1812), 4 Taunt. 367 ; cf. Aitchison v. Lohre (1879), 4 App. Cas. at p. 763. 5 McArthur, Ed. 2, p. 220 ; Livie v. Janson (1810), 12 East, 648. As to proviso, see ibid, at p. 655. 8 Livie v. Janson (1810), 12 East, 648, at p. 654, where this case is put. 116 THE MARINE INSURANCE ACT, 1906. SECT. 77. 2. A ship is insured by her owners by a time policy. After insur- ance she is chartered. On the voyage out the ship is damaged, and the repairs are paid for by the charterers, and the cost specially insured. On the voyage home she is totally lost. The shipowner can only recover for the total loss. 1 NOTE. In Lidgett v. Secretan 2 where the assured recovered for both a partial and total loss, the losses were covered by different and consecutive policies, and the fact that the insurer was the same person in both cases was held to be immaterial. " It is clear," says Lord Abinger, " that whenever the underwriter adjusts a partial loss, he still remains liable on the policy, and may go on paying partial losses exceeding in the whole cent, per cent., and may ultimately have to pay a total loss of cent, per cent. Such a case is possible." 3 As to suing and labouring clause, see next section. Suing and 78. (1.) Where the policy contains a suing and clause" 12 labouring clause, the engagement thereby entered into is deemed to be supplementary to the contract of in- surance, and the assured may recover from the insurer any expenses properly incurred pursuant to the clause, notwithstanding that the insurer may have paid for a total loss, or that the subject-matter may have been warranted free from particular average, either wholly or under a certain percentage. 4 (2.) General average losses and contributions and salvage charges, as defined by this Act, are not recover- able under the suing and labouring clause. 5 1 The Dora Forster (1900), P. 241. 2 Lidgett \. Secretan (No. 2), L. R. 6 C. P. 616. * Brooks v. MacDonnell (1835), 1 Y. & C. 500, at p. 515 ; 41 R. R. at p. 342. 4 McArthur, Ed. 2, p. 262 ; Gow ou Insurance, p. 226 ; Lowndes, Ed. 2, p. 202 ; Lohre v. Aitchison (1878), 3 Q. B. D. at p. 567, C. A. (reversed on another point) ; and Kidston v. Empire Ins. Co. (1866), L. R. 1 C. P. 535, affirmed L. R. 2 C. P. 357, Ex. Ch. ; cf. Dum Brown & Co. v. Binning (1906), 11 Com. Gas. 190. s Aitchison v. Lohre (1879), 4 App. Cas. 755, especially at pp. 765, 768. For definition of salvage charges, see 65, ante. MEASURE OF INDEMNITY. 117 (3.) Expenses incurred for the purpose of averting or SECT - 78 - diminishing any loss not covered by the policy are not recoverable under the suing and labouring clause. 1 (4.) It is the duty of the assured and his agents, in all cases, to take such measures as may be reasonable for the purpose of averting or minimizing a loss. 2 Illustrations. 1. Insurance on chartered freight, warranted free from particular average. The ship in consequence of sea-damage becomes a con- structive total loss, but the cargo is lauded and sent on in another ship. The expenses of landing, warehousing, and reloading the cargo can be recovered as particular charges under the sue and labour clause. 3 2. Policy containing a collision clause. The assured is sued for running down another ship, and incurs costs in defending the action. These costs are not recoverable from the insurer under the sue and labour clause. 4 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. 5 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. 6 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 1 Kidston v. Empire Ins. Co. (1866), L. R. 1 C. P. at pp. 546, 547, per Willes, J. ; Meyer v. Ealli (1876), 1 C. P. D. 358. 2 Me Arthur, Ed. 2, p. 263 ; Kidston v. Empire Ins. Co. (1866), L. R. 1 C. P. at p. 544 ; Currie v. Bombay Ing. Co. (1869), L. R. 3 P. C. 72. 1 Kidston v. Empire Ins. Co. (1866), L. R. 1 C. P. 535 ; affirmed L. R. 2 C. P. 357, Ex. Ch. 4 Xenos v. Fox (1869), L. R. 4 C. P. 665, Ex. Ch. 5 Lee v. Southern Ins. Co. (1870), L. R. 5 C. P. 397. 6 Dixon v. Wentworth (1879), 4 C. P. D. at pp. 377, 378. The case is overruled only so far as it decided that salvage expenses were recoverable under the clause. See, too, Cunard Steamship Co. v. Marten (1902), 2 K. B. at p. 629. 118 THE MARINE INSURANCE ACT, 1906. SECT. 78. extra fodder supplied to the cattle during the detention is recoverable under the sue and labour clause. 1 6. A ship valued at 2600 is insured with D. for 1200. After encountering very heavy weather the ship is rescued by a steamer with which no contract is made, and which afterwards obtains an award of 800 for salvage. The owner, instead of abandoning, elects to repair the ship at a cost of 2600. The insurer is only liable for 1200. He is not liable under the sue and labour clause for any additional sum for salvage charges, for the salving steamer is not the " factor, servant, or assign " of the assured. 2 7. A ship is insured by A., an underwriter, who re-insures with B., who again re-insures with C. for 100. The ship becomes a construc- tive total loss. A. settles with the original assured, aud then at great expense refloats the ship and sells her. His expenses amount to 112 per cent, on the insured value. If B. pays A., he can only recover 100 from C., for A., the first insurer, is not the factor, servant, or assign of B. within the meaning of the sue and labour clause. 3 8. Policy effected by shipowner " to cover shipowner's liability of any kind to owners of mules and cargo up to 20,000 owing to the omission of the negligence clause in the contract." The mules are worth 40,000. The ship is stranded, and expenses are incurred in landing some of the mules which were saved. The sue and labour clause does not apply to a policy in this form, and the expenses so incurred cannot be recovered under the clause. 4 9. A ship insured against total loss is stranded, and abandoned. The insurers employ a firm of ship repairers, who succeed in getting her off and saving her, and the assured fails in his claim for a total loss. The insurers cannot counter-claim under the sue and labour clause, or otherwise, for the expenses of salving the ship. 5 NOTE. The assured and his agents are bound by law to use all reasonable efforts to avert or minimize a loss. 6 The suing and 1 The Pomeranian (1895), P. 349. Aitchison v. Lolire (1879), 4 App. Cas. 755. 1 Uzielli v. Boston Marine Insurance Co. (1884), 15 Q. B. D. 11 C. A. 4 Cunard Steamship Co. v. Marten (1902), 2 K. B. 624, affirmed 2 K. B. (1903), p. 511, C. A. * Cronan v. Stonier (1903), 1 K. B. 87, distinguishing The Pickwick (1852), 16 Jur. 669. 6 Benson v. Chapman (1849), 2 H. L. C. 496 ; Notara v. Henderson (1872), L. K. 7 Q. B. 225, Ex. Ch. (shipper v. shipowner). RIGHTS OF INSURER ON PAYMENT. 119 labouring clause enables the assured to recover the expenditure involved SECT. 78. 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," which provides that " no acts of the insurer or insured in recovering, saving, or preserving the property insured shall be con- sidered as a waiver or acceptance of abandonment." 1 For forms of the sue and labour and waiver clauses, see Lloyd's policy, post, p. 140. The sue and labour clause is not a contract of indemnity, therefore if an assured shipowner is sued for work done in endeavouring to salve his ship, he cannot bring in his underwriters under the third party procedure. 2 As to general average and salvage, see note to 65 and 73, ante. Sue and labour expenses are apportioned on the like principle. 3 Rights of Insurer on Payment. 79. (1.) Where the insurer pays for a total loss, Kight of . - subroga- either of the whole, or in the case ot goods of any appor- tion. tionable part, of the subject-matter insured, 4 he thereupon becomes entitled to take over the interest of the assured in whatever may remain of the subject-matter so paid for, and he is thereby subrogated to all the rights and remedies of the assured in and in respect of that subject-matter as from the time of the casualty causing the loss. 5 1 McArthur, Ed. 2, p. 272 ; Loicndes, Ed. 2, p. 165. 2 Johnston v. The Salvage Association (1887), 19 Q. B. D. 458, C. A. 3 Cunard Steamship Co. v. Marten (1902), 2 K. B. at p. 629. 4 The words as to total loss of part were added after some discussion by the Lord Chancellor's Committee. Before the Act they were very doubtful law. * Arnould, Ed. 7, p. 1386 ; McArthur, Ed. 2, p. 158 ; Pankin v. Potter <1873), L. K. 6 H. L. at pp. 118, 119, 144; Simpson v. Thomson (1877), 3 App. Cas. at p. 284, 292; Burnand v. liodocanachi (1882), 7 App. Cas. at p. 339 ; Darrell v. Tibbittt (1880), Q. B. D. at p. 563, C. A., per Lord Esher. 120 TEE MARINE INSURANCE ACT, 1906. SECT. 79. ^2.) Subject to the foregoing provisions, where the insurer pays for a partial loss, he acquires no title to the subject-matter insured, or such part of it as may remain, 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 this Act, by such payment for the loss. 1 Illustrations. 1. Goods insured by a valued policy are captured and sold. The underwriters pay down 50 per cent, of the loss on account. Afterwards the assured receives half the proceeds of the goods from the captors. The insurers are not entitled to this or any part of it. 2 2. A ship is missing, and the insurer pays for a total loss. If the ship afterwards arrives she belongs to the insurer. 3 3. Policy on goods. The ship is captured by a Brazilian cruiser as a blockade -runner. The assured offers to abandon. The insurer declines to accept the abandonment, but eventually compromises the claim by paying 35 per cent. Some years afterwards, the Brazilian Government, under a Convention with Great Britain, make com- pensation. The insurer is not entitled to any part of the compensa- tion so paid. 4 4. 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. 5 5. 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 1 Simpson v. Thomson (1877), 3 App. Gas. at p. 292, H. L. ; Arnould, Ed. 7, p. 1388. See 81 as to effect of under-insurance. 2 Tunno v. Edwards (1810), 12 East, 488 ; 11 B. B. 458. 3 Houstman v. Thornton (1816), Holt N. P. 242. 4 BrooJet v. Macdonnell (1835), 41 K. B. 336. s Dickinson v. Jardine (1868), L. B. 3 C. P. 639; and Rules of Practice of Average Adjusters' Association, 1906. RIGHTS OF INSURER ON PAYMENT. 121 the owners of the ship in fault. The insurers are entitled to the SECT. 79. whole of this sum as salvage. 1 G. 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 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. 2 7. 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. 3 8. Goods, on which freight has been prepaid, are lost through the negligence of the shipowner. . Subject 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. 4 9. 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. 5 10. Wool is damaged in a collision between lighters. The insurers 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 defence 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." 7 If the 1 North of England Ins. Assn. v. Armstrong (1870), L. R. 5 Q. B. 244, doubted, Burnand \. Eodocanachi (1882), 7 App. Cas. at p. 342; and see Arnould, Ed. 7, p. 1390, and see 81. 2 Burnand v. Rodocanachi (1882), 7 App. Cas. 333, explained Castdlain v. Preston (1883), 11 Q. B. D. at p. 404, per Lord Bowen ; and Stearns v. Village Main Reef Co. (1904), 10 Com. Cas. 89, C. A. 3 Simpson v. Thomson (1877), 3 App. Cas. 279, H. L. ; discussed Mid- land Ins. Co. v. Smith (1881), 6 Q. B. D. at p. 565 ; and Lowndes, Ed. 2, p. 226. 4 Dufourcet v. Bishop (1886), 18 Q. B. D. 373. 5 Sea Ins. Co. v. Hadden (1884), 13 Q. B. D. 70G, C. A. 6 King v. Victoria Ins. Co. (1896), A. C. 250, P. C. ' Castellain v. Preston (1883), 11 Q. B. D. at pp. 388, 404, C. A.; and of. West of England Fire Ins. Co. v. Isaacs (1896), 2 Q. B. 377 (fire policy). 122 TEE MARINE INSURANCE ACT, 1906. SECT. 79. assured is indemnified it seems the insurer may recover from a third party more than he has paid. 1 But suppose a ship valued at 5000 is insured for 4000, how is the subrogation to be apportioned? Presumably the assured, being "his own insurer" for 1000, is entitled to a fifth of the salvage. 2 The cases do not suggest a rule of apportionment, but such a rule seems required. It is recognized in French law. See Pothier, Traite d 1 Assurance, 133, and see 81, post, as to effect of under-insurance. 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." 3 But is the vesting absolute or conditional, that is to say, can the insurer disclaim the pro- perty if it is onerous ? Suppose a ship is wrecked in harbour 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. The question has been discussed, but not decided, in England.* In France, it seems, the insurer can disclaim. See Pothier, Traite d'Assurance, 136. In Committee the words " is entitled to take over " were substituted for the words " is entitled to," and this amendment strengthens the view that the insurer is not compelled to accept an onerous property. Again, in the case of a British ship, at any rate, it is the equitable and not 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. 5 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. 1 North of England Ins. Afsn. v. Armstrong (1870), L. K. 5 Q. B. 244; but cf. Burnand v. Eodocanachi (1882), 7 App. Cas. at p. 342, as to valuation. 2 Arnould, Ed. 6, p. 980 ; and Ed. 7, p. 1390. But see other cases of difficulty suggested, Loumdes, Ed. 2, pp. 227, 229. 3 Stewart v. Greenock Mar. Ins. Co. (1848), 2 H. L. C. at p. 183. 4 Eglinton v. Norman (1877), 3 Asp. Mar. Cas. 471, C. A. ; and see Arrow Shipping Co. v. Tyne Improvement Commissioners (1894), A. C. 508, H. L. ; and Barraclough \. Brown (1897), A. C. 615. 5 Simpson v. Thomson (1877), 3 App. Cas. 290, 293; but see King v. Victoria Im. Co. (1896), A. C. 250 (special assignment of rights). BIGHTS OF INSUBEE ON PAYMENT. 123 As to the effect of the rule of subrogation on the doctrine of con- SECT. 79. tribution between insurers of the same property, see note to 33, ante, and see further, note, post, p. 166, as to abandonment. 80. (1.) Where the assured is over-insured by night of double insurance, each insurer is bound, as between him- t ion. self and the other insurers, to contribute rateably to the loss in proportion to the amount for which he is liable under his contract. 1 (2.). If any insurer pays more than his proportion of 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. 2 NOTE. Under the foreign codes provision is made for successive liability to avoid the complication of the English 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." 3 But for a qualifica- tion of this principle as regards return of premium, see note to 84, and as to double insurance, see 32, ante. 81. Where the assured is insured for an amount Effect of less than the insurable value, or, in the case of a valued i nsura nce. policy, for an amount less than the policy valuation, he is deemed to be his own insurer in respect of the un- insured balance. 4 1 Arnould, Ed. 6, p. 329 ; Lowndes, Ed. 2, p. 35 ; Leake on Contracts, Ed. 3, pp. 62, 655 ; Newbrj v. Seed (1763), 1 W. Bl. 416; North British Ins. Co. v. London and Globe Ins. Co. (1877), 5 Ch. D. at p. 583, C. A. 2 Subsect. (2) is consequential. 3 Bruce v. Jones (1863), 32 L. J. Ex. at p. 135. 4 Added at (instance of Lord Chancellor's Committee. Of. Arnould, Ed. 6, p. 980, and Ed. 7, p. 1374 ; Pothier, Traite d' Assurance, 133, and note to 79. 124 THE MARINE INSURANCE ACT, 1906. SECT. 81. NOTE. All marine adjustment rests on the hypothesis that the subject-matter insured is to be regarded as fully insured. Suppose a ship, valued at 3000, is insured with A. for 1000 and with B. for 1000. If she is damaged by collision to the extent of 300, A. is liable for 100 and B. is liable for 100. That being so, it is obviously immaterial to A. and B. whether the remaining 1000 is uninsured, or whether it is insured with C. The same principle must be applied to salvage. Suppose, then, that the assured recovers 300 in damages from another ship which caused the collision. A. and B. will each be entitled to 100 of these damages, and the assured who is "his own insurer " will be entitled to the remaining 100. As to valued policies, see 27 (3). Return of Premium. Enforce- 82. Where the premium, or a proportionate part "turn. thereof, is, by this Act, declared to be returnable : (a.) If already paid, it may be recovered by the assured from the insurer, and, (b.) If unpaid, it may be retained by the assured or his agent. 1 NOTE. The broker is directly responsible to the insurer for the payment of the premium, but when returnable it is repayable to the assured. 2 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. (Arnould, Ed. 6, p. 1121). But this custom is now believed to be obsolete. Return by 83. Where the policy contains a stipulation for the ' return of the premium, or a proportionate part thereof, on the happening of a certain event, and that event happens, the premium, or, as the case may be, the 1 Arnould, Ed. 6, pp. 194, 197, 206 ; Shee v. Clarkson (1810), 11 K. E. 473 ; 12 East, 507 (broker) ; cf. McArthur, Ed. 2, p. 40. 2 Arnould, Ed. 6, p. 198. See also 52, 53, ante. RETURN OF PREMIUM. 125 proportionate part thereof, is thereupon returnable to SECT. 83. the assured. 1 84. (1.) Where the consideration for the payment Return for of the premium totally fails, and there has been no of^on- fraud or illegality on the part of the assured or his sideration - agents, the premium is thereupon returnable to the assured. 2 (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 (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 Ifiere 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. 4 (5.) 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 1 Arnould, Ed. 6, p. 1115; Owen's Notes and Clauses, Ed. 3, p. 122; Kellner \. Le Mesurier (1803), 4 East, 396, 7 R. R. 581 ; Gorsedd Steam- ship Co. v. Forbes (1900), 5 Com. Cas. 413 (return after loss) ; cf. Rules of Practice of Association of Average Adjusters, 1906, post, p. 173. 2 McArthur, Ed. 2, p. 43. 8 Ibid., pp. 43, 44. * Arnould, Ed. 6, p. 1109; and as to the proviso, see ibid. t p. 1100; Leahe on Contracts, Ed. 3, p. 92. 126 THE MARINE INSURANCE ACT, 1906. SECT. 84. in safety at the time when the contract is concluded, the premium is not returnable unless, at such time, the insurer knew of the safe arrival. 1 (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. 2 (d.) Where the assured has a defeasible interest which is terminated during the currency of the risk the premium is not returnable. 3 (e.) Where the assured has over-insured under an unvalued policy, a proportionate part of the premium is returnable. 4 (/.) Subject to the foregoing provisions, where the assured has over-insured by double insurance, a proportionate part of the several premiums is returnable. 5 Provided that, if the policies are effected at different times, and any earlier policy has at any time borne the entire risk, or if a claim has been paid on the policy in respect of the full sum insured thereby, no pre- mium is returnable in respect of that policy, and when the double insurance is effected 1 Arnould, Ed. 6, p. 1111 ; and as to the proviso, see Bradford v. Symondson, 1 Q. B. D. 456, C. A. 8 Arnould, Ed. 6, p. 1109, and see 4 (2) ante. 3 Boehm v. Bell (1799), 8 T. E. 154. 4 Arnould, Ed. 6, p. 1112. ' Ibid., p. 1113; Me Arthur, Ed. 2, p. 44, and sec 32 as to double insurance. RETURN OF PREMIUM. 127 knowingly by the assured no premium is SECT - 84 - returnable. 1 Illustrations. 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 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. 3 3. Cotton, at sea and overdue, valued at 30,000, is insured by policies effected on the 12th 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. But premium on 6000, the extent of the over-insurance, is returnable on the policies effected on the 13th. 4 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, al.iter if it was made dishonestly. 5 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 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 1 Fisk v. Ma<>terman (1841), 8 M. & W. 165. The final words were added at the instance of the Lord Chancellor's Committee, but they were redrafted in the Commons Committee. 2 Vandyck v. Hewitt (1800), 1 East, 96; 5 R. K. 516; see, too, Palyart v. Leckie (1817). 6 M. & S. 290, when the voyage was abandoned. 3 Annen v. Woodman (1810), 3 Taunt. 299. 4 Fisk v. Masterman (J841), 8 M. & W. 165. 5 Anderson v. Thornton (1853), 8 Exch. 425. 6 Allkins v. Jupe (1877), 2 C. P. D. 375, see at p. 388 as to possibility of salvage in such a case ; cf. 5, ante, reproducing this statute. 7 Bradford v. Symondson (1881), 7 Q. B. D. 456, C. A. 128 THE MARINE INSURANCE ACT, 1906. SECT. 84. 7. Insurance on 500 bales of cotton to be shipped by a particular ship. Only 250 bales are shipped. Half the premium is returnable. 1 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." 2 The case of double insurance gives rise to complications. " The assured has the right to elect under which policy or set of policies he 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 pro- portionate part both of the loss and of the return premium." 3 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. 4 This qualification is really a deduction from subsect (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, but the clause now stops somewhat short of this. Mutual Insurance. Modifica- 85. (1.) Where two or more persons mutually incase f of t a o ree * insure each other against marine losses there is mutual said to be a mutual insurance. 5 insurance. 1 Cf. McArthur, Ed. 2, p. 44. 2 Wliincup v. Hughes (1871), L. E. 6 C. P. at p. 81. 3 McArthur, Ed. 2, p. 44. See, too, 32. 4 Fisk v. Matterman (1841), 8 M. & W. 165 ; Lownd&s, Ed. 2, p. 3G. 5 McArthur, Ed. 2, p. 345 ; and for history of mutual insurance, see Marine Mutual Ins. Assn. Ltd. v. Young (1880), 4 Asp. Mar. Cas. at p. 358. MUTUAL INSURANCE. 129 (2.) The provisions of this Act relating to the SECT. 85. 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. 1 (3.) The provisions of this Act, 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 asoociation. 2 (4.) Subject to the exceptions mentioned in this section, the provisions of this Act apply to a mutual insurance. 3 NOTE. Mutual marine associations consisting of more than twenty members must be registered under the Companies Acts, 4 and the in- surances effected by them must be embodied in marine policies in con- formity with the Stamp Acts. 5 " Mutual insurance," says Matthew, 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 1 Mr Arthur, Ed. 2, p. 346 ; Lion Ins. Asm. v. Tucker (1883), 12 Q. B. D. at p. 187, C. A. " Ocean Iron Steamship AMI. v. Leslie (1889), 22 Q. B. D. 722; British Marine Mutual In*. Co. \. Jenkins (1900), 1 Q. B. 299; North E*t':rn Steamship Assn. v. Bed " S" Steamship Co. (1905), 10 Com. Cas. 21.".. 3 British Marine Mutual In*. Co. v. Jenkins (1900), 1 Q. B. 299. 4 Be Padstow Ass. Assn. (1882), 20 Ch. D. 137, C. A. * Edwards v. Aberayron Mutual Ins. Society (1875), 1 Q. B. D. 563, Ex. Ch. 130 THE MARINE INSURANCE ACT, 1906. SECT. 85. of their business, and different regulations have been adopted to meet the decisions." 1 The policies issued by mutual associations omit the ordinary pro- vision 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. Ratitica- (s 86. Where a contract of marine insurance is in good 4* Vi assured. faith effected by one person on behalf of another, the person on whose behalf it is effected may ratify the contract even after he is aware of a loss. 2 NOTE. This is an old rule of insurance law. It was questioned in Williams v. North China Ins. Co., 3 but affirmed. " I think," says f * 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. 4 Thus, if A. takes out a policy in his own name on behalf of B., the transaction cannot be adopted by C. 5 See further the notes to 23 (1), ante. implied 87. (1.) Where any right, duty, or liability would varied by* arise under a contract of marine insurance by implication agreement or usage. 1 Ocean Iron Steamship Assn. v. Leslie (1889), 22 Q. B. D. at p. 724. 2 Arnould, Ed. 6, p. 166; William* v. North China Ins. Co. (1876), 1 C. P. D. 757, C. A., see at p. 764. J Williams v. North China Ins. Co. (1876), 1 C. P. D. 757, C. A., see at p. 764. As to the common law rule, to which this is an exception, see Keighley v. Durant, A. C. (1901), 240 H. L. 4 Boston Fruit Co. v. British and Foreign Mar. Ins. Co. (1905), 1 K. B. 637, C. A. ; affirmed A. C. (1906), 336 H. L. (policy effected for shipowner cannot afterwards be adopted by charterer). 5 Byas v. Miller (1897), 3 Com, Cas. 39. S UPPLEMENTAL. 131 of law, it may be negatived or varied by express agree- SE CT- 87. ment, or by usage, if the usage be such as to bind both parties to the contract. 1 (2.) The provisions of this section extend to any right, duty, or liability declared by this Act, which may be lawfully modified by agreement. NOTE. This section is suggested by 55 of the Sale of Goods Act, 1893 (56 & 57 Viet. c. 71). The cases are analogous. As Pothier 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 Expressumfacit cessare taciturn, and Modus 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. On the other hand, the parties cannot by agreement dispense with the provisions against gaming and wagering which are prohibited in the public interest. But, speaking generally, the main object of the Act is to declare the law, that is to say, to indicate to the parties what the law will do if they do not make any express bargain, leaving them free to make any bargain they like to suit their own needs. As regards usage, it is to be noted that when one party relies on Usage, 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 in fact it formed no part of the agreement between the parties." 2 Speaking, hi 1791, of a marine policy, Buller, J., says, " it is founded on usage and must be governed by usage." 3 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 1 McArthur, Ed. 2, pp. 33-35; Hart v. Standard Ins. Co. (1889), 22 Q, B. D. at p. 501, C. A. * Taylor on Evidence, 1077. As to usage in maritime law generally, see Carver's Carriage by Sea, 160-200. 3 Brough v. Whitmore (1791), 4 T. R. at p. 210. 132 THE MARINE INSURANCE ACT, 1906. SECT. 87. therewith is inadmissible. 1 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. 2 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 usage is not admissible to contradict anything which is plainly expressed. 3 Such evidence is only admissible either to explain what is technical or ambiguous, or, as lawyers put it, to annex incidents to the contract.* Reasonable 88. Where by this Act any reference is made to a question reasonable time, reasonable premium, or reasonable dili- of fact. gence, the question what is reasonable is a question of fact. 5 NOTE. This section follows the lines of 56 of the Sale of Goods Act, 1893 (56 & 57 Viet, c. 71). Slip as 89. Where there is a duly stamped policy, reference may be made, as heretofo; in any legal proceeding. 6 may be made, as heretofore, to the slip or covering note, 1 Goodwin v. Edbarts (1875), L. R. 10 Ex. at p. 357, Ex. Ch. 2 Cf. Ex parte Turquand (1885), 14 Q. B. D. at p. 645. 3 Arnould, Ed. 6, p. 291 ; Parkinson v. Collier, 2 Park. Ins. 653. 4 For illustrations of the part played by usage, Bee Universo Ins. Co. v. Merchants' Mar. Ins. Co. (1897), 2 Q. B. 93 (liability of broker for premium); Attwood v. SelJar (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. R. 8 C. P. at p. 23 (declarations on floating policies); Dickinson v. Jardine (1868), L. R. 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) ; Blackett v. Royal Exchange (1832), 2 Cr. & J. 244 (usage not to pay for boat slung outside, invalid); Palmer v. Blackburn (1822), 1 Bing. 60, 64 (measure of indemnity, gross freight). 5 As to reasonable time, see Carlton Steamship Co. v. Castle Mail Packets Co. (1898), A. C. at p. 491, per Lord Herschell; Currie v. Bombay Native Ins. Co. (1869), L. R. 3 P. C. at p. 79 ; as to premium, see noto to 31. 4 McArthur, Ed. 2, p. 23 ; Arnould, Ed. 6, p. 260 ; Leake on Contracts Ed. 3, pp. 270, 342 ; Ion ides v. Pacific Mar. Ins. Co. (1872), L. R. 7 Q. B. 517, Ex. Ch. SUPPLEMENTAL. 133 NOTE. Lord Blackburn says, " As the slip is clearly a contract for SECT. 89. marine insurance, and is equally clearly 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." l For example, the slip is evidence for the purpose of correcting an error in the name of the ship. 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. 2 90. In this Act, unless the context or subject-matter interpreta- tion of otherwise requires terms. " Action " includes counter-claim and set off : 3 " Freight " includes the profit derivable by a ship- owner from the employment of his ship to carry his own goods or moveables, as well as freight pay- able by a third party, but does not include passage money : 4 " Moveables " mean any moveable tangible property, other than the ship, and include money, valuable securities, and other documents : 5 " Policy " means a marine policy. NOTE. In ordinary shipping law the 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 1 lonides v. Pacific Mar. Ins. Co. (1871), L. K. 6 Q. B. at p. 685 (name of ship); cf. Empress Assurance Corporation v. Boicring (1905), 11 Com. Cas. 107 (evidence not admitted). 2 Cory v. Patton (1872), L. K. 7 Q. B. 704 ; cf. Lishman v. Northern Mar. Ins. Co. (1875), L. R. 10 C. P. 179, Ex. Ch. 3 Cf. 62 (1) of the Sale of Goods Act, 1893 (56 & 57 Viet. c. 71). 4 Arnould, Ed. 6, p. 31 ; Flint v. Flemyng (1830), 1 B. & Ad. 45 ; see note, post. 5 See Soring Brothers v. Mar. Ins. Co. (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. 151. 134 TEE MARINE INSURANCE ACT, 1906. SECT. 90. person for the use of a ship as a vehicle for merchandise. 1 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." 2 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," see 12. Savings. 91. (1.) Nothing in this Act, or in any repeal effected thereby, shall affect : 54 & 55 (a.) The provisions of the Stamp Act, 1891, or any enactment for the time being in force relating to the revenue ; 3 25&26 (6.) The provisions of the Companies Act, 1862, or any enactment amending or substituted for the same : * (c.) The provisions of any statute not expressly repealed by this Act. (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 Act, shall continue to apply to contracts of marine insurance. 5 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 1 By English law, apart from special contract, freight is only payable on right delivery of the cargo, and freight pro raid itineris is not recog- nized. Cf. Carver's Carriage by Sea, Ed. 3, 542. 2 Denoon v. Home and Col. Ass. Co. (1872), L. R. 7 C. P. at p. 349. 3 See the stamp provisions set out, post, pp. 155-8. 4 See the notes to 85. 4 As to fraud and misrepresentation, see Leake on Contracts, Ed. 3, pp. 291, 330 ; as to illegality, ibid. p. 620 ; as to mistake, ibid. pp. 202-287, and Spalding v. Crocker (1897), 13 Times L. R. 396. SUPPLEMENTAL. 135 enforced as part of the ordinary law of the land. Marine insurance is SECT. 91. 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 Laws. Mr. Dicey sums up the decisions in the follow- Conflict of ing rules. An underwriter is bound by an average adjustment duly * aws ' taken according to the law of the place of adjustment, 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. 1 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." 2 The differences in time in different places raise some curious Calculation points. Suppose a ship is insured in London with A. up to midnight ^ time> 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 would be on B.'s policy. In the case of an English policy it seems that, in the absence of any provision to the contrary, the liability must be determined according to Greenwich time : see the Statutes (Definition of Time) Act, 1880 (43 & 44 Viet. c. 9), which applies to ever}' English " Act of Parliament, deed, or other legal instrument." But if the policy were effected in India the point would be a debatable one. The stamp laws are part of the lexfori. Therefore, if a risk under a Lloyd's policy is re-insured with a Swedish insurance company, the 1 Dicey 1 1 Conflict of Laws, pp. 597, 598 ; cf. Wavertree Co. v. Love (1897), A. C. 373, P. C. 2 Greerv. Poole (1880), 5 Q. B. D. 272 (English policy with foreign adjustment clause). 136 THE MARINE INSURANCE ACT, 1906. SECT. 91. re-insurance policy must conform to the English stamp laws if it is sought to enforce it in England. 1 Effect on Subject to the provisions of any license to trade, 2 the insurer is not policy of ]i a ble for any loss suffered by an alien enemy during the continuance of subsequent , . . . ,. hostilities, hostilities, even though the policy may have been effected before the commencement of hostilities. For example. 3 1. Policy on goods from London to Bayonne, effected on behalf of a Frenchman. War afterwards breaks out between England and France, and the goods are captured by a Spanish cruiser, i.e. by a British ally. The insurer is not liable, even though the action is brought after peace has been concluded. 4 2. Policy on gold bullion from Johannesburg to London, effected by a company registered and carrying on business in the South African Republic. On October 2nd the gold is seized in transit by the Government of the South African Republic. On that day war with England was anticipated, but it did not break out until October llth. The assured is entitled to recover. 5 3. Policy on gold bullion from the mine in the Transvaal to London effected in May. In October war breaks out between the Transvaal Government and England, and the gold is seized. The assured are a company registered in Natal, though working the mine in the Trans- vaal. The gold is not enemy's property, and the insurer is liable under the policy. 6 As a general rule, after hostilities have ceased, an alien enemy may enforce a contract made before the commencement of hostilities, for the plea in such an action that the plaintiff is an alien enemy is only a plea in abatement. 7 But obviously this rule does not apply to insur- ance, otherwise by an English contract an alien enemy could indemnify himself against British capture. Lord Ellenborough rests the principle of this clause on the ground of implied condition, but it is really a rule of public policy which cannot be waived or varied. " There are three rules," says Lord Davey, " which are established in our common law. The first is that the King's subjects cannot trade with an alien enemy, i.e. a person owing allegiance to a Government at war with the king, 1 Royal Exchange v. Vega (1901), 2 K. B. 567. 2 Morgan v. Oswald (1812), 3 Taunt. 554. 3 Brandon v. Curling (1803), 4 East, 410. 4 Ibid. * Driefontein Consolidated Mines v. Janson (1901), 2 K. B. 419, C. A. ; affirmed A. C. (1902), 484 H. L. fi Nigel Gold Mining Co. v. Hoade(1901), 2 K. B. 849, 6 Com. Cases, 208. 7 Sullen and Lease's Precedents of Pleading, Ed. 3, p. 475. S UPPLEMENTAL. 137 without the king's licence. Every contract made in violation of this SECT. 91. principle is void, and goods which are the subject of such a contract are liable to confiscation. " The second principle is a corollary from the first, but is also rested on distinct grounds of public policy. It is that no action can be maintained against an insurer of an enemy's goods or ships against capture by the British Government. One of the most effectual instru- ments of war is the crippling of the enemy's commerce, and to permit such an insurance would be to relieve enemies from the loss they incur by the action of British arms, and would, therefore, be detrimental to the interests of the insurer's own country. The principle equally applies where the insurance is made previously to the commencement of hostilities, and was therefore legal in its inception, and whether the person claiming on the policy be a neutral or even a British subject, if the insurance be effected on behalf of an alien enemy. " The third rule is that, if a loss has taken place before the com- mencement of hostilities, the right of action on a policy of insurance by which the goods lost were insured is suspended during the continuance of war and revives on the restoration of peace." 1 Licenses to trade must be construed liberally. 2 92. The enactments mentioned in the Second Repeals. Schedule to this Act are hereby repealed to the extent specified in that Schedule. NOTE. For list of repeals, see post, p. 153. 93. This Act shall come into operation on the first Commence- day of January, one thousand nine hundred and seven. ment - 94. This Act may be cited as the Marine Insurance Short Title. Act, 1906. NOTE. This Act, like all Acts passed subsequent to 1889, must be read subject to the provisions of the Interpretation Act, 1889 (52 & 53 Viet. c. 63). A codifying Act, as Lord Herschell has pointed out, must be con- strued according to its natural meaning without regard to the previous state of the law. It is only in case of doubt that resort to the previous law is legitimate. 3 1 Junson v. Driefontein Consolidated Mines (1902), A. C. at p. 499. 2 Morgan v. Oswald (1812), 3 Taunt. 554. 3 Vagliano v. Bank of Enyland (1891), A. C. at p. 145 H. L. ( 138 ) SCHEDULES. FIRST SCHEDULE. FOKM OF POLICY (See 30). BE IT KNOWN THAT * l as well in 2 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 8 and them, and every of them, to be insured lost or not lost, at and from 4 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 5 whereof is master under God, for this present voyage, 6 or whosoever else shall go for master in the said ship, or * 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 " ; ( 2 ) " his " ; ( 3 ) " himscK " ; ( 4 ) " Madras to London "; ( 5 ) "Calliope"; ( 6 ) "William Smith," but commonly left blank ; ( 7 ) " as above " ; ( 8 ) " as above " ; ( 9 ) usually left blank ; ( 10 ) " A. B. 100 bales of cotton valued at 1000." ' FOEM OF POLICY. 139 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 from the loading thereof aboard the said ship, 7 upon the said ship, etc. 8 and so shall continue and endure, during her abode there, upon the said ship, etc. And further, until the said ship, with all her ordnance, tackle, apparel, etc., and goods and merchandises whatsoever shall be arrived at 8 upon the said ship, etc., until she hath moored at anchor twenty-four hours in good safety ; and upon the goods and merchandises, until the same be there discharged and safely landed. And it shall be lawful for the said ship, etc., in this voyage, to proceed and sail to and touch and stay at any ports or places whatsoever 9 without prejudice to this insurance. The said ship, etc., goods and merchandises, etc., for so much as concerns the assured by agreement between the assured and assurers in this policy, are and shall be valued at 10 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, pirates, rovers, thieves, jettisons, letters of mart and countermart, surprisals, takings at sea, arrests, re- straints, and detainments of all kings, princes, and people, of what nation, condition, or quality soever, barratry of the master and mariners, and of all other perils, losses, and misfortunes, that have or shall come to the hurt, detriment, or damage of the said goods, and merchandises, and ship, etc., or any part thereof. And Sue and in case of any loss or misfortune it shall be lawful to the assured, their factors, servants and assigns, to sue, labour, and travel for, in and about the defence, safeguard, and 140 THE MARINE INSURANCE ACT, 1906. 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, will 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 Royal 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. Memoran- N.B. Corn, fish, salt, fruit, flour, and seed are war- 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. NOTE. Lloyd's Policy. The policy was settled in its present 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 Viet. c. 23). The judges have not been complimentary to its drafting. FORM OF POLICY. 141 Mansfield, C.J., has described it as " a very strange instrument." l Lawrence, J., has described it as " drawn with much laxity," 2 and Buller, 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." 3 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, and if a collision or " running down " clause be inserted that also is a distinct engagement added to the policy. 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 Act. 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 j^busi- ness, and. not a technical, pointy of view. 4 The decisions on these special provisionslire numerous, but each case turns on the particular language used. If the special clause be inconsistent with the pro- visions of the printed polic3 r , the special clause must prevail. 5 For a general canon of construction, see Hart v. Standard Ins. Co. (1889), 22 Q. B. D. at p. 501, per Lord Bo wen. For a form of company policy (Alliance Marine), see Owen's Notes 1 Le Cheminant v. Pearson (1812), 4 Taunt. 380. - Marsden v. Reid (1802), 3 East, 579. 3 Brough v. Whitmore (1791), 4 T. K. at p. 210. 4 Tatham v. Burr (1898), A. C. at p. 386. 5 Hydarnes S.S. Co. v. Indemnity Mutual Mar. Ass. Co. (1895), 1 Q. B. 500, C. A. ; cf. Dudgeon \. Pembroke (1877), 2 App. Cas. 284. 142 TEE MARINE INSURANCE ACT, 1906. 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. See further the note on the history of marine insurance, post, p. 170. Rules for Construction of Policy. The following are the rules referred to by this Act for the construction of a policy in the above or other like form, where the context does not otherwise require : NOTE. By 30 (2) of the Act, ante, p. 44, "subject to the provisions of thin Act, and unless the context of the policy otherwise requires the terms and impressions mentioned in the first schedule to this Act shall be construed as having the scope and meaning in that schedule assigned to them." It is to be noted then that these construc- tions are subordinate to the provisions of the Act. Lost or 1. Where the subject-matter is insured " lost or not not lost. jog^" an( j 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. 1 From 2. Where the subject-matter is insured " from " a particular place, the risk does not attach until the ship starts on the voyage insured. 2 At and 3. (a.) Where a ship is insured " at and from " a par- ticular place, and she is at that place in good safety when [Ship.] the contract is concluded, the risk attaches immediately. 3 (&.) If she be not at that place when the contract is concluded, the risk attaches as soon as she arrives there 1 McArthur, Ed. 2, p. 80 ; cf. Mead v. Davison (1835), 3 A. & E. 303 ; Gledstanes v. Royal Exchange Corporation (1864), 34 L. J. Q. B. 35 (floating policy); Bradford v. Symondson (1881), 7 Q. B. D. 456, C. A. (re-insurance) ; and see 6 and notes. 2 McArthur, Ed. 2, p. 81 ; Arnould, Ed. G, p. 388 ; and 43 and notes. 3 McArthur, Ed. 2, p. 81 ; Palmer v. Marshall (1831), 8 Bing, 79. RULES FOR CONSTRUCTION OF POLICY. 143 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. 1 (c.) Where chartered freight is insured " at and from " [freight,] 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. 2 (d.) Where freight, other than chartered freight, is payable without special conditions, and is insured " at and from " a particular place, the risk attaches pro rata as the goods or merchandise are shipped ; provided that if there be cargo in readiness which belongs to the ship- owner, 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. 3 NOTE. The expression " good safety " has a technical meaning. 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 Paragraph (d) relates to ordinary freight. The object of the words " without special conditions " is to exclude advanced or other special freight. 4. Where goods or other moveables are insured " from Fro1 ^ the the loading thereof," the risk does not attach until such thereof. 1 Me Arthur. Ed. 2, p. 82; Haughton v. Empire Mar. Ins. Co. (1865), L. R. 1 Ex. 205. 1 McArthur, Ed. 2, p. 101 ; Foley v. United Mar. Int. Co. (1870), L. R. 5 C. P. 155 ; cf. Barber v. Fleming (1870), L. R. 5 Q. B. 59 (freight to be earned on return voyage). 3 McArthur, Ed. 2, p. 100; cf. Jones v. Neptune Ins. Co. (1872), L. R. 7 Q. B. at pp. 706, 707. But as to advance freight, see 12, ante, p. 19. 1 McArthur, Ed. 2, p. 94 ; Gow on Insurance, p. 55 ; Lidgett v. Secretan (1870). L. R. 5 C. P. at p. 198. 144 TEE MAEINE INSURANCE ACT, 190G. goods or moveables are actually on board, and the insurer is not liable for them while in transit from the shore to the ship. 1 NOTE. Risk of craft to and from the vessel is commonly included by a supplementary provision. fanded **' ^ 7 ^ ere tne I1S ^ on gds or other moveables con - 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. 2 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 the policy often define its termination. 3 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. Difficult questions sometimes arise where the cause of loss comes into operation before the expiration of the policy, but the actual loss occurs afterwards. 4 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. 5 Where a ship was to be held covered for " thirty days " it was held that " thirty dajV meant thirty consecutive periods of 24 hours. 6 1 McArthur, Ed. 2, p. 91 ; Arnould, Ed. 6, p. 378. 2 McArthur, Ed. 2, p. 97 ; Arnould, Ed. 6, p. 392 ; Gow on Insurance, p. 56; cf. Houlder v. Merchants Mar. Ins. Co. (1886), 17 Q. B. D. 354 (goods put in lighters for transhipment, risk ended) ; Marten v. Nippon (1898), 14 Times L. R. 333 (re-insurance, warehouse clause) ; Samuel v. Royal Exchange Ass. Co. (1828), 8 B. & Cr. 119 (ship detained outside port of destination by ice, risk not ended). 3 McArthur, Ed. 2, pp. 100, 101. 4 See the cases reviewed in Lidgett v. Secretan (1870), L. R. 5 C. P. at p. 199 ; cf. McArthur, Ed. 2, p. 93. s Mercantile Mar. Ins. Co. v. Titherington (1864), 5 B. & S. 765 (ship arrived on the 25th of May at 7 p.m. and was lost on the 24th of June at 3 a.m. ; held covered). Cf. Lidgett v. Secretan, supra, at p. 200. As to com- putation of time, see Gornfoot v. Royal Exchange (1903), 2 K. B. 3"!3. 6 Gornfoot v. Royal Exchange (1903), 2 K. B. 363; affirmed 1 K. B. (1904), 40*C. A. RULES FOR CONSTRUCTION OF POLICY. 145 6. In the absence of any further license or usage, the Touch and stfiv 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. 1 7. The term " perils of the seas " refers only to Perils of fortuitous accidents or casualties of the seas. It does , not include the ordinary action of the winds and waves. 2 ^~*~~7 <^ &* e * accidental circumstance, not the result of ordinary wear and tear, C /- ^' 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 transit, not attributable to the fault of anybody." 3 These definitions certainly are open to criticism, but the following points may be noted. First, the term " peril " denotes something which is accidental and fortuitous. As Lord Herschell says, " the purpose of the policy is to secure an indemnity against accidents which may happen, not against events which must happen." Secondly, the expression is " perils of the seas," not " perils on the seas." For example, the policy enume- rates many maritime perils, such as capture, seizure, fire, etc., which are incidental to marine adventure, but which are not perils of the seas ; so, too, risks, not ordinarily covered by the policy, may be expressly covered, e.g. the risk of mortality in insurance on cattle, and frozen meat risks. Thirdly, the expression "perils of the seas" has 1 Arnould, Ed. 6, p. 471 ; Gow on Insurance, p. 58 ; cf. 46, 47. McArthur, Ed. 2, p. 110; Arnould, Ed. 6, p. 754; cf. Carver's Carriage by Sea, Ed. 3, 85 ; cf. 55 (2) ante. 3 Thames and Mersey Mar. Ins. Co. v. Hamilton (1887), 12 App. Caa. at p. 492 (the Inchmaree case); see Paterson \. Harris (1861), 30 L. J. Q. B. 354, distinguishing the chemical from the mechanical action of the sea; cf. Blackburn v. Liverpool Steam Navigation Co. (1902), 1 K. B. 290 (bill of lading case). L 146 TEE MARINE INSURANCE ACT, 1906. the same meaning in a marine policy that it has in a bill of lading or charter party, though its application to the contract is different. 1 As to the rule of proximate cause, see 55, ante, and notes thereto. Fire. The term " fire " does not cover a loss caused by the explosion of steam, nor a fire caused by the inherent vice of the subject-matter insured, but it does cover a fire voluntarily caused in order to avoid capture by an enemy. 2 A rule to this effect was formerly included in the Bill, but was cut out by the Lord Chancellor's Committee, as it was suggested that the decisions it embodied might some day be questioned. For example Policy on hemp. If hemp is put on board in a damaged condition, liable to ferment, and fire is in consequence generated, and the hemp is consumed, the insurer is not liable. 3 Though the insurer of goods is not liable for a loss caused by fire from vice propre, yet, if the goods have to be landed, and freight is thereby lost, the insurer on freight may be liable. 4 As regards the phrase " unless the ship be stranded, sunk, or 'burnt,'" it has been held that the ship must be substantially burnt to fulfil the condition. 5 Pirates. 8. The term" pirates" includes passengers who mutiny and rioters who attack the ship from the shore. 6 rA*^*? ,A*}~ :> NOTE. See further, Note E, post, p. 168, on definition of piracy. #/UK4.-For different purposes the definition varies. 9. The term " thieves " does not cover clandestine IK %)**' theft, or a theft committed by any one of the ship's company, whether crew or passengers. 7 1 Hamilton v. Pandorf (1887), 12 App. Gas. at p. 525; Wilson v. Owners of Cargo per Xantho (1887), 12 App. Cas. at p. 509. 2 See McArthw, Ed. 2, p. 115; Arnould, Ed. 6, p. 759; Gordon v. Rimmington (1807), 1 Camp. 123; 10 E. E. 656 (fire to avoid capture) ; Thames and Mersey Mar. Ins. Co. v. Hamilton (1887), 12 App. Cas. 484, 493 (explosion of steam). 3 Boyd v. Dttlois (1811), 3 Camp. 133; cf. Pirie v. Middle Dock Co. (1881), 4 Asp. Mar. Cas. 388. 4 The Knight of St. Michael (1898), P. 30. 5 The Glenlivtt (1894), p. 48, C. A. e McArthur, Ed. 2, p. 121 ; Arnould, Ed. 6, p. 770; cf. Carver's Car- riage by Sea, Ed. 3, 11, 94; Owen's Declaration of War, p. 437. 7 Arnould, Ed. 6, p. 770; Gow on Insurance, p. 113 ; cf. Carver's Car- riage by Sea, Ed. 3, 94. RULES FOR CONSTRUCTION OF POLICY. 147 -:. The terms " thief" and " theft " are used in a special sense in certain maritime documents. Among the perils insured against in an ordinary policy, and among the excepted perils in most charter parties and bills of lading are "pirates, rovers, and thieves.'" In this context the term, "thief" seems only to apply to a person who commits theft by violent means. " The theft that is insured against by name in the policy means that which is accompanied by violence (latrocinium\ and not simple theft (furturii) ; it being an elementary rule of the law of insurance that furtum non est casus fortuitus" (Arnould, Ed. 6. p. 770). Some American policies use the words " pirates and assailing thieves." In a case on a bill of lading containing the exceptions "pirates, robbers, thieves," it was held that the word " thieves " applied only to strangers, and not to persons belonging to the vessel ; and Archibald, J., after pointing out that the words were no doubt copied originally from the ordinary marine policy, expresses the opinion that a similar construc- tion must be put upon both instruments. 1 10. The term " arrests, etc., of kings, princes, and Restraint people " refers to political or executive acts, and does not include a loss caused by riot or by ordinary judicial process. 2 Illustrations. 1. Policy on goods owned by a Spaniard from London to Alicante. The ship calls at Corunna, and while there is seized by the Spanish Government for the purposes of transport, there being war between Spain and Morocco. The goods are unladen and damaged. This is a seizure of the goods within the meaning of the policy. 3 2. Policy on gold from the Transvaal to London warranted free from capture and seizure. The gold is the property of a company registered in the Transvaal. On October 2 the gold while in transit 1 Taylor v. Liverpool G. W. Steam Co. (1874), L. B. 9 Q. B. 546, at p. 551. McArthur, 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 A pp. Cas. at p. 396. 3 Aubert v. Gray (1862), 32 L. J. Q. B. 50, Ex. Ch. 148 THE MARINE INSURANCE ACT, 1906. is seized by the Transvaal Government in anticipation of war, and on October 1 1 war is declared. This is a seizure within the meaning of the warranty, and the insurer is not liable. 1 3. Policy on consignment of bulls from England to Buenos Ayres. The bulls are prevented from landing under a law prohibiting the importation of live cattle from infected countries. The bulls have to be sent on to another country at great expense. This is a loss through the restraint of princes. 2 4. Voyage policy on a bull to Buenos Ayres, the policy being against all risks, including mortality, but containing a warranty against capture, seizure, and the consequences of detention. There having been cattle disease on board, the bull on arrival is slaughtered by the local authority. The insurer is protected by the warranty. 3 NOTE. An insurance against British capture is illegal, see note to 91. The word "people" in this context, says Lord Kenyon, " means the ruling power of the country." * 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 River, 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 particular case with the one meaning or the other depends, not on any general rule, but on the context and circumstances of the case." 6 As to takings at sea and the warranty " free from capture and seizure," see Owen's Declaration of War, p. 68 ; as to embargo, ibid., p. 39 ; and as to blockade, ibid., p. 123. 1 Robinson Gold Mining Co. v. Alliance Marine Assurance Co. (1902), 2 K. B. 489, C. A. ; affirmed A. C. (1904), 359 H. L. 2 Miller v. Law Accident Insurance Co. (1903), 1 K. B. 712, C. A., reversing on one point, ibid. (1902), 2 K. B. 694. 3 St. Paul Fire and Mar. Ins. Co. v. Morice (1906), 11 Com. Cas. 153. 4 Nesbitt v. LusMngton (1792), 4 T. R. at p. 787. 5 Johnston v. Hoqg (1883), 10 Q. B. D. at p. 435. RULES FOR CONSTRUCTION OF POLICY. 149 11. The term " barratry" includes every wrongful Barratry. act wilfully committed by the master or crew to Jjhe "prejudice ot l the owner, or, as the case may be, the charterer. 1 NOTE. This definition is inclusive, not exhaustive. See Note B, post, p. 163, on definitions of barratry, and discussion thereof. 12. The term " all other perils " includes only perils All other similar in kind to the perils specifically mentioned in the pen s< policy. 2 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 risk by special terms. For instance, policies on animals are sometimes expressed to be against "all risks," or "all risks, including mortality." The expression " mortality " appears only to include death from natural causes. 3 See 3 (2), ante, defining " maritime perils." 13. The term " average unless general " means a Average partial loss of the subject-matter insured other than a general. general average loss, and does not include " particular chares." 4 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 Esher 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 1 Arnould, Ed. 6, p. 774 ; cf. Carver's Carriage by Sea, Ed. 3, 99, 100. 8 Arnould, Ed. 6, p. 789; Cullen v. Sutler (1816), 5 M. & S. at p. 465 ; Thames and Mersey Ins. Co. v. Hamilton (1887), 12 App. Gas. 484, reviewing the cases at p. 495; The Knight o/ St. Michael (1898), P. at p. 35 (fire). Compare 2199 of the California!! Code, which uses the words, " all other dangers peculiar to the seas." 3 St. Paul Fire and Mar. Ins. Co. v. Morice (1906), 11 Com. Gas. 153. 4 See McArthur, Ed. 2, pp. 173, 261 ; see, too, 64 and 66 and notes thereto, and Note C on Average, post, p. 1(54. , 150 THE MARINE INSURANCE ACT, 1906. points out that from the time of Lord Mansfield the words have been 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." 1 See further, Eule 14, and notes, and Note C, post, p. 164. Stranded. 14. Where the ship has stranded the insurer is ^ liable for the excepted losses, although the loss is not attributable 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 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 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 within 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 contents of the policy." 3 See also note to last rule. 1 Price v. A 1 Small Damage Assn. (1889), 22 Q. B. D. at pp. 580, 591. 2 See McArthur, Ed. 2, p. 283 ; Arnould, Ed. 6, p. 821 ; Thames and Mersey Mar. 1m. Co. v. Pitts (1893), 1 Q. B. 476 (goods iii lighters, not on board); The Alsace Lorraine (1893), P. 209 (goods landed at port of refuge) ; cf. Russell v. Erwin (1890), 6 Times L. K. 353, as to when a barge is stranded. 3 Welle v. Hopwood (1832), 3 B. & Ad. 20, at p. 34 ; see this passage approved in Letchford v. Oldham (1880), 5 Q. B. D. 538, 545, C. A., where the cases are reviewed. RULES FOE CONSTRUCTION OF POLICY. 151 15. 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 and engine stores, if owned by the assured. 1 NOTE. This definition is inclusive, and not necessarily exhaustive. See 16, ante ; and see 30 (2). 16. The term " freight " includes the profit derivable Freight. by a shipowner from the employment of his ship to carry his own goods or moveables, as well as freight payable by a third party, but does not include passage money. 2 NOTE. The term " freight " is used throughout the Act in the same sense as in the policy. See 90, ante. 17. 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 and living animals must be insured specifically, and not under the general denomination of goods. 3 NOTE. The expression " goods," in ordinary law, covers all moveable tangible property. 4 But when used in a policy, the nature of the contract imposes a restricted meaning. If the insurer is required 1 See McArthur, Ed. 2, p. 67 ; and 16, ante. 2 See Arnould, Ed. 6, p. 31 ; mint v. Flemyng (1830), 1 B. & Ad. 45 ; Denoon \. Home and Colonial Ass. Co. (1872), L. R. 7 C. P. at p. 349. * See J/c Arthur, Ed. 2, p. 58 ; Arnould, Ed. 6, pp. 24-28 ; Gow on Insurance, pp. 44-46. As to meaning of "merchandise" in a contract of affreightment, see Carver's Carriage by Sea, Ed. 3, 263. The rule as to deck cargo probably does not apply to inland voyages by river or canal, Apollinaris Co. v. Xord Deutsche Ins. Co. (1904), 1 K. B. 252, cessante ratione, cestat ipsa lex. 4 See, e.g., Chalmers' Sale of Goods Act. 1893, 62, and notes. 152 THE MARINE INSURANCE ACT, 1906. to undertake anything more than an ordinary risk, the policy ought to disclose the particular nature or the subject-matter insured. Hence it has been held that machinery is not covered by a policy on goods. 1 So, too, if the policy is on a particular kind of goods, goods of another kind cannot be substituted. 2 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, 26 and notes thereto. 1 Scott v. Mannheim Ins. Co., Times, April 19, 1899. 2 MacJtenzie v. Wliitworth (1875), 1 Ex. D. at p. 41. ( 153 ) SECOND SCHEDULE. SECT. 92. ENACTMENTS REPEALED. Session and Chapter. Title or Short Title. Extent of Kepeal. 19 Geo. 2. c. 37. 28 Geo. 3. c. 56. 31 & 32 Viet. c. 86. An Act to regulate insurance on ships belonging to the subjects of Great Britain, and on mer- chandizes or effects laden thereon. 1 An Act to repeal an Act made in the twenty-fifth year of the reign 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 the like purpose in lieu thereof. 2 The Policies of Marine Assurance Act, 1868. 3 The whole Act. The whole Act so far as it relates to marine insurance. The whole Act. 1 See 4, pp. 8 and 9, reproducing this statute. 2 See Arnould, Ed. 6, p. 107, for history of this legislation, and 23 (1). 3 See 50, reproducing this statute. ( 354 ) CUSTOMARY DEDUCTIONS. (See Section 69 (1).) 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, and cost of cartage and carriage. Cost of anchors and of provisions and stores which have not been in use. 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 Metal sheathing must be dealt with by allowing in full the cost of a weight equal to the gross weight of metal sheathing stripped off, minus proceeds of the old metal. Nails, felt, and labour metalling are subject to one-third, also the cost of replacing metal lost. 1 See McArthur, Ed. 2, pp. 184, 213 ; cf. Goic on Insurance, p. 339, and Eules of Practice of Association of Average Adjusters, post, p. 173. ( 155 ) APPENDIX I. STATUTES. THE STAMP ACT, 1891. (54 & 55 VICT. c. 39.) Policies of Insurance. 91. For the purposes of this Act the expression " policy of insur- Meaning of ance " includes every writing whereby any contract of insurance is policy ot nade or agreed to be made, or insurance " includes assurance. 1 , . , , . . , . insurance, made or agreed to be made, or is evidenced, and the expression sea insur- ance. 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 policy of upon any ship or vessel, or upon the machinery, tackle, or furniture ot' 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 2 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. 1 As to the provisions which follow, see generally Highmore's Stamp Laws. pp. 147-153, and see correspondence with Inland Kevenue in Owen's Notes and Clauses, Ed. 3, and Allen's Stamp Duties on Sea Insurances. 2 The word " interest " in this context clearly includes liability. 156 APPENDIX I. Contract 93. (1.) A contract for sea insurance (other than such insurance to be m as j s re ferred to in the fifty-fifth section of the Merchant Shipping 25 & 26 Act Amendment Act, 1862) 1 shall not be valid unless the same is Viet. c. 63. expressed in a policy of sea insurance. (2.) No policy of sea insurance made for time shall be made for any time exceeding twelve months. 2 (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. 3 Policy for 94. Where any sea insurance is made for a voyage and also for voyage and ti me , or to extend to or cover any time beyond thirty days after the chargeable SQ ip sna ^ nave arr i ve d 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. an( j a j so w jj- n ^ty ag a p ii C y f or time. No policy 95. (1.) A policy of sea insurance may not be stamped at any valid time after it is signed or underwritten by any person, except in the unless duly . ,, . ., , . , stamped * wo cases following ; that is to say, (a.) Any policy of mutual insurance having a stamp impressed thereon may, if required, be stamped with an 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 : (Z>.) 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. 1 Section 55 of the Merchant Shipping Act Amendment Act, 18G2 (25 & 26 Viet. c. 63), is now repealed, and reproduced in 506 of the Merchant Shipping Act, 1894 (57 & 58 Viet. 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. 2 This provision is reproduced in 25 (2) of the Act, ante, p. 36. It must be read with 11 of the Finance Act, 1901, post, p. 159, which, with certain conditions and qualifications, authorizes continuation clauses in marine policies. 3 The effect of these provisions is reproduced in 23 of the Act, ante, p. 34. The words " the names of the subscribers or underwriters," though more applicable to individual insurers, include a body corporate. STATUTES. 157 (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. 96. Nothing in this Act shall prohibit the making of any alteration Legal which may lawfully be made in the terms and conditions of any ?l teratlons ,. . v.t, m policies policy ot sea insurance alter the policy has been underwritten ; pro- ma y be vided that the alteration be made before notice of the determination made under of the risk originally insured, and that it do not prolong the time c * r . tai . n re ~ stnctions. 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 further sum be insured by reason or means of the alteration. 1 97. (1.) If any person Penalty on (a.) becomes an assurer upon any sea insurance, or enters into assurin S any contract for sea insurance, or directly or indirectly policy duly receives or contracts or takes credit in account for any stamped, 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 insurance is expressed in a policy of sea insurance duly stamped, or (6.) makes or effects, or knowingly procures to be made or effected, 2. 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. 1 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. 158 APPENDIX I. (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 consideration, 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 cop) r , 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 f POLICY OF SEA INSURANCE (1.) Where the premium or consideration does not exceed the rate of 2s. Gd. per centum of the sum insured 001 (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 003 (&.) For time In respect of every full sum of 100, and also any fractional part of 100 thereby insured Where the insurance shall be made for any time not exceeding six months . 003 Where the insurance shall be made for any time exceeding six months and not exceeding twelve months . . G And see 91, 92, 93, 94, 95, 96, and 97. STATUTES. 159 SALE OF GOODS ACT, 1893. (56 & 57 VICT. c. 71.) $ 20. I'nli'ss otherwise agreed, the goods remain at the seller's Risk ;)r.w ri>k until the property therein is transferred to the buyer; but when /' passes the property therein is transferred to the buyer, the goods are at the ^ lt ! 1 pro " buyer's risk, whether delivery has been made or not. 1'roviiled that where delivery has been delayed through the fault of cither hn\ er or seller, the goods are at the risk of the party in fault irds any loss which might not have occurred but for such fault. Provided also that nothing in this section shall affect the dutiea or liabilities of either seller or buyer as a bailee of the goods of the other party. 1 32. ^3.) Unless otherwise agreed, where goods are sent by the Duty of seller to the buyer by a route involving sea transit, under circurn- f eller as to 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 sea transit. 2 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 certain which the liability of owners is limited under this Part (VIII.) of this [j^;", * hall not be invalid by reason of the nature of the risk.* THE FINANCE ACT, 1901. (1 E0w. 7, c. 7.) % 11. (I.) Notwithstanding anything contained in the Stamp p rov j 8 j on ' S91, a policy of sea insurance made for time may contain a as to con- oontinuation clause as defined in this section, and such a policy shall t)nuit "" 1 clauses in , policies of BM notes to theae provisions in Chalmers' Sale of Goods Act. sea insur - , ,,., ance. 54&5S 1 1'nrt VII I. limits the liability of the owners of British ships. The yict. c. 39. object of this section ia to make it clear that although the liability of a >hi['.'wner is limited, he ia still at liberty to insure. Sec ante, p. 155, us to the saving in the Stamp laws for this provision. 160 APPEND IK L not be invalid on the ground only that by reason of the continuation clause it may become available for a period exceeding twelve months. (2.) There shall be charged on a policy of sea insurance containing such a continuation clause a stamp duty of sixpence in addition to the stamp duty which is otherwise chargeable on the policy. (3.) If the risk covered by the continuation clause attaches and a new policy is not issued covering the risk, the continuation clause shall be deemed to be new and separate contract of sea insurance expressed in the policy in which it is contained, but not covered by the stamp thereon, and the policy shall be stamped in respect of that contract accordingly, but may be so stamped without penalty at any time not exceeding thirty days after the risk has so attached. (4.) For the purposes of this section, the expression " continuation clause " means an agreement to the following or the like effect, namely, that in the event of the ship being at sea or the voyage otherwise not completed on the expiration of the policy, the subject- matter of the insurance shall be held covered until the arrival of the ship, or for a reasonable time thereafter not exceeding thirty days. 1 THE REVENUE ACT, 1903. (3 EDW. 7, c. 46.) Stamping ' ^ policy of insurance made or purporting to be made upon, of policies or to cover any ship or vessel, or the machinery or fittings belonging on ships to the ship or vessel whilst under construction, or repair, or on trial, struction sna ^ ^ e sufficiently stamped for the purposes of the Stamp Act, 1891, etc. and the Acts amending that Act, if stamped as a policy of sea insurance made for a voyage, and though made for a time exceeding twelve months shall not be deemed to be a policy of sea insurance made for time. 1 This section was inserted in consequence of the decisions in Charlef- wortli v. Fciber (1900), 5 Com. Cas. 408, and Eoyal Exchange v. Fegra(1901), 2 K. B. 567 ; affirmed (1902), 2 K. B. 384, C. A. In the latter case, a twelve-months-time policy contained a continuation clause to the follow- ing effect : " Should the vessel be at sea or abroad on the expiration of this policy, it is agreed to hold her covered until her arrival at the port of final destination in the United Kingdom at a pro rata daily premium to the within." It was held that the continuation clause must be con- strued as part of the original time policy, and as extending the insurance beyond the legal twelve months. APPENDIX II. NOTES. NOTE A. DEFINITIONS OF MARINE INSURANCE. THE following definitions of marine insurance may be referred to : See 1, 1. " Marine insurance is a contract whereby one party, for a ante - stipulated sum, undertakes to indemnify the 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 1'un des contractants se charge des risques et fortunes de mer que doivent courir un vaisseau, ou les marchandises qui y doivent etre chargees, et promet en indemniser 1'autre contractant pour une 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 (d) universal, i.e. du droit des gens. 5. "L'assurance est un contrat par lequel on promet indemnite des choses qui sont transporters par mer, moyennant un prix convenu entre 1'assure qui fait ou fait faire le transport et 1'assureur qui prend le peril sur soi et le charge de Tev^nement. Cette definition est M 162 APPEND IK II. tirde du Guidon de la mer et de la doctrine de tous nos auteurs." Emerigon, Ch. I. 6. "Assecuratio est conventio seu contractus quo quis in se sus- cipit incertum periculum cui alter est obnoxius que e contrario eo nomine illi premium retribuere tenetur." Grotius ; cited by Lawrence, J., in Lvcena 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. R. 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. 1 Comparing marine with life insurance, the former is a contract of indemnity, the latter is not. 2 Death is a certainty, the date of its occurrence only is uncertain. Moreover, human life is incapable of money valuation. Comparing marine insurance with fire insurance, both of them are contracts of indemnity, 3 but the measure of indemnity is assessed on wholly different principles. 4 In a fire insurance (unless the policy otherwise provides) if goods valued at 20,000 be insured 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. See a clear exposition of the principle per Walton, J. 5 For a comparison between a contract of insurance and a contract of guarantee, see Seaton v. Heath (1899), 1 Q. B. at p. 792, and Rowlatfs Principal and Surety, p. 9. 1 Roberts v. Security Co., Ltd. (1897), 1 Q. B. Ill, C. A. 2 Ddfby v. Ind. Life Ass. Co., 15 C. B. o55 ; Buniand v. BodocanacM (1882), 12 App. Cas. at p. 340. Castettain v. Preston (1883), 11 Q. B. D. 380, C. A. 4 See Joyce v. Kennard (1871), L. E. 7 Q. B. at p. 81. s Anglo-Californian Bank v. London and Prov. Mar. Ins. Co. (191)4), 10 Coin. Cas. at pp. 8, 9 (guarantee and marine policy contrasted). NOTES. 1G3 NOTE B. DEFINITIONS OF BARRATRY. Barratry, in the maritime sense of the term, is derived from the See Sched. Italian word " barrateria," which is supposed to be of Arabic origin, **** and which signifies " cheating." The following definitions may be referred to : 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," Lockyer v. Offley (1786), 1 T. K. 259 ; 1 K. B. 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. Bowcroft (1806), 8 East, 134; 9 B. B. 385, 392 ; approved Cory v. Burr (1883), 8 App. Cas. 399. All the definitions and cases up to 1870 are reviewed in an American case, Atkinsons. Great Western Ins. Co. (1872), 1 Asp. Mar. Cas. (N. S.) 382. 7. " Les termes baratteries du patron comprennent toutes les especes, tant de dol que de simple imprudence, defaut de soin et 164 APPENDIX II. imperitie, tant du patron que des gens de 1'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 he 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 Ellenborough says, ' In order to constitute barratry, which is a crime, the captain must he proved to have acted against his better judgment," 1 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 and shippem* The general opinion is that barratry can only be committed against the owner, or a charterer who pro hoc vice is in the position of an owner (AnunJd, 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. 3 The following acts are instances of barratry: Engaging in gmnggling^ deviation in order to smuggle, fraudulent sale of ship and cargo, scuttling the ship. NOTE C. Dansmos or AVERAGE. See 64, Much learning and ingenuity have been spent on the endeavour to define the true meaning of the term " average.'' See Me Arthur, Ed. 2. p. 386 ; Arnovld, 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 avenge as accustomed." 1 Todd v. Ritchie (1815), 1 Stark. 240. - Jr*et \. yicholton (1854), 10 Exeh. 28, 37; Wettpori C'jal C.,. v . NePkaa (1898), 2 Q. K 132 ; Small v. U. K. Mar. At**. (1897), 2 Q. B. 311, C. A. (innocent mortgagee). v. Fender (1872), 1 Asp. 3Iar Ca. (N. 8.), 432, 435. NOTES. 165 In insurance law the use of the word " average " is very puzzling. The fact is, the law has been developed piecemeal 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 in- curred for the purpose of preserving the subject-matter from peril are known as particular charges, and are recoverable under the sue and labour clause, and not under the body of the policy (see 66 and 78) ; 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. 149. 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. 08, 100). But even this rule is not carried to its logical conclusion, l>ecause it has been held that for the purpose of making up the 3 per cent, franchise a general average loss cannot be added to a particular average loss. (See McArthur, Ed. 2, p. 386, and ante. P. 113.) According to French law, " le mot avarie designe un dommage material et aussi une depensc extraordinaire faite pour le navire et pour les merchandises, conjointement ou separement." Code de Com- merce, Art. 397. "Les avaries se divisent en deux classes. Elles sont (1) simples ou particulieres ; (2) grosses ou communes." .Bra- I'ard-Demangfat, Ed. 7, p. 475. French law, therefore, differs from English law by including ex- l>enses which, under our law, would be classed as " particular charges,'' See Kidston v. Empire Ins. Co. (1866), L. R. 1 C. P. at p. 550, per Willes, J. See particular charges distinguished from general average. W- Arthur, Ed. 2, p. 173. 166 APPENDIX 11. NOTE D. DEFINITION OF ABANDONMENT. See 63 ABANDONMENT (from the French " abandonner," but the corre- and 79. spending term in insurance is " delaissement "). In ordinary language the term "abandonment" is used as the equivalent of "relinquish- raent." 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 cession which takes place, by operation of law, of whatever remains of the subject-matter insured when the insurer pays for 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 proprietary 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 in- surance, 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 de"laissement equipolle a, 1111 transport." But see Arnould, Ed. 7, pp. 1388, 1390, distinguishing abandonment from subrogation. " 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." Belt's Principles of the Laws of Scotland, 484. " L'acte par lequel 1'assure quitte et delaisse aux assureurs les droits, noms, raisons et actions de propriete 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 Sacre, 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 NOTES. 167 bis 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., Rankin 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 thing from a notice of abandonment, though the ambiguous word ' abandonment ' often leads to confounding the two." Rankin 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. liankin v. Potter (1873), L. R. 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., Rankin v. Potter (1873), L. R. 6 H. L. at p. 118 (loss of freight). ' "Where the owners of an insured ship have claimed or been paid as for 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 168 APPENDIX II. 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 it does pass to the underwriters, who have satisfied a claim for a partial loss, though no property in the ship passes. ****** " Mason v. Sainsbury (3 Douglas' Rep. 61) and fates 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 such 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. Gas. 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." Kaltenbach v. Mackenzie (1878), 3 C. P. D. at p. 471. NOTE E. DEFINITION op PIRACY. See Sched. PIRACY (from Lat. piratica, sea robbery). Eobbery with violence I., Kule 8. a f. gea j s ca n e( j 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. NOTES. 169 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 statute apply. Thus " the slave trade is piratical in 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. For 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 : 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, Tiostis humani generis. . . . The offence of piracy, by common law, consists in committing those acts of robbery and depredation upon the high seas which if committed upon land would have amounted to felony there. But by statute some other offences are made piracy also." Blackstone, Com- mentaries, vol. 4, pp. 71, 72, citing 2 Inst. 113. Cf. Cicero, off. 3, 29. Pirala non est perdudlium numero definitus, sed communis hostin 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 circumstances which would have amounted to robberv 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 they ' violently dispossess the master, and afterwards carry away the ship itself or any of the goods 170 APPENDIX II. with felonious intent.' " Carver's Carriage by Sea, Ed. 3. 94, citing A.-G. for Hong Kongv. Kwok-a-Sing (1873), L. K. 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 gentium. Piracy is only a sea term for robbery, piracy being a robbery within the jurisdiction of the Admiralty. ... If the mariners of any 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 Hong Kong v. Kwok-a-Sing (1873), L. R. 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." It. v. McCleverty (1871), L. R. 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." Hall's International Law (1892), Ed. 3, p. 257. NOTE F. HISTOKY OK MAKIXE 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 JIanseatic League, whose treaty privileges in England were abolished NOTES. 171 in 1578. Its English history is ably and exhaustively traced by Mr. F. Martin in his History of Lloyd's and Marine Insurance, published iu 1876. It will be sufficient here to give the leading dates ha that history. 1 1589. First reported case, Anon, 6 Coke R. 47s, 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. 1688. First mention of Lloyd's cofiee-house, resorted to by merchants and underwriters. 1720. The "Royal Exchange Assurance Corporation" and the " London Assurance Corporation," incorporated by charter pursuant to the 6 Geo. 1, 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. 2, 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. 3, 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 1 Mr. Marsden's Select Pleas of the Court of Admiralty, published for the Selden Society, contain some interesting antiquities of marine insurunce. 172 APPENDIX II. by 35 ,Geo. 3, 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. 4, c. 114, and companies and partnerships allowed to engage in marine insurance. See Martin, p. 290. 1834. Establishment of "Lloyd's Register of British and Foreign Shipping " on modern basis. See Martin, p. 345. (N.B. The society of " Lloyd's Register " is altogether apart from Lloyd's.) 1845. The Gaming Act, 1845 (8 & 9 Viet. c. 109), makes void all contracts by way of gaming or wagering. 1862. The Companies Act, 1862 (25 & 26 Viet. c. 89), provides for incorporation of limited companies, and prohibits associations of more than twenty persons from carrying on business unless incorporated. 1864. Re-insurance again legalized by 27 & 28 Viet. c. 56. See Mackenzie v. Whitworth, 1 Ex. D. at p. 40. 1868. The policies of Marine Assurance Act (31 & 32 Viet. c. 86) provides for assignment of policies and empowers assignee to sue in his own name. 1871. Lloyd's incorporated and regulated by Lloyd's Act, 1871 (34 & 35 Viet. c. xxi.). See Martin, p. 356. 1891. Stamp law consolidated by Stamp Act, 1891 (54 & 55 Viet. 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 Viet. c. 60), consolidates the laws relating to merchant shipping. 1901. 11 of the Finance Act, 1901 (1 Edw. 7, c. 7), authorizes continuation clauses under certain conditions. 1906. Marine Insurance law codified by Marine Insurance Act, 1906 (6 Edw. 7, c. 41). The law of marine insurance developed more rapidly in France than in England. The Guidon de la Mer, published at Rouen 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 Emerigon 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-enacted 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. NOTES. 173 NOTE G. BULBS OF PRACTICE OF ASSOCIATION OF AVERAGE ADJUSTERS. 1 The following Eules 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 Act. The complete Kules, relating both to general and to particular average, are appended to the annual Reports of the Association. The following are taken from the Report for 1906. 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. Apportionment of Costs in Collision Cases. (Proposed and accepted 1889, p. 42. Confirmed 1890, p. 30. Referred 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 necessarily 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. 1 As to the effect to be given to these rules of practice, see Steamship Cariebrwlc Co. \. London and Proi: Mar. Ins. Co. (1901), 6 Com. Cas. at p. '297, per Mathew, J. . 174 APPENDIX II. 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. (6) 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. (c) This rule shall not admit any ordinary expenses incurred in fulfilment of a contract of affreightment, though such expenses are increased by the removal to a port of repair. 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. Rigging Chafed (Custom of Lloyd's, 1876). Rigging 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. NOTES. 175 Sails split or blown 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. Scraping and Painting. (Proposed and accepted 1900, p. 26. Confirmed 1901, p. 41.) That when in consequence of damage by a peril insured against, a vessel's bottom has to be scraped and painted, the cost of such scrap- ing and painting shall be charged to underwriters on ship, without any deduction on account of the vessel having become due for ordinary painting at any time subsequent to the accident. 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 repairs, 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. Metal sheathing 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 176 APPEND IK II. 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. (1890-91) 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 belonging to, or repairs done to, a 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 skip. PARTICULAR AVERAGE ON GOODS. Adjustment on Bonded Prices {Custom of Lloyd's, 1876). In the following cases it is customary to adjust particular average 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 charges, but exclusive of Customs duty, in cases where it is the custom of the port to sell or deal with the goods in bond. 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 ad- justing claims, be apportioned on the invoice values, where the invoice distinguishes the separate values of the said different qualities or descriptions ; and over the net arrived sound values in all other cases. NOTES. 177 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 hin. Alloiuance 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 1 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 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 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. Adjustment of Return of Premium (Custom of Lloyd's, 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. N INDEX. ABANDONMENT, when required, 88 nature and effect of, 90, 92, 121, 166 of ship, effect on freight, 92 notice of, 88 policy without benefit of, 8, 9 note on definition of, 166 ABANDONMENT OF ADVENTURE, 61 ACTION, defined, 133 by assignee of policy, 67, 68 by insurer in name of assured, 122 for contribution by co-insurer, 123 ACTUAL TOTAL LOSS, 79, 86 ADJUSTMENT OF LOSSES, 102-119 See MEASURE OF INDEMNITY. ADVANCE FREIGHT, insurance of, 19 effect of abandonment on, 92 ADVANCES, insurance of, 5, 11, 18 ADVENTURE (MARINE), insurance of, 4, 5 legality of, 6, 59 abandonment of, 61 frustration of, 86 AGENT, of assured effecting insurance, 29, 30. See also BROKER. of insurer, 35, 36 shipping agent, 28 ratification of insurance effected by, 130 180 INDEX. "ALL OTHER PERILS," 7, 145, 149 "ALL RISKS," 4, 7, 149 ALTERATIONS IN POLICY, 157 AMOUNT INSURABLE, quantum of interest, 20 insurable value, 22 double insurance, 45, 123, 124 sum insured to be specified in policy, 34 APPORTIONABLE RISKS, 112, 114, 119 "ARRESTS, RESTRAINTS, ETC.," 147 ASSIGNMENT, of policy, 67 of interest in subject insured, 22, 68 on abandonment, 90, 92, 166 ASSURED, defined, 1, 34 must have insurable interest, 8 assignment of interest by, 22, 68 duty as to good faith, 25 disclosure of material facts by, 25, 29, 33 responsibility for disclosure by agent, 29, 30 representations pending contract by, 30 not bound to disclose opinion, 32 warranties by, 51-60 issue of policy to, 36 assignment of policy by, 67 duty as to payment of premium, 69, 70 loss caused by misconduct of, 72, 76 return of premium to, 124-128 ratification of insurance by agent, 130 when and how far his own insurer, 123, 124 "AT AND FROM," when voyage must commence, 60 when risk attaches, 142 AVERAGE, note on meanings of, 164 "average unless general," 149, 165 See GENERAL AVERAGE; PARTICULAR AVERAGE. INDEX. 181 AVERAGE ADJUSTERS' ASSOCIATION, certain rules of practice of, 173 BAILEE, insurable interest of, 11, n. BARRATRY, what the term includes, 149, 163, 164 loss proximately caused by, 72 deviation caused by, 66 BILL OF LADING, construction of perils in, 145 BLOCKADE-RUNNING, not illegal, 6 must be disclosed, 6 BOATS, covered by policy on ship, 132, n., 138 BOTTOMRY, insurance on, 18, 39 BROKER, may effect policy in his own name, 34, 68 liability for premium, 70 not the insurer's agent, 70 lien of, on policy, 70 concealment by, 29 representations by, 30 BUILDING RISKS (SHIP), insurance of, 3 stamp on policy, 4, 160 "BURNT," 146 CANCELLING CLAUSE, 7 CAPTAIN. See MASTER. CAPTURE AND SEIZURE, construction of the term, 148 when proximate cause of loss, 75 warranty free from, 49, 75, 147 effect of recapture, 89 182 INDEX. CARGO, when interest on, attaches, 13, 14 See GOODS. CARRIER, insurable interest of, 10, 21 CAUSA PROXIMA, rules as to, 72, 73, 74 CHAIN-CABLES, 154 CHANGE OF VOYAGE, effect of, 62 compared with deviation, 63 CHARGES OF INSURANCE, 20, 23 CHARTERED FREIGHT, insurance of, 11 commencement of risk on, 143 See FREIGHT. CLAUSES (SPECIAL), construction of, 141 COALS, covered by policy on steamship, 23, 151 spontaneous combustion of, 75 COLLISION, running-down clause and its construction, 111, 141 when proximate cause of loss, 73, n., 74 COMMENCEMENT OF RISK, 142 COMMISSION, is insurable, 5 broker's commission, 20 COMMON CARRIER, insurance by, 10, 21 disclosure of special contract with, 27 COMMON LAW, saving for, including law merchant, 134 COMPANIES ACTS, effect on mutual insurance, 129 saving for, 134 CONCEALMENT, 25-29. See NON-DISCLOSURE. INDEX. 183 CONDITIONING CHARGES, in partial loss of goods, 106 in constructive total loss, 84 CONSEQUENCE OF HOSTILITIES, when proximate cause of loss, 73 CONSIGNEE, insurable interest of, 20 CONSTRUCTION, of policy, 130, 142 of Marine Insurance Act, 137 CONSTRUCTIVE TOTAL LOSS, what is, 81 effect of, 87 notice of abandonment, 88 valuation clause in policy disregarded, 39 prudent uninsured owner test, 85 CONTINUATION CLAUSE, 37, 159 ~\ . . , ^^ * - - ' * i CONTRACT^ insurance a contract of indemnity, 2, 161 application of general rules of law, 134 when deemed to be concluded, 32 See MARINE INSURANCE. CONTRIBUTION, between insurers, 46, 47, 123 CORN, a memorandum article, 140 COST PRICE, basis of insurable value of goods, 23, 106 COVERING NOTE, defined, 1 no action to enforce, 32, 33 effect of, 32, 33, 34, 132 CRAFT (RISK OF), no warranty of seaworthiness, 56, r 57 special clause to cover, 144 184 INDEX. CREW, insurance of wages, 18 provisions for use of, 22 negligence of, 73 barratry by, 149, 163 CUMULATIVE LOSSES, 114 CUSTOM OF TRADE, 130, 131. See USAGE. CUSTOMARY DEDUCTIONS, 154 DAMAGE. See PARTICULAR AVERAGE. DAYS, how computed, 144 DECK CARGO, 151 DECLARATION OP INTEREST, under floating policy, 43 DEDUCTIONS, customary, in average on ship, 105, 154, 175 DELAY, ^ ^^ CrA^ +*-*<- in commencing adventure, 60 in course of voyage, 65, 66 excuses for, 66 losses proximately caused by, 73, 77 restraint of princes, 147 DEVIATION, what is, and effect of, 63, 64 excuses for, 66 distinguished from change of voyage, 62, 63 DISBURSEMENTS, insurable, 5 what covered by the terra, 38, n. DISCLOSURE, by assured of material facts, 26-29 by agent of assured, 29 of ships' papers and documents, 25 DOUBLE INSURANCE, rules as to, 45 contribution between insurers, 123 return of premium, 126, 128 DRY DOCK EXPENSES, 103, 104, 114, 175 INDEX. 185 ENEMY'S GOODS, 136 EVIDENCE, slip or covering note when admissible, 32, 33, 132 of usage to explain policy, 131 materiality of facts not disclosed, 27 of unseaworthiness, 57 EXCLUDED LOSSES, 72 EXPLOSION OF STEAM, not covered by ordinary policy, 75, 77 EXPRESS WARRANTIES, 50 EXTRA CHARGES, 107, n. F. P. A. WARRANTY, 112-115 FIRE, meaning of term in policy, 146 FIRE INSURANCE, compared with marine, 162 FIRST VOYAGE, 104, 154 FITTINGS OF SHIP, 23, 151 FLOATING POLICY, 43 FOREIGN ADJUSTMENT, 96, 101, 135 FOREIGN LAW, 134 FRANCHISES, 114 FRAUD, in valuation, 39, 42 concealment of material facts, 26-29 untrue representations pending contract, 30, 31 general application to insurance, 134 FREIGHT, meaning in marine insurance, 133, 134, 151 insurable interest in, 11 advance freight, 19 commencement of risk on, 143 termination of risk on, 144 loss of, proximately caused by delay, 77 constructive total loss of, 84, 86 when notice of abandonment not required, 90 effect of abandonment of ship on, 92 particular average on, 105 186 INDEX. FRUSTRATION OF ADVENTURE, 86 "FULL INTEREST ADMITTED," 9 FURNITURE (OF SHIP), 22, 23, 138 GAMING POLICIES, are void, 8, 9, 60 no return of premium, 125, 127 GENERAL AVERAGE, liability of insurer for, 97-101 adjustment of contributions, 109 not within sue and labour clause, 116 meanings of average, 164 i no KJK "average unless general, 149, 165 fF 4 f 1 4.' 1 A-l 1AA effect of valuation clause on, 41, 100 conflict of laws as to, 135 GOOD FAITH, insurer and assured must observe, 25 GOOD SAFETY, meaning of, 144 warranty of, 53 GOODS, restricted meaning in policy, 151 insurable value of, 23 commencement of risk on, 143 termination of risk on, 144 actual total loss of, 79 constructive total loss of, 81-87 transhipment of, 81 particular average on, 106-108, 176 particular average warranties, li2 inextricably mixed, 80, 107, 108 GRAVING DOCK EXPENSES, 154 GREENWICH TIME, 135 GROSS PROCEEDS, meaning of, 107 GROSS VALUE, meaning of, 107 INDEX. 187 HISTORY, of marine insurance, 170 HONOUR POLICIES. 6^10 HOSTILITIES, warranty free from consequences of, 73 trading with enemy prohibited, 59, 60, 136 blockade-running, 6 HULL AND MACHINERY, scope of policy on, 25 HYPOTHECATION, gives insurable interest, 5, 10 master's power of, 18 ILLEGALITY, of adventure, 6, 8 implied warranty of legality, 59 no return of premium, 125, 127 effect of hostilities, 136 IMPLIED OBLIGATIONS, may be negatived or varied, 130, 131 IMPLIED WARRANTY, general nature of, 48 of seaworthiness, 53, 58 of legality, 59 none as to nationality, 52 INCHMAREE CLAUSE, 7 INDEMNITY, marine insurance based on, 2, 161 different theories of, 24 measure of, 102-119. See MEASURE OF INDEMNITY. INHERENT VICE, 73 NSUBABLE INTEREST, 8-22. See INTEREST. INSURABLE VALUE, rules for determining, 22 INSURANCE AGENT OR BROKER, ^ "// duty as to disclosure, 29 ' /" responsibility for premium, 70 lien for charges, 70 rV*- / -v\J"[ " 188 INDEX. INSURER, defined, 1 duty as to good faith, 25 what material facts he is presumed to know, 29 execution of policy by, 35 rights as to premium, 69 responsibility for losses, 70, 72 responsibility for return premium, 70, 124 rights of, on abandonment, 92 rights of, on payment, 119 when assured is own, 123, 124 INTEREST (INSUEABLE), wagering policy void, 8 definition of interest, 10 when interest must attach, 13 defeasible or contingent interest, 15 partial interest, 16, 20 re-insurance, 16 bottomry, 18 wages of master or crew, 18 advance freight, 19 charges of insurance, 20 quantum of interest, 20, 21 assignment of interest, 22, 68, 69 " policy proof of interest," 8 INVOICE COST, basis of adjustment on goods, 23, 106 IRON SHIP, particular average on, 104, 154 ISSUE OF POLICY, 36, 69 JETTISON, 99, 100 LAND RISKS, 3 LEAKAGE AND BREAKAGE, 73 LEAVE TO CALL, 145 LEGALITY, of adventure, 6 implied warranty of, 59 effect of subsequent hostilities, 136, 137 INDEX. 189 LIABILITY (TO THIRD PERSON), may be insured against, 5 adjustment of losses, 110 LIEN, of broker on policy, 70 LIFE, deviation to save, 66 LIFE INSURANCE, contrasted with marine, 162 LIFE SALVAGE, 96, 97 LIGHTERAGE, special terms for, must be disclosed, 27 no warranty of seaworthiness, 57 LIMITED INTEREST, insurance by person having, 21 LLOYD'S, history of, 170 usages of, 132, n. practice to pay innocent shippers, 57 usage as to payment of premium, 71 execution of policy at, 36 Lloyd's Act, 1871 .. 36, n., 172 LLOYD'S POLICY, form of, 138 note on, 140-142 construction of main terms in, 44, 142-152 underwriters' subscription, 36 issue of, 36 ike POLICY. LOSS, meaning of, 2 of voyage, 86 LOSSES, included and excluded, 72 partial and total loss, 78 actual total loss, 79 missing ship, 80 constructive total loss, 81, 85 190 INDEX. LOSSES continued. particular average loss, 94 salvage charges, 95 general average loss, 97 adjustment of losses, 102-119. See MEASUKE OF INDEMNITY. successive losses, 115 sue and labour clause expenses, 116 particular charges, 94, 112, 113, 116 LOST OR NOT LOST, acquisition of interest, 13 attachment of policy, 142 MARINE ADVENTURE, defined, 4. See ADVENTURE. MARINE INSURANCE, definition of, 1, 161 mixed sea and land risks, 3, 4 analogous risks, 3 history of, 170 is a contract of indemnity, 1, 2, 161 must be embodied in policy, 33 based on good faith, 25 founded on interest, 8, 10 subject-matter of, 6 is a branch of contract law, 134, 135 when contract deemed to be concluded, 32, 33 stamp laws concerning, 155-158 conflict of laws, 135 MARITIME PERILS, definition of, 5, 6, 7 when proximate cause of loss, 72, 73, 77 MASTER, barratry of, 149, 163 negligence of, 73, 76 authority to hypothecate, 18 authority of tranship, 81 MATERIAL FACTS, what are, 26 duty to disclose, 26 INDEX. 191 MAXIMS, Aliud est celare, aliud tacere, 28 causa proximo,, non remota, spectatur, 76 cuilibet licet renunciare juri pro se introducto, 91, n. dolus circuitu non purgatur, 76 expressum facit cessare taciturn, 131 ex turpi causa non oritur actio, 6 freight is the mother of wages, 19 modus et conventio vincunt legem, 131 MEASURE OF INDEMNITY, measure of insurable value, 22 general principle of adjustment, 102 total loss, 103 partial loss of ship, 103 partial loss of freight, 105 partial loss of goods, etc., 106 apportionment of valuation, 108, 176 general average contributions, 109, 110 collision and other liabilities, 111, 173 miscellaneous cases, 111 MEMORANDUM, form, 140 construction, 149, 150 MERCHANDISE, meaning of the term, 150, 151 MISREPRESENTATION, in negotiating contract, 30-32 generally, 134, n. MISSING SHIP, 80 MISTAKE, 35, 134, . MIXED SEA AND LAND RISKS, 3 " MOORED IN SAFETY," 143, 144 MORTALITY RISKS, 149 MORTGAGEE, insurable interest of, 20, 21 double insurance, 47 MORTGAGOR, insurable interest of, 20, 21 double insurance, 47 192 INDEX. MOVEABLES, defined, 133 MUTUAL INSURANCE, rales as to, 128-130 NAME, of assured in policy, 34 of insurer, 34, 35 of master of ship, 35, n., 138 of ship, 35, 138 NATIONALITY, warranty of, 52 NEGLIGENCE, of assured, 76 of master or crew, 73, 76 NEUTRALITY, warranty of, 51, 52 NEW FOR OLD, deduction in case of ship, 104, 154, 175 NON-DISCLOSURE, Jby^assured in negotiating contract, 26, 27, 28 by agent orassurea72^30 NO THIRDS, 105 NOTICE OF ABANDONMENT, rules as to, 88, 89 distinguished from abandonment, 166, 167 none in actual total loss, 79 OPEN POLICY, ambiguous meaning of, 41 See UNVALUED POLICY. OPINION, assured need not disclose, 32 OUTFIT, what covered by insurance on ship, 23, 24 INDEX. 193 OVER-INSURANCE, measure of insurable value,J22 by valued policy, 39, 42 by double insurance, 45 duty tpdisclose, 27^42 ""return of premium, 126 OWNER OF SHIP. See SHIPOWNER. OWNERSHIP, distinguished from insurable interest, 12, 16, 21 risk primd facie goes with, 159 necessary, to give notice of abandonment, 91 P. P. I. POLICY, 8, 9 PARTIAL INTEREST, is insurable, 16 insurance by limited owner, 20 PARTIAL LOSS, definition, 78 recovery for, on claim for total loss, 78 particular average defined, 94 salvage charges, 95 general average, 97 adjustment on ship, 102, 154 adjustment on freight, 105 adjustment on goods, 106 miscellaneous cases, 111 apportionment of valuation, 108 average warranties and franchises, 112 successive losses, 115 particular charges, 94, 116 right of insurer on payment of, 119, 168 rules of Average Adjusters' Association, 173-177 PARTICULAR AVERAGE, definition, 94 warranties against, 112 rules of Average Adjusters' Association, 173-177 See PABTIAL Loss. 194 INDEX. PARTICULAR CHARGES, defined, 94 recoverable under sue and labour clause, 116, 117 distinguished from particular average, 94 in relation to F. P. A. warranty, 113 PASSAGE MONEY, insurable, 5 " not included in freight, 133, 151 'pERH/k INSURED AGAINST, what are, 5, 6, 7 must be proximate cause of loss, 72, 73, 76, 77 PERILS OF THE SEAS, what are. 145 when proximate cause of loss, 73, 74. 75 apprehension of distinguished from operation of, 78 PILOT, 56 PIRATES, what included in term, 146 note on piracy, 1 68 ;< / % /3 ^ ~( e ' POLICY, - L^^ 'i^J^W^u^v_ denned, 1 contract to be embodied in, 33 what it must specify, 34 execution and issue of, 35, 69 when assignable, 67 effect of receipt on, 72 for voyage or time, 36 designation of subject-matter in, 37 governed by usage, 131 valued, 39 unvalued, 42 floating, 43 stamp requirements, 156 See LLOYD'S POLICY. PORT, - what is, 64, . i r j- u CA several P rts of discharge, 64 (M*. ' seaworthiness for, 56 .. of departure, 61 , 142 thirty days after arrival at, 144 INDEX. 195 PREMIUM, defined, 2, 162 when payable, 69 policy effected through broker, 70 effect of receipt, 72 substitute in mutual insurance, 130 additional, or to be arranged, 44 return of, 124, 125 PREPAID FREIGHT, insurance of, 19 effect of abandonment of ship on, 92 PROFITS, are insurable, 5 total loss of, 80 PRO EAT A FREIGHT, effect of abandonment of ship on, 92, n. PROVISIONS (FOR CREW), 22, 151 PROXIMATE CAUSE, rules as to, 72, 73 RATIFICATION, of insurance effected by agent, 130 RATS, losses caused by, 73, 75 RECAPTURE, 89 RECEIPT, effect of, in policy, 72 RECONDITIONING CHARGES, 107 RE-INSURANCE, rules as to, 16, 17 designation in policy, 38 no notice of abandonment, 89 REMOVAL, of ship for repair, 174 196 INDEX. REPAIRS, in partial loss of ship, 103, 154, 174 estimate of, in constructive total loss, 82 REPEALS, 137, 153 REPRESENTATIONS, during negotiation of contract, 30 when amounting to warranty, 32 distinguished from warranty, 32 RESPONDENTIA, 18 RESTRAINT OF PRINCES, 147 RETURN OF PREMIUM, by agreement, 124 in other cases, 125 RISK, meaning of term, 2 when apportionable, 108, 1 12 commencement of, 142 termination of, 144 of craft, 144 See INTEREST ; VOYAGE. ROBBERY, 146, 168 RUNNING-DOWN CLAUSE, 110, 111 "SAFELY LANDED," 144 SAFETY, 144. See GOOD SAFETY. SAILING WARRANTIES, 51 SAILS, 175 SALE (SUBJECT-MATTER INSURED), effect of, on policy, 22, 68, 69 when risk is transferred by, 159 duty of seller as to insurance, 159 SALVAGE, different meanings of, 95, 96, 97 policy without benefit of, 9 abandonment of, to insurer, 92, 119, 167 life salvage, 96 INDEX. 197 SALVAGE CHARGES, defined, 95, 97 recoverable under policy, 95 not within sue and labour clause, 118 when general average, 95, 101 effect of valuation clause in policy, 41 SAVINGS, Acts not expressly repealed, 134 common law and law merchant, 134 usages of trade, 131 SEAL, policy under, 35, 162 SEAWORTHINESS, - of ship, 53 of substituted ship, 55 of lighters, 57 of goods, 57 evidence of unseaworthiness, 57 SEVERAL POLICIES, double insurance, 45 consecutive policies, 43 SHIP '- insurable value of, 22, 151 seaworthiness of, 53 constructive total loss of, 81, 82 particular average on, 103, 173 " stranded, sunk, or burnt," 146, 150 commencement of risk on, 142 termination of risk on, 144 in course of construction, 3, 4, 160 " SHIP OR SHIPS," floating policy by, 43 SHIPOWNER, carrying his own goods, 92, 133, 134 general average, when he owns ship and freight, 98, 99 duty as to general average, 104 SHIPPER. See ASSURED ; GOODS. SHORT INTEREST, 42, 112 2,6- Z I"' 2 ' 1 (( > It '*- 198 INDEX. SIGNATURE, of insurer, 35 SLIP OR COVERING NOTE, defined, 1 conclusion of contract by, 32, 33 no action on, 33 when admissible in evidence, 34, 132 SMUGGLING, 59, 164 SPECIAL CLAUSES, how added, 138, n., 141 construction of, 141 See also WARKANTY. STAMP ACT, 1891, provisions as to policies set out, 155-158 scale of duties, 158 STATUTES CITED, 19 Geo. 2, c. 37 (wager policies), 8, 153 28 Geo. 3, c. 56 (name of assured), 34, 153 5 Geo. 4, c. 114 (insurance companies), 171 8 & 9 Viet. c. 109 (gaming and wagering), 8, 172 31 & 32 Viet. c. 86 (assignment of policy), 68, 153 34 & 35 Viet. c. xxi. (Lloyd's Act), 172 43 & 44 Viet. c. 9 (definition of time), 135 54 & 55 Viet. c. 39 (stamps), 35, 155-158 56 & 57 Viet. c. 71 (sale of goods), 159 57 & 58 Viet. c. 60 (merchant shipping), 19, 159 1 Edw. 7, c. 7 (continuation clause), 159, 160 3 Edw. 7, c. 46 (ships in course of building), 160 STEAMSHIP, what included in insurance on, 23, 151 no thirds clause, 104, 105 STOPPAGE IN TR AN SITU, effect of, on insurable interest, 15 STORES, 22, 23 what is, 151 effect of, on policy, 151 INDEX. 199 STRANDING, 150 SUBJECT-MATTER INSURED, what really is, 5 designation of, in policy, 37, 38 SUBROGATION, distinguished from abandonment, 93, 121, 122, 1G7 on settlement of total loss, 119-122, 167 in cases of double insurance, 46, 47 SUCCESSIVE LOSSES, 115 SUE AND LABOUR CLAUSE, nature and effect of, 116-119 form of, 139, 140 general average and salvage not within, 96. 116 TACKLE, ETC., included in policy on ship, 138 TEMPORARY REPAIRS, 154 TERMINATION OF RISK, 144 THEFT, meaning of, 146 THIRD PARTY, insurance against liability to, 5, 110 THIRDS, deduction, new for old, 104, 154 TIME, ship's time or Greenwich time, 135 reasonable, a question of fact, 132 TIME POLICY, what is, 36 must not exceed twelve months, 36, 156, 157, 159, 160. no warranty of seaworthiness, 54 calculation of expiration of, 36, 37, 144 stamp on, 156 scale of duty, 158 200 INDEX. TOTAL LOSS, defined, 78 actual total loss, 79 constructive total loss, 81 missing ship, 80 adjustment of, 103 following partial loss, 115 particular charges may be added to, 1 17 " TOUCH AND STAY," 145 TRANSHIPMENT, 82, 84 UNDERINSURANCE, effect of, 123, 124 UNDERWRITER, defined 1. See INSURER. UNSEAWORTHINESS, 53-58 See SEAWORTHINESS. UNVALUED POLICY, defined, 42 insurable value on, 22 when floating policy treated as, 43 adjustment of total loss, 102, 103 adjustment of partial loss, 103-108 return of premium for over-insurance, 126 effect of under-insurance, 123, 124 USAGE, policy founded on, 131, 141 general application of, 130 as to payment of premium, 71 course of voyage when regulated by, 61 landing of goods, 144 VALUED POLICY, defined, 39 effect of valuation, 39-42 adjustment of total loss, 103 , partial loss of freight, 105 partial loss of goods, 106 INDEX. 201 VALUED POLICY continued. apportionment of valuation, 108 short interest, etc., 42, 112 general average or salvage under, 41, 112 - effect of tinder-insurance, 123, 124 VICtfPROPRE, 58, 73 VOYAGE, when it must commence, 60 abandonment of adventure, 61 change of voyage, 62 change of port of departure or destination, 61 deviation, 63 several ports of discharge, 64 delay in voyage, 65 excuses for deviation or delay, 66 liberty to touch and stay, 145 termination of, 144 in different stages, 53, 56 VOYAGE POLICY, what is, 36 stamp oc, 159 effect of adding " thirty days after arrival," 144 implied warranty of seaworthiness, 53, 58 building risk stamped as, 160 WAGERING POLICY, what is, 8-10 is void, 8, 60 no return of premium, 125-127 WAGES, insurable by master or seaman, 18 WAIVEE, of disclosure by assured, 26 of breach of warranty, 50 of notice of abandonment, 89 WAIVER CLAUSE, 119, 140 WAR RISKS, 147, 148. See HOSTILITIES. 202 INDEX. WARRANTY, nature and effect of, 47-49 excuses for breach of, 49 express warranties generally, 50, 51 as to neutrality, 51 to sail with convoy, 52 as to nationality, 52 good safety, 53 seaworthiness, 53-58 legality, 59 free from capture and seizure, 75, 147, 148 free from particular average, 112, 113 WEAR AND TEAR, .insurer not liable for, 73 "WITHOUT BENEFIT OF SALVAGE," when a wagering policy, 8 WRIT, fixes notice of abandonment, 91 aliter in Scotland and abroad, 91 YORK-ANTWERP RULES, 96, 101 THE END. PEIKTED BY 'WILLIAM CLOWES ASD SONS, LIJIIIKD, LONDON AliD BKCCLES.