underwriters of the damaged state of the goods unless the loss is occasioned by their being damaged; but if the goods, (e. g. hemp) are put on board in a damaged state, and consequently ignite and are destroyed, the underwriters are not liable. (y) It may also be added as another instance of an immaterial concealment, that an insurance may be made for part of a voyage without a disclosure of the ultimate place of destination; as for instance on freight from St. Ubes to Portsmouth, upon a ship which sailed from St. Ubes to Gottenburgh, with intent to proceed first to Portsmouth to take up convoy in her way to Gottenburgh. (z) The reason is that the non-disclosure of the ship's ultimate place of destination does not vary the risk. (y) Boyd v Dubois, 3 Campb 133. (z) Taylor v Wilson, 15 East, 324. 2 Dow Rep 367, 373. Vide Hodgson v Richardson, 1 Bla Rep 463. 2 Taunt 424. 279 *CHAPTER XIV. OF PARTIAL LOSSES AND ADJUSTMENT. THE principle of insurance as a contract of indemnity naturally suggests the division of losses into two kinds; viz. 1. Partial or average losses. 2. Total losses. Having already considered the various causes of loss for which the insurers are liable, it will be proper in this place to consider the mode in which partial losses are estimated and adjusted. An insurer may be liable for a partial damage under the policy, although eventually a cause of total loss occurred which was excepted from its operation. Thus when an American ship, warranted free from American condemnation, slipped away in the night for the purpose of eluding her national embargo, but was driven on the shore by the wind, and having been with great difficulty got off, was some time after seized and finally condemned by the American government, the Court of King's Bench held, that as there was ultimately a total loss by a peril excepted out of the policy, the insured could neither recover for a total loss, nor for any previous partial loss arising from the stranding, which in the event became wholly immaterial to the insured; but they considered that the insured might recover for actual disbursements made for repair of damage occasioned by sea perils before the total loss; these being covered by the general authority given to the insured to sue, labour, and travail for the defence, safeguard, and recovery of the property insured. (a) And the liability of an underwriter *is not confined to the single amount of his subscription, but he may be subject either to several average losses, or to an average loss and total loss, or to money expended and labour bestowed about the defence, safeguard, and recovery of the ship, to a greater amount than the subscription; and this will be recoverable as an average loss. (b) It may be proper to add, that when repairs are ordered by the underwriters, for the payment of which a bottomry bond is given, and they refuse to pay it on the arrival of the ship, in consequence of which the ship is sold, they are liable for all the damage which accrues to the owner in consequence of that refusal. (c) When an entire insurance is effected on ship and cargo, and no cargo is shipped, the insurer is only liable for such a proportion (a) Livie v Janson, 12 East, 648 and sce cases of partial loss only, 4 Taunt 803. 11 East, 232. (b) Le Cheminant v Pearson, 4 Taunt 367. 10 John 487. (c) Da Costa v Newnham, 2 TR 407. of the sum insured, as the property upon which the policy attaches bears to the whole. Thus, if the sum insured be 600l. on ship valued at 1,000l. and cargo 1,000l., and no cargo be shipped, the underwriters are only liable to the extent of 50l. per cent, upon their respective subscriptions. (d) This rule was adopted in a case which occurred before Lord Kenyon, where a joint insurance had been effected to the amount of 5,500l. on ship and cargo, calculating the ship at 1,500l.; the subscriptions were to the extent of only 6001.; and no part of the cargo had been taken on board. Lord Kenyon inclined to be of opinion that the insured, in an action for the loss of the ship, were entitled to recover the whole 6001. as that sum was in fact less than the value of the ship; but the jury intimating that a different rule had been adopted at Lloyd's coffeehouse, he assented to a verdict being given for such a proportion only of the sum subscribed by the defendant, as the property upon which the policy attached bore to the whole which was included in the valuation. In an action on a valued policy it affords no defence to prove that the insured have received the same amount from the underwriters on another policy, if the subject matter insured be proved to be of a value equal to the sum received and that sought to be recovered. (e) We shall proceed to consider separately the amount at which the loss is to be estimated in the case of 1. Ship; 2. Goods; 3. Freight. 1. Ship. *When a ship partially damaged has been repaired by the owners, the practice is to deduct one-third from the cost of the repair, in consideration of the benefit which the owners derive from new materials in lieu of the old. And this rule, which is intended to prevent nice calculations as to actual amount of damage, was adopted in a late case, although just before the voyage the ship had been newly repaired, and the damage occurred in the new part of the vessel. When it was proposed, on the part of the insurer, to call witnesses to prove the usage, the Judge interposed, and said, it could scarcely be insisted that witnesses should be called to prove a usage which was perfectly well known to every one of the jury. The rule, indeed, is notorious; it is not one of law, nor is it universal; but is adopted on account of the impossibility in most cases of proving the actual deterioration of the vessel by the wear and tear of the voyage. (f) But the underwriters are not entitled to the usual deduction of one-third, for new materials in lieu of old, where the ship has been repaired, unless she has been restored into the free possession of the owner. (g) 2. Goods. The value of the goods is to be estimated according to the invoice price; an insurer is not liable for the rise or fall of the market, (h) or for a loss that may arise from the difference of exchange. (i) Insurance is a con (d) Amery v Rogers, 1 Esp Rep 207. (e) Bousfield v Barnes, 4 Campb 228. (f) Poingdestre v Royal Exchange As. surance Company, 1 Ry & Moo 378, and as to charges on ship and freight respectively, 5 M & S 13, 14. (g) Da Costa v Newnham, 2 T R 407. tract of indemnity against the perils of the voyage; the insurer engages, so far as the amount of the prime cost, or value in the policy, "that the thing shall come safe," he has nothing to do with the market; he has no concern in any profit or loss which may arise to the merchant from the goods; if they be totally lost, he must pay the prime cost, that is, the value of the thing insured at the outset he has no concern in any subsequent value. So likewise, if part of the cargo, capable of a several and distinct valuation at the outset be totally lost; as if there be one hundred hogsheads of sugar, and ten ha pen to be lost, the insurer *must pay the price of those ten hogsheads, without any regard to the price for which the other ninety may be sold. But where an entire individual, as one hogshead, happens to be spoiled, no measure can be taken from the prime cost to ascertain the quantity of such damage; but if you can fix whether it be a third, fourth, or fifth worse, the damage is fixed to a mathematical certainty. How, then, is this to be found out? Not by any price at the outset port, but by that at the port of delivery, where the voyage is completed, and the whole damage known. Whether the price there be high or low, in either case it equally shews whether the damaged goods are a third, fourth, or a fifth worse than if they had come sound; consequently, whether the injury sustained be a third, fourth, or fifth of the value of the thing; and as the insurer pays the whole prime cost if the thing be wholly lost, so if it be only a third, fourth, or fifth worse, he pays a third, fourth, or fifth of the value of the goods so damaged. (k) It was held in case of a partial loss on tobacco that though the sale of both the sound and damaged hogsheads might be the most certain means of ascertaining the difference and calculating the amount of the loss; yet the valuing of the sound hogsheads by a regular broker, the parties acting bona fide, was sufficient. 2 Dow, 545. Appeal from Scotland. And the rule for calculating a partial loss on goods by sea damage, is to estimate the difference between the respective gross proceeds of the same goods when sound, and when damaged, and not the net proceeds; this rule being adopted chiefly to prevent the underwriter's liability from being affected by the fluctuation of the market, or by the port duties, or charges after the arrival of the goods at their port of destination. (1) Nor is there any difference with regard to the mode of estimating the loss between a valued and an open policy; for the effect of valuation is to fix by agreement the amount of the prime cost. (m) The rule for estimating the loss in the case of an open policy, is to take the invoice price at the loading port, together with the premium of insurance (n) and commission, as the basis of calculation; and when a partial loss occurs, the amount is ascertained by taking the proportional difference between the selling price of the sound, and that of the damaged part of the goods, at the port of de (k) 2 Burr 1170. (1) Johnson v Shedden, 2 East, 581. Hurry and Others v Royal Exchange Assurance Company, 3 Bos & Pul 309. (m) 2 Burr 1171. 511. livery, and applying that proportion, (be it a half, a quarter, an eighth, &c.) with reference to such estimated value at the loading port, to the *damaged portion of the goods. (0) In the case of an open policy, the invoice price at the loading port, including premiums of insurance and commission, is, for all purposes of either total or average loss, the usual standard of calculation resorted to for the purpose of ascertaining this value. The selling or market price at the port of delivery cannot be alone the standard, as that does not include premiums of insurance and commission, which must be brought into the account, in order to constitute an indemnity to an owner of goods, who has increased the original amount and value of his risk by the very act of insuring. The proportion of loss is necessarily calculated through another medium, namely, by comparing the selling price of the sound commodity with the damaged part of the same commodity at the port of delivery. The difference between these two subjects of comparison affords the proportion of loss in any given case, i. e. it gives the aliquot part of the original value, which may be considered as destroyed by the perils insured against, and for which the assured is entitled to be recompensed. When this is ascertained, it only remains to apply this liquidated proportion of loss to the standard by which the value is calculated, i. e. to the invoice price, being itself calculated as before stated; and we then obtain the one-half, the onefourth, or one-eighth of the loss to be made good in terms of money. This rule of calculation is generally favourable to the underwriter, as the invoice price is less in most cases than the price at the port of delivery; but the assured may obviate this inconvenience by making his policy a valued one; or by stipulating that, in case of loss, the loss shall be estimated according to the value of like goods at the port of delivery. (p) In the absence of any express contract on the subject, the general usage of the assured and underwriters supplies the defect of stipulation, and adopts the invoice value, with the additions I have mentioned, as the standard of value for this purpose. (q) The nature of the contract, as observed by Lord Mansfield, is, that the goods shall come safe to the port of delivery, or if they do not, to indemnify the insured to the amount of the prime cost, or value in the policy. If they arrive, but lessened in value, through damage received at sea, the nature of an indemnity speaks demonstrably that the merchant must be put in the same condition (relation being had to the prime cost or value in the policy) which he would have been in if the goods had arrived free from damage; that is, by paying such proportion or aliquot part of the prime cost or value in the policy, as corresponds with the proportion, or aliquot part of the diminution in value occasioned by the damage. No private scheme or project in trade of the insured can affect (0) Usher v Noble, 12 East, 639. (P) Per Lord Ellenborough, ubi supra. But it would scarcely be advisable for the merchant to pay the premium upon the whole amount of the freight, duties, and expected profit, sometimes amounting to more than the goods themselves, toinsure against the contingency of the loss of a part. Stev 131. (q) 12 East, 647. |