Where various articles are insured together in the same policy and there is an average loss on each, the only fair rule is to adjust the loss separately on each article. Arnould on Insurance, 6th ed., p. 934, citing Benecke Pr. of Indem. and Stevens on Average.

How the rule is applied to a floating policy appears in Crowley v. Cohen, 13 R. C. 314. An insurance which at first sight was very similar to a floating policy, but was distinguished as a different kind of insurance altogether, came into question in Joyce v. Kennard (1871), L. R. 7 Q. B. 78, 41 L. J. Q. B. 17, 25 L. T. 932, 20 W. R. 233. It was an insurance on all goods on all wharves and lighters of the plaintiffs, who were lightermen, against all losses for which they should be responsible; that is to say, against risks quite different from those which form the subject of an ordinary marine insurance policy. The Court construed this as a contract of indemnity limited only by the amount of the subscription, and having no relation to the total value of the property which might at any time be within the scope of the insurance.

AMERICAN NOTES.

"This doctrine is fully adopted in the United States: " 1 Parsons on Marine Insurance, p. 243. Sustained by Le Roy v. U. S. Ins. Co., 7 Johnson (N. Y.), 343; Post v. Phœnix Ins. Co., 10 ibid. 79; Clark v. United F. & M. Ins. Co., 7 Massachusetts, 365; 5 Am. Dec. 50; Carson v. Marine Ins. Co., 2 Washington (U. S. Circ. Ct.), 468; Snell v. Delaware Ins. Co., 1 ibid. 509; Coffin v. Newburyport M. Ins. Co., 9 Massachusetts, 436; Fontaine v. Columbian Ins. Co., 9 Johnson (N. Y.), 29; Suydam v. Marine Ins. Co., 2 ibid. 138.

In the Coffin case, supra, the Court observed: "A policy of insurance is a contract of indemnity. To render it such, as respects goods, the rule is, when they are purchased, to make an aggregate of their prime or invoice price, and all duties and expenses upon them, until they are put on board, including the premium of insurance; and from analogy, if the goods happen not to be purchased, but are grown or produced, or the property in them otherwise obtained by the assured, then their value, or what is the same thing, their price, at the place where the insurance commences." In the Clark case, supra, the Court said: "The insurance upon the goods is restricted to their value at the port of lading, or their prime cost, including all expenses upon them until laden on board." (And expected profits were disallowed.) So in Smith v. Condry, 1 Howard (U. S. Supr. Ct.), 35.

In the Carson case, supra, the Court said: "It being admitted that there is no direct authority or custom in relation to a case precisely like the present, it must be decided upon an attentive consideration of the nature of the contract of insurance." This, the Court said, is a contract of indemnity, and continued: "But it is impossible that the first cost can ever furnish a just rule of indemnity, where it exceeds or falls short of the actual value of the property when it is put at risk. The invoice price, which was contended for on behalf of the

plaintiffs, is liable to all the objections which exist against the prime cost, and to an additional one, which, in the opinion of the Court, cannot be surmounted. It furnishes no rule of indemnity, in any case where it exceeds, or is less than, the market value of the article; if the former, the insured is more than indemnified by receiving more than it was worth; if the latter, which it is presumed will seldom, if ever, happen, his indemnity would be in part only. But the strong ground of objection to this rule for appreciating the value of the property at risk, is, that it substantially destroys all distinction between valued and open policies, and this too in the face of one of the best established rules of evidence. It makes a private document, created by one party to the contract, evidence against the other, as to a fact which it is essential for the former to prove in the ordinary way. In the case of a valued policy, the insured is relieved from the necessity of proving the amount of his loss, because both parties have agreed that the property at risk was worth so much. But to bind the insurer by the arbitrary value fixed in the invoice is to subject him to ex parte evidence, furnished by his opponent in the cause, without his agreement, and even without his knowledge of its contents when the contract was entered into. And as it rarely happens, if ever, that an invoice does not accompany the cargo, it would follow that all policies would in fact be valued; with this difference only, that what has hitherto been understood as valued policies means nothing more than such as are valued by both parties, whereas open policies would be valued by one of the parties only.

"If neither the prime cost nor the invoice price can furnish a correct rule for estimating the value of the plaintiffs' indemnity, will both together answer the purpose? If they differ, neither can be admitted, if the preceding course of reasoning be right. If they agree, then the contention for a choice is merely a dispute about terms. But if either or both vary from the real value of the property insured, and consequently furnish no just rule of indemnity, then it is impossible that their agreement can furnish any." And the Court concluded that the recovery must be based upon "the market price of the property insured at the time and place of exportation."

In Mut. Safety Ins. Co. v. Cargo of Brig George, 1 Olcott (U. S. Dist. Ct.), 102, it was held, in a case of general average, that "the invoices and bills of lading will be received as evidence of the value of the cargo at the place of purchase and shipment," but not conclusive.

Kent says: "The actual or market value at the port of departure may frequently be different from the invoice price, or prime cost, and when that happens, or can be ascertained, it is to be preferred." (Citing Snell v. Del. Ins. Co., 4 Dallas (U. S. Circ. Ct.), 430, and the Carson case, supra.) "In Gahn v. Broome, 1 Johnson Cases (N. Y.), 120, the invoice price was adopted as the most stable and certain evidence of the actual value, but in Le Roy v. United States Insurance Company (7 Johns. Rep. 343), the invoice price was understood to be equivalent to the prime cost, and that was commonly the market value of the subject at the commencement of the risk. The Court, in that case, did not profess to lay down any general rule, but they nevertheless adopted the prime cost as being the plain and simple, and, generally speaking, the best,

rule by which to test the value of the subject. The English Court of King's Bench, in Usher v. Noble, pursued in effect the same rule by estimating a loss on goods in an open policy, at the invoice price at the loading port, and taking with that the premium of insurance, and commission, as the basis of the calculation."

No. 89. AITCHISON v. LOHRE.

(H. L. 1879.)

(APPEAL FROM LOHRE v. AITCHISON.)

No. 90.- PITMAN v. UNIVERSAL MARINE INSURANCE COMPANY. (C. A. 1882.)

RULE.

In case of an insurance on ship, if the owners elect to repair, the measure of indemnity is (ordinarily and in the case of an old ship) the cost of repair, less one-third by reason of the repair giving new for old; and if the loss has to be estimated while the ship remains unrepaired, the indemnity is (primâ facie) to be measured by an estimate on the same principle. principle. But if the owners have elected to sell and have sold the ship unrepaired, they cannot by claiming an average loss recover more than the loss as fixed by the net price for which she was actually sold.

Aitchison v. Lohre.

4 App. Cas. 755-769 (s. c. 49 L. J. Q. B. 123; 41 L. T. 323; 28 W. R. 1).

[755] Insurance. - Indemnity. - Partial Loss. - Value of Ship. - Suing and Labouring Clause.

General average and salvage do not come within either the words or the object of the suing and labouring clause of a policy of marine assurance.

Salvage expenses are not assessed upon the quantum meruit principle, but on the general principle of maritime law, rewarding persons who by great, and perhaps dangerous, exertions bring in a ship, for which exertions, if not successful, nothing would have been paid.

The assured, who had not abandoned, but had elected to repair, after damage

sustained from perils of the sea, was held, therefore, not entitled to recover under that clause the expenses of salvage.

But held that, up to the amount insured, he was entitled to recover the cost of repair, with the reduction of one-third new for old, even although the amount, calculated upon that principle, should exceed the amount that would be payable upon a total loss with benefit of salvage, and should equal the whole sum insured.

The ship Crimea was insured with the defendant for £1200, being valued in the policy at £2600. It encountered very bad weather, and was in danger of sinking; it was rescued by a steamer, which obtained from the Irish Court of Admiralty £800 as salvage money. The owner did not abandon, but elected to repair. The defendant's proportion of the repair expenses amounted (after the deduction of one-third new for old) to £1200, the full sum he had insured, and he was held liable to that amount; but was held not to be liable to any part of the salvage expenses.

Appeal against a decision of the Court of Appeal, which had partly sustained and partly varied a previous decision of the Queen's Bench Division.

A policy of insurance for £1200 had been effected on a vessel called the Crimea, for a voyage from the Clyde to Quebec or St. John's, and thence to the United Kingdom. The policy was. in the usual form, and contained the usual suing and labouring clause. The defendant paid into Court the sum of £1080. The plaintiff replied, denying the sufficiency of the sum thus

*

paid in. A special case was stated for the opinion of [* 756] the Court, which was to be at liberty to draw inferences

of fact. (See 1 Q. B. D. 502, 3 Q. B. D. 553, where the circumstances are fully detailed.)

The policy was for £1200. The ship was, in the policy, valued at £2600. The real value was stated to be £3000. The outward voyage was performed in safety. On the homeward voyage the ship encountered such severe storms that it was in danger of being lost, when it was saved and carried into Kingston Harbour by the steamer Texas, to which the Irish Court of Admiralty afterwards awarded £800 for salvage.

The ship was nearly sixteen years old, and its value as it lay damaged in the docks after the storms was stated to be £998. The owner did not give notice of abandonment, but signed a contract for repairs for a sum of £2982. The repairs were executed at that sum. The amount of salvage and general average expenses borne by the ship was stated to have been £519. The ship had

VOL. XIV. - 29

No. 89. Aitchison v. Lohre, 4 App. Cas. 756, 757.

not before been metalled, but it was metalled in the docks at a cost of £695. That was not sought to be made a charge against the underwriter. The whole sum expended on the ship was stated in the case to have been £4414. This was subject to the ordinary deduction of one-third new for old. The value of the ship after all the repairs had been effected was estimated at £7000. Putting together the charges which the plaintiff contended he was entitled to claim against the underwriter, they amounted to £1707. The claim was resisted on the ground that there had only been a partial and not a total loss, actual or constructive, and that the underwriter could not be made liable, on a partial loss, to a greater amount than in the case of a total loss, in which he would have the benefit of salvage. The Queen's Bench Division had decided that the cost of repair, making the usual deduction of one-third new for old, was the measure of the loss if the shipowner elected to repair; and, consequently, that the assured was entitled to recover such cost of repair up to the amount insured for, even though the loss so estimated might amount to more than a total loss with benefit of salvage. But the assured was held not entitled

to recover any portion of the salvage expenses over and [* 757] above the £1200 (2 Q. B. D. 501). *The plaintiff, the shipowner, appealed against the last part of the decision; the defendant, the underwriter, appealed against the first part. The judgment was affirmed as to the claim for the expenses of repair, but it was reversed so far as related to the salvage expenses, they being added to the amount for which the policy was underwritten (3 Q. B. D. 558). This appeal was then brought.

Mr. Benjamin, Q. C., and Mr. J. C. Mathew, for the appellant:There was no total loss; if there had been, the underwriter would have been liable upon that, but then he would have had the benefit of salvage. There was only a partial loss, and that being so, the underwriter cannot be made liable to the full amount of the sum insured, as if there had been a total loss, and made so liable without benefit of salvage. Yet that is the claim here. Such a claim cannot be supported. "A partial loss is one in which the insurers are liable to pay an amount less than that insured for damage happening to the subject, or expense incurred and occasioned by the perils insured against, in distinction from a total loss, in which the insurer is liable to pay the entire value