THE loss upon an open policy on freight is by a general usage adjusted upon the gross freight, although the owner has by the event been saved various charges which he would have incurred if the freight had been earned.

[61]

The general principle of insurance, that the insured shall, in case of a loss, recover no more than an indemnity, may be controlled by a mercantile usage clearly established to the contrary; and usage that the loss in an open policy on freight shall be adjusted on the gross, and not on the net amount of the freight, is a legal usage. - DALLAS, Ch. J., dubitante.

Assumpsit on an open policy of insurance on freight. At the trial before DALLAS, Ch. J., London sittings after Trinity Term last, it appeared that the ship Juliana, bound from the East Indies to London, was totally lost just before the termination of her voyage. The freight payable to the plaintiffs in the event of the safe arrival of the ship would have been £3068; but out of this the plaintiffs must have paid £699 9s. for seamen's 62 wages, pilotage, light dues, tonnage duty, and dock dues; from which payment they were altogether exempted by the loss of the vessel.

*

The defendant contended that the plaintiffs were entitled to recover fra the insurers, not the amount of the gross freight, but only the amoun the net freight, after deducting the charges which the plaintiffs must necessarily have incurred had the ship arrived in safety; and he paid into Court sufficient to cover his proportion of the amount of the net freight.

The plaintiffs persisted in demanding the amount of the gross freight, and called merchants of thirty and forty years' experience at Lloys, who concurred in stating that though open policies on freight were extremely rare, the uniform custom in settling losses

No. 91. Palmer v. Blackburn, 1 Bing. 62, 63.

upon them had been to pay the assured on the amount of the gross freight.

To the admission of this evidence the defendant objected, on the ground that it proposed to establish the existence of a custom contrary to law, a policy of insurance being a contract, the object of which was to secure to the assured a bare indemnity; whereas a usage such as the present would secure to him a profit on, and operate as inducement to, the loss of ship.

The learned Judge having admitted the evidence, subject to future discussion on the point, the defendant called witnesses nearly equal in number and experience, who stated that they were not aware of the existence of the usage stated by the plaintiffs' witnesses.

The jury having found for the plaintiffs the whole demand,

Bosanquet, Serjt., now moved for a rule to show cause why the verdict for the plaintiffs should not be set aside, and a nonsuit, or a verdict for the defendant, be entered instead, on the ground that the evidence admitted for the plaintiffs ought to have been excluded, and that, at all events, the usage established [63] thereby was contrary to law, and to the very nature of an insurance. Instead of an indemnity, the owner would, if the usage were sustained, derive a very great advantage from the loss of his ship; in the present instance, in the proportion of near 700 to 3068, in many instances considerably more: indeed, it would be his interest that the ship should be lost as soon as possible after quitting her port of departure, as he would then secure his freight, and be saved the whole expense of paying and provisioning the crew for the voyage, and of defraying the heavy port charges to which he would otherwise be liable. Then, in all adjustments of general average, to which ship, cargo, and freight contributed, the charge on freight was always calculated on the net, and not on the gross freight (Park on Insur. 2, 7th ed. `;. Marshall on Insur. 467), and if the owner, was called on to pay in that proportion, why should he be paid in ʼn greater?

DALLAS, Ch. J. :

The evidence in support of the usage was as strong as possible; the evidence on the part of the defendant only of a negative character; and I put it to the jury to consider whether the usage was so notorious as to imply a knowledge of it in the parties to the action, and so to form a part of their contract. But the defendant's

No. 91.

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- Palmer v. Blackburn, 1 Bing. 63, 64. Notes.

counsel contends that, admitting the existence of the usage, it is contrary to law, contrary to the very principle of a policy of insurance, as being no more than a contract for indemnity, - opening a wide gate to fraud, and thence that in law it cannot be supported. Without giving any opinion on the subject, I think the point of considerable importance, and worthy of further consideration.

I think a rule ought not to be granted in this case. The chief objection made on the part of the defendant is, that the evidence ought not to have been admitted. I think it was properly admitted on both sides, and, if it was admissible, there can be no ground for a new trial; the jury would have drawn a very wrong conclusion if they had found there was no such usage. They have found that open policies on freight have always been settled in this manner, and my experience entirely coincides with that finding.

BURROUGH, J. :—

In questions on policies of insurance, the course has always been to ascertain the custom of merchants; there is a strong instance of this in 1 Burr. Rep., Pelly v. Royal Exchange, 1 Burr. 341 (p. 30, ante), where, it being found to be a universal and wellknown usage for China ships to unrig and place their tackle in a warehouse on Bank Saul, in Canton River, the insurers on a ship were held liable for a loss happening to her tackle by fire on this Bank Saul. Now, the usage in the present instance is as well known to all the brokers as that was relating to Bank Saul, and in these cases the usage of trade has always been the ground of decision. Rule refused.

AMERICAN NOTES.

Parsons cites this case (1 Marine Insurance, p. 253), saying, “The weight of authority, as well as the general custom, is the same here."

In McGregor v. Ins. Co. of Penn., 1 Washington (U. S. Circ. Ct.), 39, it was held that the alleged custom in Philadelphia to strike off one-third of the gross freight for charges, and to pay only two-thirds to the assured in a policy on freight, where a total loss has occurred, is unreasonable, different from the general law of the subject, in direct contradiction of the policy, and illegal. So in Stevens v. Columbian Ins. Co., 3 Caines (N. Y.), 43; 2 Am. Dec. 247, it was said: " Although indemnity is the legal object of insurance, it is not always the criterion by which to ascertain the amount of the loss. Νο

No. 92. Bruce v. Jones, 1 Hurl. & Colt. 769. — Rule.

general rule giving a specific portion of the freight could with justice be adopted. It would operate unequally by reason of the great diversity in the distance and expense of voyages; and to adopt the net amount of freight as a rule would lead to much litigation and uncertainty respecting the deductions to be made. But to take the gross amount of freight as the rule of damages would be equal, simple, and easily ascertained."

IF the assured suing on a valued policy has already recovered upon other policies on the same subject-matter, he can recover only the excess (if any) of the value in the policy thus sued on over the amount already recovered.

Bruce v. Jones.

1 Hurl. & Colt. 769-778 (s. c. 32 L. J. Ex. 132; 9 Jur. (N. S.) 628; 7 L. T. 748; 11 W. R. 371).

Insurance. Valued Policies. - Limit to Total Amount to be recovered. Where several valued policies of insurance are effected upon the same [769] vessel valued differently, and upon a total loss, the assured receives under some of the policies part of the sums insured, in an action upon another policy he is only entitled to recover the difference between the amount received and the agreed value in that policy.

Therefore, where a shipowner effected upon the same ship four policies of insurance, in which respectively the agreed value of the ship was stated to be £3000, £3000, £5000, and £3200, and upon a total loss received under the three former policies sums amounting to £3126 13s. 6d., and then sued upon the latter policy: Held, that, as between the assured and the underwriter of that policy, the value of the ship must be taken to be £3200, and the assured was only entitled to recover the difference between that sum and £3126 13s. 6d.

Declaration on a policy of insurance for £2400 on the ship Hero, on a voyage from Cardiff to Manilla, and in which the ship was valued at £3200, and underwritten by the defendant for £125. The declaration alleged a total loss.

Plea (inter alia): that the plaintiff made other policies of insurance on the same ship on the same voyage, viz., a policy dated the 30th of July, 1860, in which the said ship was valued at £3000, which said policy was underwritten for sums amount

ing altogether to £725; a policy, dated the 8th May, 1861, in which the same ship was valued at £3000, and the policy underwritten for £500; a policy, dated the 20th June, 1861, in which the same ship was valued at £5000, and underwritten for the sum of £3450. Averments: that the said ship mentioned and insured in each of the said policies was the same ship, and the [* 770] risk intended to be * covered the same risk; that the said ship was lost after the making of the said policies, and that divers of the said several insurers upon the said ship, whose names were subscribed to the said policies other than the policy in the declaration mentioned, paid to the plaintiff, and the plaintiff accepted and received of and from the said underwriters, sums amounting altogether to the sum of £3200, and the plaintiff then and thereby became satisfied and indemnified for the said loss of the said ship as agreed upon in the said policy in the declaration mentioned. Issue thereon.

At the trial, before WILLES, J., at the last Liverpool Summer Assizes, it appeared that the policy in question, which was dated the 6th August, 1860, was effected at Liverpool for £2400 on the plaintiff's ship Hero, valued at £3200, and was underwritten by the defendant for £125. The loss of the ship having been proved, the defendant gave in evidence three other policies effected by the plaintiff on the same ship for the same voyage, viz., a policy effected at Bristol, dated the 30th July, 1860, for £725, in which the ship was valued at £3000; another effected at Aberdeen, dated the 8th May, 1861, for £500, in which the ship was valued at £3000; and another effected in London, dated the 20th June, 1861, for £3450, in which the ship was valued at £5000. There was conflicting evidence as to the real value of the ship. The plaintiff had received from the underwriters of the Bristol policy £492 6s. 6d., from the underwriters of the Aberdeen policy £684 7s., and from the underwriters of the London policy £1950, amounting in the whole to £3126 13s. 6d.

The learned Judge, in leaving the question of damage to the jury, told them that insurance was a contract of indemnity, and that, for the purpose of the present action and as between the plaintiff and defendant, the value agreed upon and stated in the

policy must be taken as the real value of the ship, [771] viz. £3200; and that, as the plaintiff was entitled to

recover in respect of a total loss, he was entitled to be