for the repair of the ship, or to defray other expenses necessary for the prosecution of the voyage (8); the liability of the cargoowner to make up the deficit in the payment of a bottomry bond, on ship and cargo, arising from the ship and freight being of insufficient value (t); loss by the forced sale of property under Admiralty decree to realize the amount of a claim thereon (u); loss by prejudice, or suspicion of damage (x); the forfeiture of freight arising from the exercise of a power of mulct or cancelling option by the charterer, &c. (y).

4. Loss directly attributable to the misconduct of the assured or his agent (2).-The following are instances of this limitation-Loss by unseaworthiness, or improper condemnation; theft which, when unaccompanied by overpowering force, might have been prevented by the exercise of ordinary vigilance on the part of those in charge of the vessel; loss in the shipping or landing of cargo, directly attributable to the negligence of the shipowner's servants, or to defect in the ship's tackle; damage by bad stowage, rats, or other vermin; loss by British capture or hostile arrest; loss resulting from the act of a foreign state, of which the assured is a subject, when committed with a hostile intention against this country (the assured being, in such a case, identified in the eye of the law with his government in the proceeding); the loss of articles placed in improper or insecure

(s) Recoverable, not from the underwriters who have insured the goods, but from the parties for whose use the funds were required. Powell v. Gudgeon, 5 M. & S. 431.

(t) According to the law of most Continental states, where money is raised upon bottomry, the liability of the shipowner to discharge the debt is limited to the value of the ship and freight on arrival; and if such value, on realization, prove insufficient to satisfy the bondholder, the deficiency is a charge upon the cargo. It has been held that the owners of the cargo, on making good such a deficit, have no laim for the amount thereof from their underwriters. Greer v. Poole, 4 Asp. Mar. L. C. 300.

(u) Thompson v. Reynolds, see Ar

nould, 4th ed., p. 667.

(x) "The underwriters insure against actual damage, and do not in any sense guarantee that the goods shall arrive free from suspicion of damage.' Per Bovill, C.J., in Cator v. The Great Western Insurance Co., 2 Asp. Mar. L. C. 90.

(y) Inman v. Bischoff, L. R. 7 H. L. 670; Mercantile Marine Insurance Co. v. Tyser, 5 Asp. Mar. L. C. 6.

(2) Where the loss arises owing to the wilful misconduct of the assured, the exception to the liability of underwriters is not confined to the proximate consequences of the wrongful act, but extends to all its consequences, though the immediate cause of loss be a peril insured against. Thompson v. Hopper, 6 E. & B. 172, 937.

situations, such as watercasks on deck, and hawsers or other ropes lying on deck, unless the vessel is just entering or leaving port. Under the same head may be placed the custom by which an underwriter is exonerated from liability for the loss of cargo laden on deck, unless he has sanctioned its carriage by special agreement in the policy.

I. TOTAL LOSS DEFINED AND ANALYSED.

TOTAL loss, as applied to insurance, signifies the utter loss, either actual or constructive, of the subject insured, by the direct operation of the perils insured against.

An actual total loss occurs "when the subject insured wholly perishes, or its recovery is rendered irretrievably hopeless" (a); as, for instance, when a vessel founders in a gale, or is captured by an enemy and condemned as a prize. Whenever the thing insured is, by the operation of a peril insured against, reduced to such a state as to be no longer capable of use under its original denomination, there is an actual total loss. For example, if a ship is so injured by perils of the sea as to be irreparable, the loss is actual, though her materials survive, either in fragments, or bound together in the original form; and again, if goods are so badly damaged, as to have become incapable of use for the purpose intended, there is, equally as in the former case, an actual total loss (b).

A constructive total loss occurs, when the subject insured, though existing in specie (c), is justifiably abandoned, on account

(a) Arnould, 4th ed., 844.

(b) See the judgment of Lord Abinger in Roux v. Salvador. In that case there was an insurance on hides from Valparaiso to Bordeaux.

The ship sprang a leak and put into Rio, where it was found that the hides were in an incipient state of putrefaction, and it was certain that if they had been sent on to Bordeaux they would have lost

the character of hides, and become a mass of corruption before their arrival. The master of the ship thereupon sold them at Rio, and it was held to be not an average but a total loss. 3 Bing.

N. C. 281.

(c) To exist in specie, is to be capable of utilisation as the thing insured. Per Bramwell, B., in Rankin v. Potter, L. T. Rep., v. xxix., p. 155.

of its destruction being highly probable, or because it cannot be preserved from actual total loss, unless at a cost greater than its value would be if such expenditure were incurred.

The difference between an actual and a constructive total loss is that, in the former case, the privation of the thing insured to the owner thereof is ascertained and permanent, while, in the latter case, it is inferential, or temporary. For instance, where a ship is so damaged as to be irreparable, the loss, as we have already seen, is actual; but, where the damage is susceptible of repair, only at a cost exceeding the value of the ship when repaired, the loss is constructive. Again, where a vessel founders in deep water, so as to afford no reasonable hope of recovery, the loss is actual; but, where a vessel sinks in shallow water, so as to admit of a reasonable hope of raising and restoring her, only at a cost exceeding her value when raised or restored, the loss is constructive. Upon the same principle, where goods are so damaged by sea perils, that they cannot be brought to their destination in specie, the loss is actual; but where, though damaged, it is possible to bring them to their destination in specie, only at a cost exceeding their value when so brought, the loss is constructive.

II-CONSTRUCTIVE TOTAL LOSS ON SHIP.

To determine whether there is a constructive total loss in respect of a ship which has been injured by the perils insured against, the rule is that the cost of repairing the damage must be compared with the value which the vessel would have if repaired. If, as it was stated by Tindal, C.J., "the damage to the ship is so great from the perils insured against, as that the owner cannot put her in a state of repair necessary for pursuing the voyage insured, except at an expense greater than the value of the ship, he is not bound to incur that expense, but is at liberty to abandon, and treat the loss as a total loss" (d). It is

(d) In Benson v. Chapman, 6 M. & Gr. 810.

reasonable that the assured should have the right of recovery where the property, though subsisting in specie, has been rendered practically worthless; for, as it was remarked, in a leading case upon the subject of constructive total loss, “a vessel is totally lost, within the meaning of a policy, when it becomes of no use or value as a ship to the owner, and is as much so as if the vessel had gone to the bottom of the sea, or had been broken to pieces, and the whole or great part of the fragments had reached the shore as wreck; and the course has been in all cases in modern times to consider the loss as total where a prudent owner, uninsured, would not have repaired" (d).

In treating upon the application of this general principle to particular cases, we have to notice the mode in which the cost. of the repairs and the value of the vessel when repaired are to be respectively computed. First, as regards the cost of the repairs, the amount to be estimated is that which is necessary to restore the ship to the condition of a sea-going vessel (e). From the amount of the repairs necessitated by sea perils, no deduction of one-third new for old is to be made, nor is there to be any abatement on account of an enhancement in the cost of the repairs arising from the old or decayed state of the ship, provided that she was seaworthy for the voyage on sailing (ƒ)· To the estimated cost of repairs, ascertained as above, is to be added the ship's share of any general average or salvage expenses arising out of the accident to which the damage is due, incurred for the purpose of rescuing the property from an actual total loss (g). In short, the estimated amount of repairs should represent the entire and minimum cost of rescuing the vessel from the perils insured against and removing the injuries she has sustained, so as to restore her to a condition in which she may be enabled to navigate the seas with safety.

(d) Irving v. Manning, 1 H. of L. Cas. 304.

(e) "The question between the assured and the underwriters of the ship is, whether the damage sustained may be so far repaired as to keep her as a ship, though not perhaps so good a ship as she was before, without ex

pending more than she would be worth.' Per Blackburn, J., in Rankin v. Potter, Asp. Mar. L. C. N. S., vol. ii.,

p. 72.

(f) Phillips v. Nairne, 4 C. B. 343. (g) Kemp v. Halliday, L. R. Q. B. 520.