of an insured interest is jettisoned, there is a direct claim, even under a policy warranted free from particular average, as the claim in such a case is not one for average but for total loss. there can be no claim for partial loss under a policy which is warranted free from partial loss. The point at issue has never been submitted to our Court for adjudication, but there are some decisions and dicta of the judges which have a bearing upon it. In Dickenson v. Jardine, it was decided that the owner of a shipment of tea had a direct claim upon his underwriters for a partial loss by jettison; but, as the policy included the risk of particular average, the question now under consideration did not then arise. Oppenheim v. Fry (3 B. & S. 873) was an action to recover for par ticular average on a steamer which had been damaged by fire, when in ballast and unchartered, and the point in dispute was as to whether any, or if any, what part of the expense incurred in extinguishing the fire could be added to the cost of the repairs to make up the required percentage. In the course of his judgment in that case, Lord Blackburn, (then Blackburn J.) observed: - "I think it is not necessary, for the decision of this case, to say whether the extraordinary expenditure was general average or not, though I have a strong impression that, where a voluntary sacrifice is made for the benefit of the whole adventure, it is general average; whether the ship and cargo and freight belong to only one or two different adventurers, or whether they are partially interested, as they might be in the case of a steamer, one in the hull and another in the machinery.' The same learned judge is reported to have said in Mavro v. The Ocean Marine Insurance Co. (L. R. 10 C. P. 418):-" Under the usual memorandum, underwriters will not be liable for any but a total loss, unless the partial loss arise from the stranding of the ship, or unless such partial loss is one occasioned by a sacrifice made for the benefit of the whole adventure." These dicta appear favourable to the theory that general average constitutes a species of loss distinct from particular average, though the expressions used are hypothetical, and do not of necessity bear the meaning which has been imputed to them. On the other hand, we have the more distinct expressions of opinion by Lord Mansfield in Wilson v. Smith, and by Brett, J., in Harris v. Scaramanga, to which reference has already been made (Ante, Ch. VII., s. 1, note (a)). In Hall v. Janson, (4 E. & B. 500), which was an action upon a policy on freight to recover for contribution in general average, Lord Campbell, C.J., said :-"The policy not only contains general words to indemnify the assured, but it expressly declares that 'freight' is warranted free from average, unless general, or the ship be stranded; therefore the underwriter on freight expressly, absolutely, and universally undertakes to pay general average, however large or however minute the amount may be." Here, it is plain that Lord Campbell understood the reference to general average in the Memorandum to refer to the liability of the underwriter to contribute. The decisions which have been given in the United States Courts upon the point in question are somewhat conflicting. In Maggrath v. Church (1 Caines, N. Y. 196, 215), it appeared that a mast was cut away for the common safety, and that in consequence thereof, corn was damaged to an extent less than three per cent. The corn was insured by a policy containing the clause "free of average under three per cent, unless general. It was held by the State Court of New York that the entire loss was recoverable direct from the underwriter, as the assured had the right to look for his indemnity from the person who had engaged to indemnify him from the peril. On the other hand, it was decided by the Supreme Court of Pennsylvania, in the case of Lapsley v. Pleasants (4th Binney, 502, reported in 2 Parsons on Marine Insurance, 292) that a shipper, a part of whose goods, amounting to more than R VI-GENERAL AVERAGE ON ONE INTEREST. At this stage, it will be appropriate to notice a question which has often been discussed, viz., as to whether there can be a general average where there is only one interest directly at risk. We may take, for example, the case of a ship in ballast and unchartered, and suppose that expenses are incurred in extinguishing a fire, or in averting some other danger which threatens the property with destruction (a). Are those expenses general average, or do they fall under the suing and labouring clause? The terms of the question indicate that we are here dealing with general average, not within its own province, but in relation to marine insurance; and, to that quarter, we must accordingly look for the answer. Apart from insurance, it is evident that no general average would arise in the case supposed, because there could be no contribution. At first sight, the most logical course would appear to be to hold that, where there is only one interest at one half, had been thrown overboard for the general safety, could not recover loss directly from his underwriters, but was bound, in the first instance, to claim the contributions due from the other shippers and from the owners of the ship and freight. It remains to take a brief survey of the position from the standpoint of mercantile usage. The custom which prevails at present, and which has existed from time immemorial, amongst those engaged in the business of marine insurance, is to treat the obligation of the underwriter, with respect to gene. ral average, as one to repay the assured any contribution which the latter has duly made, so far as the amount thereof attaches to the sum insured. The words "warranted free from average, unless general," or "warranted free from particular average," occurring in a policy in the common form, are understood to have the same effect, viz., to exclude the liability for partial loss, thus reducing the contract to an agreement to pay total loss, general average, or charges under the suing and labouring clause. Any innovation upon a custom so firmly established would of necessity be attended by great practical inconvenience. As, however, the existing practice is in conformity with principle as well as established usage, there is no reason to think that the Courts would sanction a departure from it in the direction of setting up a liability on the part of underwriters for general average loss as distinct from the obligation to contribute which has hitherto been exclusively recognised under that name. (a) This was the case which had actually occurred in Oppenheim v. Fry (see previous section, note (z), when the Court of Queen's Bench decided that, assuming that the expenses incurred in extinguishing the fire were particular average, and not general average, they must be apportioned to the hull and machinery according to their respective values, and that as the portion applicable to the hull, when added to the cost of the repairs, did not amount to three per cent. upon the hull valuation, there was no claim for particular average. The question as to whether or not the expenses referred to were general average, was thus left undecided. risk, there can be no general average, but that any charges incurred for the preservation of the property, will be recoverable under the suing and labouring clause in the policy. The question cannot however be disposed of in that summary way, for there are others interested in property exposed to sea perils besides the owners, whose position has to be considered. Let us take the case of a ship and cargo belonging to the same persons, and assume that owing to sea perils, it becomes necessary for the ship to put into a port of refuge for the common safety. If there had been different owners of the ship and cargo respectively, the expenses of entering the port would have been general average; but, as the ownership is the same, no contribution, and consequently no general average occurs. The property is however insured under separate policies on the ship and cargo, and the owners seek to recover the expenses from their underwriters. In what form is the claim to be made? It is doubtful whether the expense of entering the port of refuge could in such a case be recovered under the suing and labouring clause in the policies, because it is not a particular but a general charge. The master, in deciding to bear up for a port of refuge, was not acting on behalf of the ship, or of the cargo, alone, but as agent on behalf of all concerned. The expenses resulting from that course are general charges, akin to general average; in fact, they are general average, so far as the underwriters are concerned, for the claim has to be stated in the form of a general average. The necessity for that course becomes still more apparent if we consider the question in relation to sacrifice instead of expenditure. A ship and cargo, owned by the same persons, being in jeopardy, a part of the cargo is jettisoned for the common safety. On the completion of the voyage, the owners seek to recover compensation for the loss of cargo sustained-in what form is the claim to be made? Assuming that the policies on cargo were warranted free from particular average, the owners would have no direct claim upon their underwriters. The loss could not be recovered under the suing and labouring clause, for that stipulation refers to expenses and not to sacrifices incurred for the preservation of the interest insured. Unless he could have recourse to general average, the owner would be left without any remedy for a loss voluntarily sustained to avert a total loss, of which the underwriters in common had gained the benefit, which would be unjust. Or, supposing that the policies included the risk of particular average, and that the loss amounted to the requisite percentage, the owners would be indemnified; but the underwriters, upon the cargo, on payment of the loss, would find themselves in the same dilemma as the owners in the contingency first supposed, viz., they would be unable to recover from the underwriters on the ship any contribution towards the loss, though the latter would have benefited by the sacrifice proportionably with themselves. Thus the equity of the case would necessitate the admission of the loss into general average. Hence, we arrive at the conclusion that, in addition to general average proper, which exists independently of insurance, there may and indeed must be an adjustment, upon the same principle, of the loss voluntarily incurred for the common safety where there is only one interest directly at risk, in order to effect an equitable distribution of the loss among the underwriters concerned. Accordingly, sacrifice or expenditure incurred for the preservation of a ship which is in ballast and unchartered, as well as in any other case where there is only one interest directly at risk, is, in practice, treated as general average (b). The claim arising under such circumstance is one not for partial loss, but for contribution, and must in all respects, be regulated by the principle of general average. Accordingly, in the event of a sacrifice of ship's materials for the safety of a vessel which is in ballast and unchartered, if the actual value of the property saved by the general average act be greater than the insured value, the underwriters will not be liable for the full amount of the loss, but only for such a proportion thereof as the sum insured bears to the actual value of the vessel as assessed. (b) Benecke, Principles of Indemnity, 473; Baily on General Average, 2nd ed., 147; Phillips, 4th ed., s. 1783. VII.—EFFECT OF STRANDING. It is expressly provided that the warranty to be "free from average, unless general," shall not apply in the event of the stranding of the ship. The happening of that event is a condition which effaces the warranty and admits the risk of particular average, irrespective of percentage, upon each of the three classes of articles enumerated. In an action which was tried five years after the first introduction of the memorandum, it was contended that the words "or the ship be stranded," amounted only to an exception, by which the underwriters consented, in the event of the stranding of the ship, to pay for partial loss, so far as it could be proved to have resulted from the stranding (c). This contention was however disapproved, and the underwriters were held liable for the whole of the damage sustained. In a subsequent case (d), it was expressly declared, after full argument and most careful consideration, that the proviso in question is a condition, upon the happening of which, partial loss is recoverable, whether occasioned by the stranding, or occurring independently of it. The facts which were submitted to the Court upon that occasion were so striking as to afford a good exemplification of the effect of the clause under review. It appeared that the ship, in the course of her voyage, struck upon a sunken rock with such violence that she sprang a serious leak, owing to which she had to be beached. It was found that neither the ship nor the cargo had received any damage from the stranding, but that all the damage was the result of the previous striking upon the rock. In the course of his judgment, Lord Kenyon observed :-" The words of the policy are general, including all cases. Then comes the memorandum, 'corn, fish, salt, fruit, flour, and seed, warranted free from average, unless general or the ship be stranded.' This, therefore, lets in a general average, and I do not know how to construe the words (c) Cantillon v. London Assurance Corporation, Marshall, 2nd ed., 223. (d) Burnet v. Kensington, 7 T. R. 210. |