one was given of a ship being so battered by winds, waves, and rocks that in the end it was no ship at all, but only a heap of iron and timber. To use technical language the property insured had changed its species, it no longer remained the kind of thing it was at the commencement of the venture. Such losses are of great importance in the case of insurances on cargo. In the case of Roux v. Salvador, 1836,1 a parcel of hides was insured from Valparaiso to Bordeaux. The ship sprang a leak and put into Rio, where it was found that the hides were rotting so quickly that they would certainly not reach Bordeaux as hides at all, but simply as a mass of putrefied matter. The master of the ship sold the hides at Rio, and the loss was held to be a total loss less the net proceeds accounted for by the master. Similar cases might occur in which by perils of the sea, grain, sugar, or fruit received such damage that they no longer remained grain, sugar, or fruit, but became utterly changed in their character. It appears that the principle of Roux v. Salvador might equally apply to such cases. Yet in some such cases such a proceeding might come dangerously near paying for vice propre or inherent quality of the goods. For supposing that some chemical was insured, say some powder which solidified when combined with sea-water, it is quite clear that with imperfect packages a large amount of irreparable damage might be done which would not have occurred in an article of different constitution like flour.

The last words of Phillips' definition of a total loss are "or where the voyage or adventure for which the insurance is made is otherwise broken up by the perils insured against." It is hard to see how these words can be applied to ships, but in the case of goods or of the hire paid for the carriage of goods it is manifest that where perils insured against effect a "destruction of the contemplated adventure" (Lord Ellenborough's words in Anderson v. Wallis, 1813, and Barker v. Blakes, 1808; quoted by Baron Bramwell in Rodocanachi v. Elliott, 1873),2 there may be reasonable ground

1 3 Bing. N.C. 266.

2 2 Asp. Mar. L. Cas. 399; L. R. 8 C.P. 649.

for the assured asking for indemnity from his underwriter. Such destruction of a contemplated venture might occur in many ways: goods might be detained in a port for a long period without any hope of early release so as completely to frustrate all the commercial ventures connected with their purchase and contemplated sale. This was the case in the matter of Rodocanachi v. Elliott1 regarding goods detained in Paris during the siege of 1871. Or it might happen that the vessel carrying the goods in question stranded at a point far from any possible assistance: the crew might be able to save some cargo, putting it ashore in a place of safety, but be unable to remove it to a port from which it could be sent on to destination. The goods would thus lie perfectly safe but unattainable. This appears to be a fair case of loss of venture and consequently of constructive total loss of cargo.

Again, if a voyage has been in some way interrupted by perils insured against, it may happen that damaged cargo is discharged at some point en route. If the original ship is unable to prosecute her voyage it becomes a question whether the goods can be forwarded without a loss being incurred on them. If there would be a loss, in case the goods were reconditioned, reshipped and forwarded, that is, if on arrival at destination the goods were not worth the amount of these various expenses, it is plain that there is something like a constructive total loss on the goods. On this point there are several important decisions; one of them (Farnworth v. Hyde, 1866)2 has given rise to a good deal of discussion, owing to the discovery of what seems a mistake in an elementary sum in addition and subtraction.

What would a prudent uninsured owner of goods do in such a case? If he has goods lying damaged at an intermediate port or place, what will he do? will he arrange to bring them on, or will he literally abandon them as they lie? His choice will certainly depend on the cost of bringing them on to destination. The first item to consider

1 2 Asp. Mar. Law Cas. 399, L. R. 8 C.P. 649.

2 L. R. 2 C. P. 204.

is the cost of reconditioning, then follow the expenses of reshipping and the freight. If the expected value of the goods at destination does not amount to the sum of these items, it is evidently commercially unreasonable to expect the merchant to bring on the goods, it is evidently better to sell them as they lie for any price they will fetch.

Suppose that the same merchant were insured, under what circumstances should he be entitled to claim a constructive total loss from his underwriter? There would seem to be no doubt that such a claim can be justified in case the value of the goods taken as arrived at destination with all charges paid is nothing, or, in other words, when the price obtained for goods if sold at destination after payment of all charges does not exceed the amount of the charges. The question arises whether the freight per bill of lading is one of the charges that should be taken into the calculation.

:

The case of Farnworth v. Hyde, 1866,1 was one against the underwriters of a policy on a cargo of timber from Quebec to Liverpool. It was proved that the ship was frozen up in the St. Lawrence at the beginning of winter, and in the spring she was, under the advice of competent surveyors, sold, as it was considered that the expense of repairing and forwarding would be greater than the value when repaired. No notice of abandonment was given the news of the disaster and of the sale arrived at the same time. The jury in the Court of first instance found the sale justifiable, and a verdict was entered for the assured as for a total loss. The Court of Common Pleas, on a rule to enter non-suit, held (Mr. Justice Byles dissenting) that there was evidence to show that the probable loss during the operation of saving and forwarding would have absorbed the surplus profit, and that the verdict for a total loss ought to stand even without abandonment. In estimating what would have been the value of the cargo had it arrived at Liverpool, the original bill of lading freight £1556 was deducted; had not this been done, there would have been a margin of profit of £1700.

1 L. R. 2 C.P. 204.

This point was brought to the notice of the Exchequer Chamber by Mr. Justice Blackburn, and in consequence it was held that this freight ought not to have been deducted to get at the value of the cargo as arrived at destination. In the words of Baron Channell's judgment: "They ought not to take into account the fact that if the goods are carried on in the original bottom, or by the original shipowners in a substituted bottom, they will have to pay the freight originally contracted to be paid, that being a charge to which the goods are liable when delivered, whether the perils of the seas affect them or not." On this principle the judgment proceeds to state that in case the original shipowner determines not to carry on the goods either in the original or in a substituted bottom, the cargo-owner, if he brings them on, is not entitled to take into account the whole of the amount he pays for forwarding, but only the amount by which that exceeds the original freight. The effect of this, put briefly, is that unless the extraordinary expenses incurred in consequence of perils of the sea or other perils insured against exceed the arrived gross value of the cargo delivered at destination (i.e. of course with freight paid) the assured is not entitled to abandon.

This result is quite different from that at which we arrived when we considered the action of the prudent uninsured owner. He would abandon the goods if their expected gross price did not exceed the freight plus the extraordinary expenses; while the law does not give the insured owner any right to tender abandonment to his underwriter unless the expected gross value does not exceed the extraordinary expenses alone, Lowndes (Law M. I. p. 137) and M'Arthur (Contract M. I. p. 151, note) both regard this difference as the result of a mistake or fallacy into which the judges fell. So it certainly is, if it is correct to assume that the result in any question of policy or practice in the relations of assured and underwriter must accord exactly with the result of the course which would be adopted by a prudent uninsured owner.

But is this assumption justifiable? If A, while retaining certain of his own obligations with their corresponding

privileges and rights, delegates some to B and others to C, the result of the operation of each separate set of delegated obligations and rights does not of necessity coincide with that of the whole sum of A's original obligations and rights. This is really the principle underlying Baron Channell's judgment: he examined separately the relations of the cargo-owner to the shipowner and then to the cargo underwriter.

As to the shipowner, as long as the cargo is delivered in specie at destination the freight is due to him by the consignee in whatever state of damage the cargo is delivered, provided the damage has arisen from perils excepted in the bill of lading.

As to the cargo underwriter, it is possible that before the cargo can be offered for sale at destination for any sum worth mentioning, expenses have to be incurred in reconditioning the goods. This class of expenses was dealt with in Rossetto v. Gurney, 1851,1 and Reimer v. Ringrose, 1851.2 The judges intimated to the assured: "The obligation or risk transferred by you to your underwriters includes nothing but the consequences of the perils enumerated in the policy; liability to pay freight at destination is not one of these, so no consequence of that obligation can be transferred to your underwriter." It appears to have been on this ground that Mr. Justice Blackburn raised the question of freight in the Exchequer Court in Farnworth v. Hyde, 1866.3 The reasoning seems to be (at least) as little fallacious as the opposite doctrine that the position of an underwriter towards his assured is always to be determined commercially by the course which would have been adopted by a prudent uninsured merchant or shipowner. To put it in few words: the underwriter never guarantees that cargo will be worth its freight whether it arrives damaged or sound, why should a freight obligation be imported into his contract in certain cases of damage and loss when it is really a part of the merchant's obligations which the merchant retains at his own risk in case of arrival 26 Exch. 263.

1 II C.B. 176.

3 L. R. 2 C. P. 204.