and in respect of the subject-matter insured as from the SECT. 80. time of the casualty causing the loss.1

(2.) Where the insurer pays for a partial loss, the subject-matter insured, or such part of it as may remain, is not transferred to him, but he is thereupon subrogated to all rights and remedies of the assured in and in respect of the subject-matter insured as from the time of the casualty causing the loss, in so far as the assured has been indemnified, according to law, by such payment for the loss.2

Illustrations.

1. Goods insured by a valued policy are captured and sold. The underwriters pay down 50 per cent. of the loss. Afterwards the assured receives half the proceeds of the goods. The insurers are not entitled to this or any part of it.3

2. A ship is missing, and the insurer pays for a total loss. If the ship afterwards arrives she belongs to the insurer.4

3. Insured goods are jettisoned. The insurer of these goods must pay as for a total loss, but he then stands in the place of the assured as regards claims for general average contribution.5

4. A ship valued at £6000 is insured for £6000. Her real value is £9000. She is run down by another ship, and the insurers pay for a total loss. Afterwards the assured recovers £5000 damages from the owners of the ship in fault. The insurers are entitled to the whole of this sum as salvage."

5. Cargo insured under a valued policy is destroyed by a Confederate cruiser. The cargo is worth more than the valuation. After the war, compensation is paid to the cargo owner by the United States

1 McArthur, Ed. 2, p. 158; Rankin v. Potter (1873), L. R. 6 H. L. at pp. 118, 119, 144; Simpson v. Thomson (1877), 3 App. Cas. at pp. 284, 292; Darrell v. Tibbitts (1880), 5 Q. B. D. at p. 563, C. A., per Lord Esher. 2 Simpson v. Thomson (1877), 3 App. Cas. at p. 292, H. L.

3 Tunno v. Edwards (1810), 4 East, 488.

Houstman v. Thornton (1816), Holt N. P. 242.

5 Dickinson v. Jardine (1868), L. R. 3 C. P. 639; and Rules of Practice of Average Adjusters' Association, 1900.

• North of England Ins. Assn. v. Armstrong (1870), L. R. 5 Q. B. 244, doubted, Burnand v. Rodocanachi (1882), 7 App. Cas. at p. 342.

SECT. 80. under an Act which expressly refuses to recognize claims made by or on behalf of insurers. The insurers, who have paid for a total loss, are not entitled to this compensation.1

6. Two ships belonging to the same owner come into collision. The insurers of the ship not in fault have no claim against the ship in fault, for they stand in the place of the assured, who cannot have a claim against himself.2

7. Goods, on which freight has been prepaid, are lost through the negligence of the shipowner. Subject to any special provision in the contract of affreightment, the shipper can recover as damages the prepaid freight for the benefit of the insurers on freight.3

8. A ship is run down, and the insurer pays for a total loss. The insurer on ship is not entitled to the damages recovered by the shipowner from the ship in fault for loss of freight.*

9. Wool is damaged in a collision between lighters. The insurers pay the claim, and the assured assigns to them his rights against the owner of the lighter in fault. That owner cannot set up the defence that the payment was outside the policy.

NOTE.-The right of subrogation is a necessary incident of a contract of indemnity, and it operates on every right and remedy "by which the loss insured against can be or has been diminished. If the assured is indemnified it seems the insurer may recover from a third party more than he has paid. But suppose a ship valued at £5000 is insured for £4000, how is the subrogation to be apportioned? Probably the assured, being "his own insurer" for £1000, is entitled to a fifth of the salvage, The cases do not suggest a rule of apportionment,

1 Burnand v. Rodocanachi (1882), 7 App. Cas. 333, explained Castellain v. Preston (1883), 11 Q. B. D. at p. 404, per Lord Bowen.

2 Simpson v. Thomson (1877), 3 App. Cas. 279, H. L.; discussed Midland Ins. Co. v. Smith (1881), 6 Q. B. D. at p. 565.

3

Dufourcet v. Bishop (1886), 18 Q. B. D. 373.

Sea Ins. Co. v. Hadden (1884), 13 Q. B. D. 706, C. A.

5 King v. Victoria Ins. Co. (1896), A. C. 250, P. C.

• Castellain v. Preston (1883), 11 Q. B. D. at pp. 388, 404, C. A.; and cf. West of England Fire Ins. Co. v. Isaacs (1896), 2 Q. B. 377 (fire policy).

7 North of England Ins. Assn. v. Armstrong (1870), L. R. 5 Q. B. 244; but cf. Burnand v. Rodocanachi (1882), 7 App. Cas. at p. 342, as to valuation.

8 Arnould, Ed. 6, p. 980. But see other cases of difficulty suggested, Lowndes, Ed. 2, pp. 227, 229.

but such a rule seems required. It is recognized in French law. Pothier, Traité d'Assurance, § 133.

See SECT. 80.

The authorities fully bear out the proposition that whatever remains of the subject-matter insured vests in the insurer when he settles for a total loss. "The assured," says Lord Cottenham, “must give up to the underwriters all the remains of the property recovered, together with all benefit and advantage belonging or incident to it, or rather such property vests in the underwriters." 1 But is the vesting absolute or conditional, that is to say, can the insurer disclaim the property if it is onerous? Suppose a ship is wrecked in harbour and the insurer pays for a total loss. There may be an obligation to remove the wreckage, the expense of which would exceed the value of the wreckage. Or take the case of a collision in a fog in mid-ocean with a derelict vessel. The question has been discussed, but not decided, in England.2 In France, it seems, the insurer can disclaim. See Pothier, Traité d'Assurance, § 136.

Again, in the case of a British ship, at any rate, it is the equitable and not the legal title which vests in the insurer. Speaking broadly, the insurer, in the absence of special contract, must exercise all remedies in the name of the assured.3 It follows that the insurer is entitled to the use of the assured's name; but if the insurer wishes to bring an action he must, of course, indemnify the assured as regards costs.

As to the effect of the rule of subrogation on the doctrine of contribution between insurers of the same property, see note to § 33, ante, and see further, note, post, p. 146, as to abandonment.

contribu

§ 81.-(1.) Where the assured is over-insured by Right of double insurance, each insurer is bound, as between him- tion. self and the other insurers, to contribute rateably to the loss in proportion to the amount for which he is liable. under his contract.4

(2.) If any insurer pays more than his proportion of

1 Stewart v. Greenock Mar. Ins. Co. (1848), 2 H. L. C. at p. 183.

2 Eglinton v. Norman (1877), 3 Asp. Mar. Cas. 471, C. A.; and see Arrow Shipping Co. v. Tyne Improvement Commissioners (1894), A. C. 508, H. L.

3 Simpson v. Thomson (1877), 3 App. Cas. 290, 293; but see King v. Victoria Ins. Co. (1896), A. C. 250 (special assignment of rights).

♦ Arnould, Ed. 6, p. 329; Lowndes, Ed. 2, p. 35; Leake on Contracts, Ed. 3, pp. 62, 655; Newby v. Reed (1763), 1 W. Bl. 416; North British Ins. Co. v. London and Globe Ins. Co. (1877), 5 Ch. D. at p. 583, C. A.

SECT. 81. the loss, he is entitled to maintain an action for contribution against the other insurers, and is entitled to the like remedies as a surety who has paid more than his proportion of the debt.1

Enforcement of return.

Return by

NOTE.-Under the foreign codes provision is made for successive liability to avoid the complication of the English rule (see Arnould, Ed. 6, pp. 329-331). Co-insurers are not co-sureties, but in many respects they have similar relations inter se. As Martin, B., says, when two or more policies are effected on the same subject-matter and interest "the policies are one insurance as between all the underwriters, but not one insurance for all purposes." 2 But for a qualification of this principle as regards return of premium, see note to § 84, and as to double insurance, see § 33, ante.

Return of Premium.

§ 82. Where the premium, or a proportionate part thereof, is, by this Digest, declared to be returnable:— (a.) If already paid, it may be recovered by the assured from the insurer, and,

(b.) If unpaid, it may be retained by the assured or his agent.3

NOTE.-The broker is directly responsible to the insurer for the payment of the premium, but when returnable it is repayable to the assured.4

There is said to have been a custom that when the premium was returnable, the insurer was nevertheless allowed to make a deduction of one-half per cent. (Arnould, Ed. 6, p. 1121). But this custom is now believed to be obsolete.

§ 83. Where the policy contains a stipulation for the agreement. return of the premium, or a proportionate part thereof,

1 Subsect. (2) is consequential.

2 Bruce v. Jones (1863), 32 L. J. Ex. at p. 135.

3 Arnould, Ed. 6, pp. 194, 197, 206; Shee v. Clarkson (1810), 11 R. R.

473; 12 East, 507 (broker); cf. McArthur, Ed. 2, p. 40.

Arnould, Ed. 6, p. 198. See also § 61, ante.

on the happening of a certain event, and that event SECT. 83. happens, the premium, or, as the case may be, the proportionate part thereof, is thereupon returnable to the assured.1

failure

of con

§ 84.-(1.) Where the consideration for the payment Return for of the premium totally fails, and there has been no fraud or illegality on the part of the assured or his agents, the sideration. premium is thereupon returnable to the assured.2

(2.) Where the consideration for the payment of the premium is apportionable and there is a total failure of any apportionable part of the consideration, a proportionate part of the premium is, under the like conditions, thereupon returnable to the assured.3

(3.) In particular—

(a.) Where the policy is void, or is avoided by the insurer as from the commencement of the risk, the premium is returnable, provided that there has been no fraud or illegality on the part of the assured; but if the risk is not apportionable, and has once attached, the premium is not returnable.1

(b.) Where the subject-matter insured, or part thereof has never been imperilled, the premium, or, as the case may be, a proportionate part thereof is returnable.

Provided that where the subject-matter has been insured "lost or not lost," and has arrived

1 Arnould, Ed. 6, p. 1115; Owen's Notes and Clauses, Ed. 3, p. 122; Kellner v. Le Mesurier (1803), 4 East, 396, 7 R. R. 581; Gorsedd Steamship Co. v. Forbes (1900), 5 Com. Cas. 413 (return after loss); cf. Rules of Practice of Association of Average Adjusters, 1900, post, p. 158.

2 McArthur, Ed. 2, p. 43.

3 McArthur, Ed. 2, pp. 43, 44.

Arnould, Ed. 6, p. 1109; and as to the proviso, see ibid. p. 1100; Leake on Contracts, Ed. 3, p. 92.