66

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in writing under the policy, in the words following:Adjusted a loss on this policy at 100l. per cent., the Hanover packet, Captain Sherborn, being totally lost at Falmouth. Should any salvage hereafter be recovered, the insured promises to refund to the insurer whatever he may so recover, in such proportion as the sum insured bears to the whole interest. London, 23rd October, 1764, for Richard Seward, Michael Firth."

The insurer paid the whole money insured, which was 2001. In April, 1765, the iron trunk, which contained all the bullion, was fished up; and thereby all the bullion was recovered without prejudice, and delivered to the defendant. The defendant's expense of salvage amounted to 637. 8s. 2d., and deducting that sum for salvage, the net proportion of his share came to 206l. 11s. 9d. The plaintiff's proportion thereof, in respect of his subscription, amounted to 487. 4s., which was paid into Court.

The question was, whether the plaintiff was entitled to recover?

The Court held, that this was a policy of a peculiar sort; and that it was good within the exception of the 19 Geo. 2, c. 37, which says, that certain policies of a particular form shall be void, except on effects from any port in Europe or America, in the possession of the crowns of Spain or Portugal. This is a mixed policy: partly a valued policy, partly an open one: it is a valued policy, and fairly so, without fraud or misrepresentation. Therefore the loss having happened, the insured is entitled to recover as for a total loss. The insurer agreed to the value, and cannot be allowed to dispute it. The insured has received the money for a total loss; and there is no want of conscience in retaining it. The cases cited at the Bar only tend to show, that where it appears, before adjustment to be but an average loss, the underwriter shall pay no more than the real damage; the reason of which decision is, that the insured must show the whole case as it then stood. But in the present case, there was a total loss at the time of the adjustment. The adjustment in this case

But where a compromise

has been enter

ed into by the underwriters,

they can make

no claim to

restitution at a

makes an end of the question. Here is a solemn abandonment, and a solemn agreement, "that the insurers shall be content with salvage, in such proportion as the sum insured bears to the whole interest." There was a total loss at the time of the adjustment (which is the same as if the damages had then been recovered in an action.) Here is no sort of fraud, nor anything that is against any law: and to refund more than in that proportion would be contrary to the underwriter's own agreement. Therefore the nett proportion only, in respect to the plaintiff's subscription after deduction of salvage, ought to be returned, and that is paid into Court. The postea was ordered to be delivered to the defendant.

But where a compromise has been entered into by the underwriters, they cannot, at a future period, make a claim for restitution. And, therefore, in the case of Blaawpot v. Da Costa, (a) it was held, that where satisfaction had been made under a commission for distribution of prizes to the future period. assured, such of the underwriters as had paid were entitled to restitution, but that the Royal Exchange Company, with whom the ship had been insured for 1,500., and who had compounded for their loss and renounced salvage, were not entitled.

And in a very recent case of Brooks v. M'Donnell, (b) in the equity side of the Court of Exchequer, where an insurance was effected on goods on board a ship consigned to Buenos Ayres, and the ship, with the cargo, was captured by the Brazilian government, and condemned for an attempted breach of blockade: and a notice was given of the capture by the assured to the underwriters, and an offer made to abandon; but the underwriters declined the offer to abandon, and after some negotiations, it was arranged, that by payment by the underwriters of 35l. per cent. on the sum insured, the policy should be delivered up to be cancelled: and some years afterwards, in pursuance of a convention between Great

(a) 1 Eden, 130.

(b) 1 Young & Coll. 500; and see Tunno v. Edwards, 12 East, 488.

Britain and the Brazilian government, the goods were ordered by the latter government to be restored to the owners, and compensation made: and a claim was made by the underwriters to the whole or part of the sum awarded for compensation, it was held, that the underwriters having declined the offer to abandon, the payment of the 35. per cent. was a compromise of their liability under the policy, and that they were not entitled to any portion of the sum awarded for compensation.

SECTION XVI.

GENERAL AVERAGE.

Having in the preceding section considered the two descriptions of losses which happen to the assured by the perils of the sea, and which are borne by the underwriters according to the contract of which we are treating, and recollecting that the first description of loss, which was a total loss of the thing insured, either absolute in the first instance, and without any interference on the part of the assured, or a constructive total loss in which the thing insured remained in specie, or in the case of capture, in which, after a ship had been taken, the assured were by law entitled at once to abandon to the underwriter; and the second description which we considered, were what are properly called average losses (because they are equally distributed among the different underwriters, each paying his proportion of his subscription), and they differ essentially from total losses, because there may be many average losses in the voyage, and many average losses as well as one total loss; but there cannot be more than one total loss, for when that occurs, the adventure is at an end.

The memorandum which has just been the subject of our inquiries, is intimately connected with the second kind of loss, viz., the average loss: for we have just seen that by its

The principle

of this general contribution

is derived from

terms the underwriter exempts himself from any liability to average loss in articles of a certain description, particularly specified in the memorandum: with regard to others, also specified, he exempts himself, unless the average loss amounts to three or five per cent., with this general condition overriding the memorandum, "unless the average be general, or unless the ship be stranded." The latter part of this condition has been treated of in the preceding section: it now becomes our object to inquire what a "general average" is, and what laws and rules, founded upon law, and the practice, custom, and usage of merchants, for enforcing the benefits and advantages for which it was in the earliest times founded, and its principles regulated and established.

The late Lord Tenterden, in his Treatise on Shipping, which is so justly celebrated, thus commences his chapter upon this important subject. I shall not hesitate a moment in availing myself of that learned writer and Judge's remarks on that commencement, on the term "general average." He says, "Having thus treated of the respective duties of the owner and merchant, I now proceed to the consideration of a subject which is equally a duty of the one and the other, namely, the general contribution that is to be made by all parties toward a loss sustained by some for the benefit of all. This contribution is sometimes called by the name of 'general average,' to distinguish it from special or particular average, a very incorrect expression, used to denote every kind of partial loss or damage happening either to the ship or cargo from any cause whatever (a); and sometimes by the name of gross average,' to distinguish it from customary average, mentioned in the bill of lading, which latter species is sometimes also called 'petty average.' The principle of this general contribution is known to be derived from the ancient law of Rhodes, being adopted into the Digest of Justinian,

(a) If the learned author applies the term "incorrect expression" to its use in marine insurance treatises or actions of policies of

insurance, I cannot acquiesce in his remark; for, it is the word used in the policy where the word partial never appears.

of Rhodes,

being adopted of Justinian, with an express recognition of its true origin.

with an express recognition of its true origin. The wisdom the ancient law and equity of the rule will do honor to the memory of the state from whose code it has been derived, as long as maritime commerce shall endure. The principle of the rule has been adopted by all commercial nations, but there is no principle of maritime law that has been followed by more variations in practice. The modern ordinances of the several continental states of Europe differ from each other in many particulars relating to this general contribution, and the French ordinance establishes a different mode of contribution in different cases. An enumeration of these varieties would furnish little entertainment or instruction to an English reader; discordant rules rather serve to perplex the choice than to guide the judgment. The determination of English Courts of Justice, furnish less of authority on this subject than on any other branch of maritime law, there being few reported cases of questions either between the parties liable to contribution in the first instance, or between a party so liable and an assurer, from whom indemnity has been sought. The work of Magens contains a variety of cases of adjustment of average by consuls and Courts abroad, and by merchants at home, detailed with the tedious forms of the notarial office, but accompanied by some very judicious remarks. Much useful information upon this subject is to be found in Mr. Park's System of Marine Insurances, and also in the publication by Serjeant Marshall, on the same subject." I shall of course myself, in detailing the law on this subject, have occasion to follow not only the guides which this learned author pointed out, but in a great measure to derive the matter which it is my business to give as fully and correctly as I am able, from the treatise of the learned author himself.

The first case which appears to have been argued in our Courts of Justice, on the subject of general contribution, is the case of Wilson and another v. Smith (a), tried before

(a) Reported in 3 Burr. p. 1550, and Black. Rep. p. 507.