on the ship. The construction given to the code by the Royal Court at Rennes, in 1822, in the case of Blaize v. Company of General Assurance at Paris, was, that the future freight did not go to the insurer on the ship, but only the freight on the goods saved and already earned at the time of the loss (b)

(2.) Of the adjustment of partial losses.

In an open policy the general rule is, that the actual or market value of the subject insured is to be estimated at the time of the commencement of the risk. The object of inquiry is, the true value of the subject put at risk, and for which an indemnity was stipulated; and the question of total or partial loss does not turn on the estimated value, in a valued policy, but upon a view of all the circumstances attending the loss. (c) 1

There are two kinds of indemnity that may lawfully be obtained under a contract of insurance. The first is, to pay what the goods would have sold for if they had reached the place of destination; and the value there consists of the prime cost and expenses of the outfit, the freight and expenses at the port of delivery, and the profit or loss arising from the state of the market. This species of indemnity puts the insured in the same situation as if no loss had happened. The other kind of indemnity is to pay only the first cost of the goods, or the market value at the time and place of the commencement of the risk, and the expenses incurred; and this places the insured in the situation he was before he undertook the adventure. (d) It annuls the speculation, and excludes the consideration of any eventual profit or loss. The first kind of in

(b) Boulay Paty, tit. 11, sec. 8.

(c) Young v. Turing, 2 Mann. & Gr. 593, 597, 601. The question whether a loss be total or partial is, whether, in the condition of the ship, the owner, as a man of prudence and discretion, would, under the circumstances, if uninsured, have sold the ship, or have endeavored to get her off and repair her. Domett v. Young, 1 Carr. & M. 465, S. P. A partial loss is frequently termed a particular average, in distinction from a general average; and Mr. Benecke says, that it denotes, in general, every kind of expense or damage, short of a total loss, and which is to be borne by the proprietor of the particular concern; and he says it is expressive, and ought to be retained. Stevens & Benecke on Average, by Phillips, 341.

(d) See supra, 274, n. b; Marchesseau v. The Merchants' Ins. Co. 1 Rob. (Louis.) 438.

1 The Law Reporter for Feb. 1848, contains an elaborate discussion of the rules of adjustment in cases of partial loss on profits.

surance is, in the opinion of Mr. Benecke, (e) more conformable to the nature of mercantile transactions, and affords, in every case, an exact indemnity; but the second kind of insurance

*of goods is the one in practice in England and other com- *336 mercial countries. (a)

The actual or market value at the port of departure may frequently be different from the invoice price, or prime cost, and when that happens, or can be ascertained, it is to be preferred. (b) In Gahn v. Broome, (c) the invoice price was adopted as the most stable and certain evidence of the actual value; but in Le Roy v. United Insurance Company, (d) the invoice price was understood to be equivalent to the prime cost, and that was commonly the market value of the subject at the commencement of the risk. The court, in that case, did not profess to lay down any general rule, but they, nevertheless, adopted the prime cost as being a plain and simple, and generally speaking, the best rule by which to test the value of the subject. The English Court of King's Bench in Usher v. Noble, (e) pursued, in effect, the same rule, by estimating a loss on goods in an open policy, at the invoice price at the loading port, and taking with that the premium of insurance and commission, as the basis of the calculation. (f)

If goods arrive damaged at the place of destination, the way to ascertain the quantity of damage, either in open or valued policies, is to compare the market price, or gross amount of the damaged goods, with the market price or gross amount at which the same goods would have sold if sound. (g) But this mode of ad

(e) Treatise on the Principles of Indemnity in Marine Insurance, c. 1.

(a) The underwriters, in cases of partial loss, have nothing to do with remote or contingent losses. They have nothing to do with bottomry bonds given to raise money for repairs, though they must bear their share of the extra expenses of raising the money, as part of the partial loss. They are not bound to supply funds in a foreign port for repairs. They are simply bound to pay the partial loss. Bradlie v. The Maryland Ins. Company, 12 Peters U. S. 378. In Oriental Bank v. Tremont Ins. Co. 4 Metcalf, 1, it was held, that interest is not payable on a policy of insurance, if there be no agreement to pay interest, or the insurer be not in default in payment.

(b) Snell v. Delaware Ins. Company, 4 Dallas, 430; Carson v. Marine Ins. Company, 2 Wash. C. C. 468.

(c) 1 Johns. Cas. 120.

(e) 12 East, 639.

(d) 7 Johns. 343.

(f) This is admitted in the French law to afford all the indemnity that was stipulated by the policy. Boulay Paty, tom. iv. 41, 42. The premium of insurance is considered as part of the value of the goods.

(g) Lewis v. Rucker, 2 Burr. 1167; Johnson v. Sheddon, 2 East, 581; Usher v. Noble, 12 Ibid. 639; Benecke on Indemnity, 426.

*337 justment affords no perfect indemnity* to the insured, for he has to pay freight for the goods as if they were sound, and which freight he cannot recover of the insurer. Various expedients have been suggested to remedy the inconvenience, and the true one is to insure the sum to be paid for the freight and charges at the port of delivery. (a)

We have seen, in a former lecture, (b) that an adjustment of a general average at a foreign port is conclusive; and it is equally so between the parties to the policy, and between the parties in interest in the adventure. (c) It is the rule in all the foreign countries for the underwriter to be bound by foreign adjustment of general average, unless there be a stipulation to the contrary in the policies, as is the case in those of the insurance companies at Paris. (d) There is a material difference between the adjustment of a partial loss, and of a general average, since the former is adjusted according to the value at the time and place of departure of the vessel, and the latter according to the value at the foreign port. (e) And as in cases of partial loss, it is to be adjusted upon a comparison of the gross proceeds of the sound and damaged goods, the underwriter has nothing to do either with the state of the market, or with the loss on landing expenses, freight, and duty, accruing in consequence of the deterioration; for no premium is paid for those items, and all other modes of adjusting particular average, except that founded on the principle of the gross proceeds, are erroneous. (f) In settling losses under the memorandum in

(a) Benecke on Indemnity, 17-26.

(b) Ante, Lect. 47, p. [244].

(c) Though the foreign adjustment be conclusive as between the parties to it, yet the party to whom the contribution has been made is not restricted in his claim, under the policy, to the sum apportioned as his share of the loss, when it falls short of a complete indemnity. Thornton v. United States Ins. Company, 3 Fairfield, 154.

(d) Molloy, b. 2, c. 6, sec. 16; 7 Mass. 370; 5 Cowen, 63; Benecke on Indemnity, 331. (e) Emerigon, 659, c. 12, sec. 44; Ord. de la Mar. tit. Du Fret. art. 6.

(ƒ) Benecke on Indemnity, 426, 427. In the adjustment of loss on a policy on profits, it is not necessary to show what the profits would have been if the loss had not happened. It is sufficient to show interest in the cargo, and the loss thereof. The loss of the cargo carries with it the loss of the profits, either in whole or in part, as the case may be. If the cargo be totally lost, the loss on the policy on profits is total. If partial on the cargo, it is partial on the profits, and to the same extent. The salvage on what is saved of the cargo is credited to the insurer on profits, as well as to the insurer on cargo. They stand on the same footing precisely. Henrickson v. Margetson, 2 East, 549, note; Barclay v. Cousins, 2 East, 544; Patapsco Ins. Company v. Coulter, 3 Peters U. S. In some of the New York policies, this principle is specially recognized by the introduction of the clause in policies on profits, that the policy is subject to the same average and benefit of salvage as cargo

the policy, which declares articles free of average, under say five per cent, if a partial loss to an article be found, on survey and sale, to have been five per cent, the insurer pays the damages and the expenses. If under five per cent, he pays nothing, and the insured bears the expenses. The expenses are like costs of suit, and fall upon the losing party. The expenses are not taken to make up the five per cent. (a)

*

*338

If extraordinary expense and extra freight be incurred in carrying on the cargo in another vessel, when the first one becomes disabled by a peril of the sea, the French rule is, to charge the same upon the insurer of the cargo. (b) This question is left undecided. in the English law, but in this country we have followed the French rule. (c) With respect to leakage, the rule, in cases free from special stipulation, is, that the insurer is not liable for waste occasioned by ordinary leakage, and only for leakage beyond the

(a) Benecke on Indemnity, 436. Mr. Benecke, in c. 9, has gone into particular calculations on the subject of the adjustment of particular average, on every kind of expense or damage short of a total loss, and applied his principles to almost all the variety of cases that can arise; and to his lucid explanations I must refer the student for a more practical knowledge of the subject. The five per cent is to be computed ⚫ upon the valuation in the policy, after deducting the premium. Several or distinct losses happening to the ship at different times, are not to be added to make up the five per cent. Brooks v. Oriental Ins. Company, 7 Pick. 259. Distinct successive losses to the ship cannot be added together to make up the five per cent, though it may be otherwise as to the cargo. In the one case, many trifling losses may fall within the common wear and tear of the ship borne by the owner; but in the other, the entire damage cannot be ascertained until the cargo is unladed. Ibid. See, also, Stevens on Aver age, 214; Benecke, 473. But in the case of Donnell v. Columb. Ins. Company, 2 Sumner, 366, a different view was taken of the subject under the memorandum in the policy, and after a thorough examination of the English and the French law of insurance, it was held, that if there be successive losses on the ship or cargo, each less than five per cent, but amounting in the aggregate to more than five per cent, they were not within the exception, and were to be borne by the insurer. The exception of all losses not amounting to five per cent, means all losses during the voyage, and the exception applies to all losses, ejusdem generis, below five per cent, and not amounting in the aggregate to five per cent. Mr. Justice Story drew the conclusion that there was no distinction in the insurance law of Europe between the aggregate averages of the whole voyage and an average loss at a particular period.

(b) Emerigon, tom. 1, 429-433, c. 12, sec. 16; Code de Commerce, Nos. 391, 393. (c) Mumford v. Commercial Ins. Company, 5 Johns. 262; Searle v. Scovell, 4 Johns. Ch. 218; Dodge v. Marine Ins. Company, 17 Mass. 471.

1 In Gt. Indian Pen. R. Co. v. Saunders, 1 Best & Smith, 41, such expenses were held to be within the terms 66 particular average," from which the goods injured were warranted free. Mumford v. Com. Ins. Co. 5 Johns. 262, was mentioned with the remark that no such case had been so decided in England.

ordinary waste, and produced by some extraordinary accident. The practice is, to ascertain, in each particular case, what amount of leakage is to be attributed to ordinary causes, or the fault of the insured, or bad stowage, and what to the perils of the sea; and, in pursuing this inquiry, the season of the year, the nature *339 of the articles, the description of the vessel, * the length of

the voyage, and the stowage, are all to be considered. (a) An adjustment of a loss cannot be set aside or opened except on the ground of fraud, or mistake of facts not known. It is only prima facie evidence of the claim, and the party must have a full disclosure of the circumstances of the case before he will be concluded by it. In the language of Lord Ellenborough, they must all be blazoned to him as they really existed. (b) And in making the adjustment, in the case of a partial loss, the rule is to apply the old materials towards the payment of the new, by deducting the value of them from the gross amount of the expenses for the repairs, and to allow the deduction of one third new for old upon the balance. (c) In England, if the injury be sustained, and the repairs made, when the vessel is new, and on her first voyage, no deduction of new for old is made; because, the vessel being new, it is not supposed that she is put in better condition by the repairs. (d) But in this country that distinction has not been adopted, and the deduction of one third new for old is made, whether the vessel be new or old. (e)

The insurer is liable for all the labor and expense attendant upon

(a) Phillips on Insurance, vol. i. 246, 247; Millar on Insurance, 132; 2 Valin, 14, 80, 83; 1 Emerigon, 391, c. 12, sec. 9.

(b) Dow v. Smith, 1 Caines, 32; Shepherd v. Chewter, 1 Campb. N. P. 274; Steel v. Lacy, 3 Taunt. 286.

(c) Burnes v. Nat. Ins. Company, 1 Cowen, 265; Savage C. J., in Dickey v. New York Ins. Company, 4 Ibid. 245; Brooks v. Oriental Ins. Company, 7 Pick. 259; Eager v. Atlas Ins. Company, 14 Ibid. 141. See supra, 331. The rule applies equally to steam-vessels insured on our interior waters. Wallace v. Ohio Ins. Company, 4 Ohio, 234. In Potter v. The Ocean Ins. Company, 3 Sumner, 27, it was held, that in case of repairs to the ship, by the perils insured against, the deduction of one third new for old was applicable only to the labor and materials employed in the repairs, and to the new articles purchased in lieu of those lost or destroyed.

(d) Fenwick v. Robinson, 1 Danson & Lloyd, 8; 3 Carr. & Pa. 323.

(e) Dunham v. Com. Ins. Company, 11 Johns. 315; Sewall v. U. S. Ins. Company, 11 Pick. 90. Temporary repairs in the course of the voyage are held to be particular average; but other repairs abroad, from strict necessity, to enable the vessel to return, and which become useless afterwards, are general average. Brooks v. Oriental Ins Company, 7 Ibid. 259.