ance, on the ground of the increased cost of rebuilding. The facts in the case show that the company had become bound to fulfill its contract of indemnity.

The company claimed that it had the right to furnish indemnity by a cash payment or by rebuilding. The insured claimed that by the action of the company it had waived or lost the right to rebuild. The insured brought these actions on the contracts evidenced by the policies, claiming a money indemnity, and the companies answered that they had the right to furnish indemnity by rebuilding the injured premises, and that they stood ready to fulfill the contract by that method of performance. The court, upon the pleadings thus made, held that it was still open to the companies to meet the obligation of their contracts by rebuilding the premises. The companies now seek to escape all liability by averring that the increase in the cost of labor and material is so great that they ought not to be required to be bound by their election to rebuild, and ought not to be held to pay the indemnity in money. The court will not require them to rebuild, nor does the plaintiff demand indemnity in that form; but upon what ground should the companies be relieved from making payment in money of the sums due upon the policies? The theory of the defense is that, if the companies had been permitted to rebuild in the summer or fall of 1898, it would have cost them much less than if they now rebuild, which may be a fair reason why the companies should be excused from rebuilding; but why should that fact relieve the companies from their obligation to make indemnity to plaintiff by a payment in money? It is argued that, if the companies had been permitted to rebuild in the summer of 1898, they could have done so at an expense less than the amount of the money payment awarded against them; but how can this be proven? The defendants have not undertaken to show what the cost of rebuilding the premises in 1898 would have been, and it is a matter of common knowledge that the actual cost of building almost always outruns the original estimate. The gist of the objection to being held liable for the money payment on the policies is that, if the companies had been allowed to rebuild in 1898, they might have succeeded in rebuilding at an expense less than the $20,000, which they were bound to pay if they did not rebuild; but there is no fact shown from which the inference can be drawn that it would have been cheaper for the companies to rebuild than to pay in money, nor is it averred in the substituted answers that such is the fact. It is not now averred in the answer, nor is it proven as a fact, that, if the companies are now required to pay the amount of their policies in cash, it will place a greater burden on them than they would have assumed had they undertaken to rebuild the premises in the summer of 1898. The position now taken by the companies is that, if they should now rebuild, it would be at a cost greater than that they would have assumed had they been permitted to rebuild in 1898. This fact may constitute a good and sufficient reason why the companies should be excused from rebuilding, but it does not constitute a reason why they should not pay in money the indemnity they owe to the plaintiff.

But it is further contended that when the companies notified the plaintiff in July, 1898, that they elected to rebuild the destroyed premises, they thereby converted the contracts for indemnity, evidenced by the policies, into contracts for the rebuilding of the premises, and that the plaintiff should have declared upon the substituted building contract and the failure to perform it, and not upon the original contract for indemnity. If this position is well taken, it follows that in every instance wherein policies of the form of those sued on are issued, and a loss happens, the company can sig. nify its election to rebuild, and then fail so to do, and thus compel the plaintiff to sue for the unknown and uncertain amount of damages which might be awarded by a jury for the breach of the alleged contract to rebuild. Upon the company would be placed the burden of responding to the damages for not rebuilding, which, in the majority of cases, would exceed the money payment necessary to discharge the contract for indemnity. In this case the contracts evidenced by the policies issued by the four companies have no relation to each other. They were issued at different dates, and in each case the company bound itself to furnish indemnity against loss by fire by a payment in cash or by repairing or rebuilding the injured premises. Under the terms of the policies, in case of a loss in amount less than the aggregate amount of the insurance, each company would be bound to pay only its proportionate amount of the total loss; but if the original contracts are merged into building contracts, as contended for by the defendants, then the plaintiff would have a separate contract with each company, whereby the latter had become bound to rebuild the injured property, and for a breach thereof the plaintiff would be entitled to judgment against each company for the full amount of the damages caused by its failure to rebuild. Again, suppose, in this case, two of the companies had paid their policies in money, and the others had elected to rebuild; it certainly would not be true that the latter would have the right to half repair or rebuild the house, or to rebuild in such a manner that, as rebuilt, the house would be worth only onehalf what it was when the fire occurred. Again, suppose, after the companies had given notice of their election to rebuild, two thereof had become insolvent, and had refused to engage in rebuilding the premises; would it be open to the remaining companies to only half repair or rebuild, and then claim that they were exonerated from further responsibility? These suggestions show that, if the theory of the conversion of the contracts evidenced by the policies into contracts for rebuilding the injured premises is adopted, then, for the proper protection of the insured, it must be held that each company is bound to fully repair or rebuild, and, in case that is not done, then each company is liable to a judgment for the full damages resulting from the breach of the rebuilding contract. This would cast a heavy burden upon the company, and yet can there be any escape therefrom, in justice to the insured? These difficulties are all avoided, however, by holding that a mere notice of an election to rebuild on part of the company does not merge, convert, or affect the contract for indemnity contained in the policy. The giving of the notice of the election to rebuild within the time limited

in the policy secures the privilege to the company of discharging its obligation by rebuilding, but if the company, for any reason or for no reason, does not in fact repair or rebuild, then the contract remains unchanged, and the insured is entitled to demand of the company that it shall pay in money the sum due on the policy, and, if payment is not made, then to enforce it by judicial aid.

The conclusion reached is that, when the completed proofs of loss were furnished to the defendant companies, the plaintiff had established a clear right to demand from the companies indemnity for the damages caused to the property by the fire therein; that the obligation rested upon each company to furnish the indemnity either by a money payment, or by rebuilding the premises within a reasonable time; that the companies have had a reasonable time within which to undertake the rebuilding of the premises, but they have not undertaken so to do, and now aver that they are not bound to rebuild; that, therefore, the companies are bound to furnish indemnity by a payment in money of the sum awarded against each company, and, as this payment has not been made, the plaintiff is entitled to judgment for the sum due in each case. The question of the interest to be allowed depends upon the time when it is held that the companies became in default for a failure to pay the indemnity in money. There is much force in the argument that it should not be held, under the peculiar facts of these cases, that the companies are chargeable with interest during the time the parties were litigating over the question of the right to rebuild, the question being decided in favor of the companies. If, however, the court should hold that interest is to be allowed only from the date when the final failure to undertake the rebuilding took place, then, in order to present the question in the appellate court, the plaintiff would be compelled to take a writ of error, although the judgment on the merits is in his favor. As it is understood that the defendants purpose going to the court of appeals on the question of lia bility for any sum, the question of the amount of interest allowable, in case it is finally held that plaintiff is entitled to recover, can be presented, on the writ sued out by the defendants, by this court ruling that interest is to be allowed from September 1, 1898, or, in other words, from 60 days after the furnishing the completed proofs of loss; and if in the court of appeals it be held that plair tiff is entitled to recover, but that the amount of interest allowed is excessive, the proper reduction can be ordered in the final judg. ment. The amount for which judgment will be entered in each case is $5,000, with interest thereon at 6 per cent. per annum from September 1, 1898, to January 20, 1900.

G. S. Steere and Walter I. Hayes (A. L. Schuyler, on the brief), for plaintiff in error.

R. C. Langan and Edred S. James, for defendant in error.

Before CALDWELL and SANBORN, Circuit Judges, and ADAMS, District Judge.

PER CURIAM. The opinion of Judge Shiras who tried this case at the circuit is adopted by this court. The judgment of the circuit court is affirmed.

(108 Fed. 987.)

INTERNATIONAL NAV. CO. v. BRITISH & FOREIGN MARINE INS. CO., Limited. SAME v. INSURANCE CO. OF NORTH AMERICA. SAME V. THAMES & MERSEY INS. CO., Limited. SAME v. ATLANTIC MUT. INS. CO.

(Circuit Court of Appeals, Second Circuit. May 11, 1901.)

Nos. 149-152.

1. MARINE INSURANCE-VALUED POLICIES ON SHIP-UNDERVALUATION - PARTIAL LOSS.

Upon a partial loss on valued policy on ship, the cost of repairs when made (less the ordinary deduction of new for old) is the measure of indemnity against the insurers, each insurer being liable for that proportion of the amount of its insurance which the cost of repair bears to the policy value, and not, as in a valued policy on goods, the proportion which the loss bears to the actual sound value at the port of discharge. 2. SAME-SALVAGE-GENERAL AVERAGE-DAMAGE AND EXPENDITURES- NEW YORK RULE.

In such case, where in consequence of stranding, necessary salvage expenses are incurred for the rescue of ship, cargo and freight including direct injury to the ship in the salvage operations, insurers are liable to the assured in the first instance, independently of any general average adjustment, for the direct injury to the ship; and on payment they are subrogated to any rights of the assured to a general average contribution on freight and cargo for their share of that loss; and semble, by the law of this country, the same rule applies as respects the recovery in the first instance of salvage expenditures necessary for the rescue of the ship, though freight and cargo are thereby benefited; and by the New York rule, the amount of the recovery for such damage to the ship, and such expenditures, is not to be reduced in the proportion of the undervaluation in the policy.

8. SAME-INSURANCE ON "DISBURSEMENTS.

A policy on "disbursements" intended to cover a variety of subjects connected with the use and service of the ship, as well as any interest in the ship not covered by insurance, and being against total loss only, is not "simultaneous" insurance of the same date and "on the same premises," when the date of the policy is different, though operative from the same day, the risk, subject-matter and conditions being different.

4. SAME-FACTS STATED ESTOPPEL.

The steamer St. Paul, worth $2,100,000, was insured for about $1,350,000 in numerous policies, in which she was valued at the latter sum; the steamer by stranding was thereby damaged in her hull, and in necessary salvage operations she was further damaged by the sanding of her engines, in all to the amount of $107,368.42; necessary salvage expenditures were paid by the shipowner as adjudged in two salvage suits, one against ship and freight for $131,148.05, and another against the cargo for $29,133.67, and also legal expenses to the amount of $5,071.64; no general average adjustment having been made, held (1) that all the salvage losses and expenditures were covered by the terms of the policies; (2) that the damage to the hull from stranding was particular average, for the whole of which the insurers were responsible in the proportion of each policy to the policy valuation; (3) that though the other salvage losses and expenditures might be subjects of general average if the stranding were not brought about by negligence, a general average adjustment was not a condition precedent to the right of the assured to maintain actions upon the policies; (4) that the sanding was a loss and damage to the subject insured directly within the policies, for which the insurers were liable to the assured in the first instance, with subrogation on payment to any right of the assured to a contribution in general average from the cargo; (5) that the adjudications adjudging the amount of sal

vage expenses to be paid by the ship and freight on the one hand, and the cargo on the other, were binding on the parties interested; and that the assured was entitled to recover the amount adjudged against ship and freight from the insurers less its own proportionate share as owner of the freight interest to be adjusted on a reference, if not agreed upon, and that the same rule applied to the legal expenses in the action against ship and freight; (6) that the claim against the insurers for the salvage charges as adjudged, should not be reduced by reason of the undervaluation of the ship in the policies to the extent of one-third below her true value which was also the basis, in part, of the salvage award, the insurers being estopped by the valuation fixed in the policy from raising that question.

(Syllabus by the Court.)

Appeals from the District Court of the United States for the Southern District of New York.

These were libels to recover on insurance policies for damage and expenses to the steamship St. Paul, caused by stranding. From decrees in favor of libelant, defendants appeal.

The opinion filed below, and here reprinted from 100 Fed. 304, was in full as follows:

BROWN, District Judge. The above libels were filed to recover upon divers insurance policies for the damage and expenses to the steamship St. Paul, caused by her stranding on the Jersey coast near Long Branch in dense fog during the night of January 24, 1896. There were numerous policies, all valued, some English and some American, mostly in similar form, and insuring the steamship in various sums, amounting in all to the valued sum of £275,000, i. e. about $1,350,000; viz. $755,625 on hull, $487,500 on machinery, and $97,500 on cabin furniture, etc. The steamer's actual value before stranding, as admitted on this hearing, was $2,100,000.

The items of loss and expense caused by the stranding of which a pro rata proportion is claimed of the several defendant companies, are the amounts which the libelant has paid.

1. For salvage and interest.

2. For legal expenses....

3. For repairs and attendant expenses.

In all.....

$135,937 22

5,071 64 107,368 42

$248,377 28

The item for "salvage" is based upon two judgments in this court on libels filed by the salvors against the St. Paul and her freight in one action, and against the libelant in personam, as carrier of the cargo, in a second action. In the first, the salvors were awarded against the ship and freight $131,148.05 (including $136.05 costs); and in the second as respects the cargo, the sum of $29,123.67 (including $136.15 costs). 82 Fed. 104. These awards were affirmed on appeal. 30 C. C. A. 70, 86 Fed. 340. As the policies here sued on insure the ship only, and not the freight, the amount here claimed for the salvage paid on account of the ship, is the arithmetical proportion of the judgment against ship and freight, apportioning it according to the respective valuations of ship and freight adopted by the court in its previous decisions; viz. $2,000,000 as the value of the ship, and $16,902 as the amount of freight.