TOTAL LOSS AND ABANDONMENT.

a partial loss. Held, that the underwriters having by their conduct accepted the abandonment, it was irrevocable, and they were bound thereby (b).

§ 157.

Notice of abandonment transfers the property in the Effect of whole subject-matter of the insurance, with the rights and abandonment. liabilities arising out of it, to the underwriter from the moment the loss was sustained, the insured being held a trustee for him (c). The thing insured, after being thus transferred by abandonment, is called the salvage. The losses, which give the insured the right to abandon, are termed salvage losses or total losses with benefit of salvage.

In cases where a vessel is validly abandoned, the underwriter will be entitled to the freight she subsequently earns, even though it be insured by other underwriters (d). He will also, on the other hand, be liable to all the liabilities of an owner, e. g., to pay the wages of the crew (d), and to pay for provisions and stores required for the prosecution of the voyage after the abandonment. If, pending an insurance on cargo and freight, the vessel is rendered incapable of carrying the cargo to its destination, the master will be bound or not bound to repair her, and earn what he can as a salvage for the underwriters on freight, according as a prudent owner, having regard to the state of his ship, but without reference to any insurance on the freight, would adopt or not adopt that course for his own advantage (e).

So, if the underwriter has paid for a total loss, he will be entitled to any part of the vessel or goods saved (ƒ),

(b) Smith v. Robertson, 2 Dow, H. L. 474.

(c) Randal v. Cockran, 1 Ves. sen. 98; Leatham v. Terry, 3 B. & P. 479; Thompson v. Rowcroft, 4 East, 34; Miller v. Woodfall, 8 E. & B. 493; North of England Iron S. Ship Ins. Co. v. Armstrong, L. R., 5 Q. B. 244; see "Cases" (1) at end of

this §.

(d) Davidson v. Case, 2 B. & B. 379 (S. C.); Thompson v. Rowcroft, 4 East, 34; Sharp v. Gladstone, 7 East, 24; Green v. Royal Ex. Ass. Co., 6 Taunt. 68; Leatham v. Terry, 3 B. & P. 479.

(e) Green v. Royal Ex. Ass. Co., 6 Taunt. 68.

(f) Houstman v. Thornton, Holt's N. P. 242.

or to any damages subsequently recovered from the owners of the ship in fault, where the loss was occasioned by a collision (g).

The assured must if he abandons do everything possible to avert a total loss, as by providing for the safeguard or recovery of the thing insured ().

If the underwriters do not accept the abandonment, they will have no right to the thing insured, if it be ultimately saved (), even though they have paid a large sum of money to the insured as a compromise (i).

In cases where no notice of abandonment has been given, but a total loss has occurred, the underwriter can, supposing he has paid the total loss, claim any part of the thing insured which may be ultimately recovered, or the proceeds of any sale of it by the assured or the master. Therefore, total losses are often termed salvage losses without abandonment (k). But if after payment by the underwriter the entire thing insured is recovered, the underwriter cannot claim from the insured his whole subscription, but only the thing saved or its value, the cost of recovering it being first deducted (7).

CASES.

1. On the ship H., valued at 6,0007., a policy of insurance was effected for 6,000l. The H. was run down and sunk by another ship. The underwriters paid the owners the 6,000l. as for a total loss. Subsequently 5,000l. was awarded to the owners of the H. by the Admiralty Court as damages in respect of the collision. The actual value of the H. was 9,0007. There was no further insurance on her. Held, nevertheless, that the underwriters were entitled as against the insured to the 5,0007. recovered as damages (m).

(g) North of England Iron. S. S. Ins. Ass. v. Armstrong, L. R., Q. B. 244.

(h) Arnould, Mar. Ins. 939.

5

(i) Brooks v. McDonnell, 1 Y. & C. (Ex.) 500; see "Cases" (2) at end of this §; and see Blaauwpot v. Da Costa, 1 Eden, 130.

(k) Houstman v. Thornton, Holt's

N. P. 242.

(1) Da Costa v. Firth, 4 Burr. 1966; North of Eng. Iron S. Ship Ins. Co. v. Armstrong, L. R., 5 Q. B. 244; see "Cases" (1) at end of this §.

(m) North of Eng. Iron S. S. Ins. Ass. v. Armstrong, L. R., 5 Q. B. 244.

2. Goods were insured on board a ship destined to Buenos Ayres. The ship and cargo were captured by the Brazilian government and condemned for an attempted breach of blockade. The insured informed the underwriters of the capture and offered to abandon. This the underwriters declined; and after some negotiations it was agreed that, on the payment by the underwriters of 351. per cent. on the sum insured, the policy should be delivered up to be cancelled. This course was adopted. Some years afterwards the goods, in pursuance of a convention between Great Britain and Brazil, were restored to the owners and compensation made. The underwriters then claimed the whole or part of the sum awarded as compensation. Held, that, the offer of abandonment having been declined by the underwriters, the payment of the 351. per cent. amounted to a compromise of their liability under the policy, and that, therefore, they could not recover any part of the compensation awarded (n).

$158.

There may under certain circumstances be a total loss Total loss of of an integral part of the goods shipped. For instance, if part of cargo. each package shipped be separately valued and insured, the loss of any one package will be a total loss of it (o). But where the packages are not so separately valued and insured, though each is distinct from the others, the loss of any one of them will not be a total loss of it, but only an average loss (p).

In the case of a general insurance on various distinct articles, the articles will be severally insured. Consequently there may be a total loss of any one of them (2).

A loss originally total may become partial through a Total loss subsequent event. For instance, if a captured vessel be reduced to a partial, when. re-captured or escape from her captors, the total loss caused by the capture will be reduced to a partial one (→).

(n) Brooks v. McDonnell, 1 Y. & C. (Ex.) 500.

(0) Lewis v. Rucker, 2 Burr. 1167. (p) Ralli v. Janson, 6 E. & B. 422 (S. C.); Hills v. London Assur. Corporation, 5 M. & W. 569; see "Cases" (1) at end of this §.

(a) Duff v. Mackenzie, 3 C. B., N. S. 16; see "Cases" (2) at end of this; Wilson v. Hyde, 3 C. B., N. S. 30.

(r) Bainbridge v. Neilson, 10 East, 329; Brotherston v. Barber, 5 M. & S. 418; see "Cases" (3) at end of

this §.

Underwriter, when liable

both for a

Again, where in the case of a policy on freight the vessel is detained under an embargo, the loss will be total. If, however, after the embargo is withdrawn the ship earns freight, the total loss will become only a partial loss (*). For it is the principle of indemnity which governs in such

cases.

The insured may sometimes recover both for a prior partial loss and a subsequent total loss of the same thing. partial and a For example, where a ship is damaged and repaired, and subsequently is wrecked and so becomes a total loss, the insured may recover from the underwriter both the cost of the repairs and also the value of the thing insured (†).

total loss.

CASES.

1. A policy of marine insurance was effected on wheat shipped in bulk and valued at 1,6007., warranted free from average, except general or the ship were stranded. On the voyage the ship encountering tempestuous weather made considerable water; and, in pumping it out, about 757. worth of wheat was pumped out along with the water and lost. Held, that the plaintiffs could not recover as for a total loss of the wheat so sacrificed (u).

2. A policy was effected on "master's effects valued at 1007., free from all average." Some of the articles so insured were totally lost by the perils insured against. Held, that the underwriters were liable in respect thereof (v).

3. A ship, insured from Rio Janeiro to Liverpool, was captured during the voyage, but afterwards recaptured. In the interim the insured on receiving intelligence of the capture gave notice of abandonment. The ship ultimately reached Liverpool having only sustained a partial damage. Held, that the insured could only recover for a partial and not a total loss (r).

4. A valued policy was effected on freight at and from Riga. On the ship arriving at Riga she was detained for five weeks and

(8) M'Carthy v. Abel, 5 East, 388; Everth v. Smith, 2 M. & S. 278; see "Cases" (4) at end of this §.

(t) Livie v. Janson, 12 East, 648, per Lord Ellenborough, C. J.; Knight v. Faith, 15 Q. B. 649; Lidgett v. Secretan, L. R., 6 C. P.

616.

(u) Hills v. London Ass. Corp., 5 M. & W. 569.

(v) Duff v. Mackenzie, 3 C. B., N. S. 16.

(x) Brotherston v. Barber, 5 M. & S. 418.

prevented from loading by order of the Russian government. The freighter never loaded her. A few days after the termination of the detention the frost set in and detained the ship at Riga till the spring, when a freight was procured and earned. The freight, however, was less than the costs of the detention. Held, that, though the policy had attached at the time of the detention, the underwriters were not liable, freight having been subsequently earned (y).

§ 159.

doer not liable to under

If the loss be caused by a wrongful act, the underwriters When wrongcannot claim damages from the wrongdoer, if the owner of the thing insured cannot. This will be the rule, not- writers for the withstanding that the underwriters have paid for a total loss, and have therefore all the rights of the owner in the damaged property vested in themselves ().

Accordingly, where two ships belonging to the same owner are damaged by coming into collision with each other, as the owner could not of course recover damages on account of his vessels being injured from himself, the underwriters will not be in a position to recover such damages (≈).

(y) Everth v. Smith, 2 M. & S. 278.

(=) Simpson v. Thompson, 3 App. Cas. 279.

loss.