Underwriter released by return of premium. Average adjuster-nonliability of. Adjustment "according to British custom." the insured, in the event of a total loss, to the extent of his subscription, i. e., the sum he has written against his own name; and in the event of an average or partial loss, to a proportionate part of his subscription. The reason for this is that each subscription makes a separate contract. Where the insured has claimed and received a return premium due on the safe arrival of the vessel insured, and the policy has been adjusted on that footing, he will not be entitled to resort again to the underwriter in the event of any of the perils insured against subsequently occurring; at all events, in the absence of any express stipulation to the contrary effect (k). When the parties, with the object of ascertaining the various average amounts to be contributed, agree that the amounts should be adjusted by an average adjuster for reward, and that his decision shall be binding, the average adjuster will not, provided he has acted bonâ fide, be liable to an action in respect of any want of skill or care on his part (1). Where by the express terms of the contract any average is to be adjusted according to British custom, the parties thereto will be bound by any practice or usage prevailing among British average adjusters. Therefore, in such a case a practice of average adjusters to treat a certain species of loss as not a general average loss, will bind the parties to the contract, although the loss would be by the general law of England the subject of a general average contribution (m). CASES. 1. The memorandum of adjustment indorsed on the back of a marine policy stated that a particular average loss of 547. per (k) May v. Christie, Holt, 67. (m) Stewart v. West India and 742; 21 W. R. 953 (S. C.), and see Hendricks v. Australasian Ins. Co., L. R., 9 C. P. 460; 43 L. J., C. P. 188; 30 L. T. 419; 22 W. R. 947; and see further, as to foreign adjustments, Bk. I. Ch. XVIII. § 123, pp. 202, 203. cent. had been settled between the plaintiff (one of the underwriters) and the defendant. Held, that it could be proved by parol evidence that it was agreed by a previous arrangement that, in the event of the other underwriters paying a smaller sum, the surplus should be repaid (n). 2. An insured residing at Glasgow employed a London insurance broker to recover a loss from the underwriter. The loss was ultimately settled, partly by the underwriter setting off in account against it a debt due to him from the broker, and partly by the payment of the balance in cash. The underwriter then erased his name from the policy. The broker became bankrupt, without paying the insured the amount of his loss. In an action by the insured against the underwriter, it was proved that the usual practice was for the amount of premiums due to the underwriter to be set off against the loss. Held, that the insured was not bound by such a usage, he not being proved to have been cognisant of it (o). § 176. calculated. In calculating a partial loss, if the ship were damaged Partial loss of and repaired by the owner, the underwriter will, in the ship-how case of an open policy, be liable for the same aliquot part of the sum he has agreed to insure, as the injury done or the cost of repairs bears to the value of the ship, when the risk commenced running. In the case of a valued policy, he will be liable for the same proportion of the valuation inserted in the policy. The owner, however, of a ship which has been repaired can, unless it be new, only claim from the underwriter twothirds of the expense of repairing, and not the whole, unless circumstances are established to take the case out of the rule (p). This is termed deducting one-third new for old. After the deduction of the one-third, it is the practice also to deduct the value of the old materials from the nett cost of the repairs. If the ship, after being repaired, never return into her owner's possession, the rule will not be applicable, (n) Russell v. Dunskey, 6 J. B. Moore, 233. (0) Scott v. Irving, 1 B. & Ad. 605. (p) Poingdestre v. R. Ex. Corpn., Partial loss on goodshow calculated. and therefore in such a case the underwriters will not be entitled to a deduction of one-third new for old (q). If, instead of repairing a ship injured by perils insured against, the owner sell her during the continuance of the risk, the loss to be made good by the underwriters will depend on the depreciation in the value of the ship, and not on the amount it would have cost to have repaired her, with an allowance in respect of new materials for old. In such a case the depreciation is to be ascertained by taking the value of the ship (if sound) at the port of distress, and her value there in her damaged condition. To fix the liability of the underwriters, the proportion so arrived at should then be applied to the real value of the ship at the commencement of the risk in the case of an open policy, or to the agreed value in the case of a valued policy (r). The estimated cost of repairs, however, though rejected as a direct measure of loss, might, in the absence of other means of getting at the actual loss, be taken to represent the difference between the ship's sound and damaged conditions. In adjusting a partial loss on goods, the difference between the gross and not the net proceeds realised by them on their arrival and the price they would have fetched had they not been damaged, must be ascertained, and then the underwriter will be liable for an aliquot part of the original value corresponding with that difference (s). Therefore, if the difference between the gross proceeds and what the goods would have fetched had they not been injured be one-fourth, the underwriter will be liable for one-fourth of the original value, and not one-fourth of what the goods would have realised had they not been (g) Da Costa v. Newnham, 2 T. R. 407. (r) Pitman v. Universal Marine Insurance Co., 9 Q. B. D. 192 (C. A.); 51 L. J., Q. B. 561; 46 L. T. 863; 30 W. R. 906. (s) Usher v. Noble, 12 East, 639; Hurry v. R. E. A. Co., 3 B. & P. 308; Johnson v. Sheddon, 2 East, 581. injured, for the underwriter insured their original value, and not their eventual proceeds. In the case of an open policy, the original value is the invoice price at the port of lading, added to the expenses incurred before the goods were shipped, together with the premium and the costs of effecting the insurance (†). In the case of a valued policy, the original value will of course be the value mentioned in the policy (u). on freight In adjusting a partial loss on freight, if the sum insured Partial loss or the valuation in the policy is below the value of the in- how calcusured's interest, the underwriter will be liable for the lated. same proportion of the loss, as the sum insured or the valuation bears to the value of the freight. If the sum insured or the valuation be equal to the insured's interest, the underwriter will have to pay the whole of the loss (x). In the case of a valued policy on freight, if the ship be lost, when part only of the goods, the freight of which was intended to be covered, are on board, the underwriter will have to pay on such proportion of the value inserted in the policy as that part of the cargo, for which freight would have been due had not the perils insured against happened, bears to the whole intended cargo. If this cannot be ascertained the underwriters will be liable as upon an open policy (y). In the case of an open policy on freight, the underwriter will have to pay the amount of freight lost through the perils insured against or a proportionate share of it (≈). In the case of an open policy on freight, the loss is estimated on the gross value, and not on the net, at the port of destination (a), that being in accordance with the usage of trade. CASES. 1. By a valued policy, freight valued at 6,500l. was insured on a ship from any port or ports in Hayti to Liverpool. The ship had previously sailed from Liverpool to Hayti with goods intended for barter. After exchanging a part of the outward cargo for fifty-five bales of cotton at one port of Hayti, the ship proceeded to another port with the object of making a similar exchange of the rest of the outward cargo. Before accomplishing this, however, the vessel was lost by a peril of the sea. Held, that the assured could only recover on the policy in respect of the freight of the fifty-five bales of cotton on board, though there was no doubt that the remainder of the outward cargo would but for the loss have been exchanged for a full return cargo (b). 2. A policy, effected for twelve months on ship and cargo, contained a stipulation that "outward cargo should be considered homeward interest twenty-four hours after arrival at the first port or place of trade." The policy by another clause was declared to be" on the ship valued at 2,0007. cargo valued at 8,000l." The ship was intended for the barter trade on the coast of Africa, and there was liberty given "to discharge, load, unload, reload, sell, barter, exchange and trade with " any part of the cargo. The ship having arrived at a place on the coast of Africa, there discharged a large part of her cargo, and after a stay of above twenty-four hours proceeded towards another port with the object of shipping other cargo. Before arriving at the next port, she was, however, totally lost. Held, that the insurers were not liable to pay the whole 8,000., but only a proportion thereof, which was to be ascertained by finding the proportion which the goods on board at the time of the loss bore to a full cargo, and that if this proportion could not be ascertained, the underwriters would be liable as upon an open policy underwritten for 8,000l. (c). 3. The owner of a ship sent her to St. Domingo with a cargo to be bartered for goods there, which she was to bring back to England. After a small part of the outward cargo had been unshipped and bartered for goods which were put on board, the vessel was wrecked. The remainder of the cargo was, however, saved and bartered for other goods, which would have formed a sufficient cargo for the ship, had she been able to perform the homeward voyage. Held, that the underwriters on a policy on ship's freight, at and from St. Domingo, were only liable in respect of the freight of the homeward goods, which were on board when the ship was wrecked (d). (b) Forbes v. Aspinall, 13 East, 323. (c) Tobin v. Harford, 34 L. J., C. P. 37 (S. C.). (d) Forbes v. Cowie, 1 Camp. 520. |