In what manner the proportion of a partial loss for which the insurers are mated. the full amount of such expenditures as far as the subject is covered by the policy. The expense of the repairs, and the amount of the expenditures, occasioned directly by the perils insured against, being ascertained; their sum constitutes the amount of the loss. The insurer must pay the same proportion of this amount, that the sum insured is of the whole amount of the insurable interest. liable, is esti- If the underwriter has agreed to insure one half, or one quarter of the amount of the interest, he must pay the same proportion of the expense of repairs. This is all very plain, but then a very important question occurs as to the mode of estimating the amount of the insurable interest; since the greater the value is at which the amount of the interest is fixed, the smaller will be the sum which the insurer is liable to pay on an amount insured which is less than that value. If 1000 dollars is insured in an open policy, on a ship worth 2000 dollars at the commencement of the risk, which sustains a partial loss of 500 dollars at a subsequent period, when her value is diminished by wear and tear, and decay, and the consumption of provisions, to 1500 dollars, shall the underwriter pay 50 per cent, or 663 per cent, of the loss? According to the practice, he pays 50 per cent; that is, the value of the ship at the commencement of the risk is the basis on which the partial loss is estimated. A similar question occurs in respect to a valued policy. If 1000 dollars is insured on a ship worth 2000 dollars, but valued in the policy at 1000 dollars, sustains a partial loss, amounting to 500 dollars, must the insurer pay the whole loss or only 50 per cent of it? A reason for his paying the whole loss is, that he has insured the whole value of the ship. But a reason why he should pay only half of the loss is, that, as between the parties, the agreed value of the ship is 1000 dollars, and since only one half of the ship is destroyed, and to be replaced, he ought to pay but one half of her value as between him and the assured. And this is the rule adopted in practice, and sanctioned by the courts under the maxim of opening the policy in case of partial loss. A contrary doctrine would involve the inconsistency of paying for damage to a thing, or the loss of a part of it, more than the parties had agreed to consider the whole of it, as (1) Saltus v. between themselves, to be worth. Ocean Ins. Extra freight. A partial loss on freight is occasioned by the loss of the Loss of a part ship after a part of the voyage is performed, which makes it of the cargo. necessary to hire another ship to carry on the cargo to the port of destination in order to earn the freight ;(1) or a loss of a part of the cargo, whereby the ship is prevented from earn(2) Supr. 290. ing a part of her freight.(2) Only freight pro ratú earned. Where on account of the perils insured against, only freight pro ratâ is earned, this is a case of partial loss upon this in terest. Mr. Justice Putnam, giving the opinion of the court, says, 'If the ship should have carried the goods to a port within one day's sail of the port of destination, but should be disabled, by the perils in the policy, from completing her voyage, the assured would be entitled to recover for the loss. In such case, if the assured should have received ninety per cent (1) Coolidge for carrying the goods so far as the port where the ship was . Gloucester obliged to stop; it would be evident that he had a right to re- 15 Mass. Rep. cover only for a partial and not for a total loss."(1) Mar. Ins. Co. 345. If goods arrive in bulk, though, in consequence of sea- (2) Lutwidge damage or otherwise, they are of no value, still the whole and another v. Grey and freight is due,(2) and accordingly the assured on freight has no others, Abbott claim for any loss. And so, if the supercargo or captain sell on Mer. Ships, goods at some intermediate port, short of that for which they 298. were shipped, on account of sea-damage, deterioration occasioned by the qualities of the article, or other cause, which might probably diminish or destroy the value in the subsequent part of the voyage, but still leave them remaining in bulk, the entire freight to the port of destination will be due on such articles, since the master of the vessel is ready to carry them on; it being a rule that the whole freight will be due, if the goods remain in such a state that they can be transported to the port of destination, and the master is ready to carry them thither. If the ship is wrecked in the course of the voyage, and the Pro ratú master either has not the means of carrying, or does not offer, freight. or is not ready to carry the goods to the port of destination, (3) Story's and the shipper consents, himself or by his agent, either ex- Abbott, 237. pressly or by implication, to receive his goods at the interme- Fricks Jacobdiate port; only freight pro ratâ is due.(3) sen, 268. n. termediate If in consequence of sea-damage or any peril insured against Case of sale in the policy on the freight, and without the fault of any party, of damaged some part of the cargo would be destroyed, both in value and goods at an inbulk, before the arrival at the port of destination, and on this port. account is discharged and sold at some intermediate port, or if (4) Stevens on the article, as in case of damaged vegetable substances, would Av. P. I. c. 2 be likely to produce disease if kept on board, (4) the case seems s. 1. p. 81. to be very similar to the preceding, which has been held by all the courts to be one of pro ratâ freight,—in each case the master is not able or is not ready to carry on the goods, and the shipper may reasonably be presumed to consent to receive them at an intermediate port, provided the pro ratâ freight does not exceed their value. And if it be considered that only freight pro ratâ is earned, it becomes a case of particular average. But the loss must, for this purpose, arise from a peril insured against. In cases of the sale of goods at an intermediate port, however, the whole freight is usually allowed, and in most instances there (5) Jones v. can be no question of its being due, as it cannot appear that the Ins. Co. of N. goods might not arrive at the port of destination in bulk. A. 4 Dall. 246. It has been intimated in some instances that the expenses at- Whether the tending a detention by embargo or other cause, constitute a par- expenses of ticular average on freight;(5) no deliberate opinion seems, how- detention are ever, to have been ever given to this effect, but the contrary has a particular average on freight. (1) Henshaw . Mar. Ins. Co. 2 Caines, 279. See also the opinion of the same judge, 2 Caines, 266. and also M'Bride v. Mar. Ins. Co. 7 Johns. 431. been explicitly decided by different courts. Mr. Justice Livingston, of New York, speaking of the expense of wages and provisions during a detention, said, 'As these expenses occasion a diminution of freight only, that subject alone must be considered as loser, and its underwriter, if there be any, called on for indemnity.'(1) But the other judges did not express any such opinion. Under a policy on the freight of a ship detained at Bourdeaux by an embargo, the freight being subsequently earned, the assured claimed the amount of the expense of wages and provisions during the detention, as a particular average. Chief Justice Tilghman, giving the opinion of the court, said, That this loss cannot be recovered from the insurers on the freight exclusively, may be strongly inferred from the nature of the contract, which engages that the freight shall not be lost, and in fact no part of it has been lost.' Rush, president of the court, said, 'To render an insurer liable, the loss should happen to the property or interest specifically insured. Neither the inN.A. v. Jones, surer of the ship, cargo, or freight, is liable to pay the expenses of an embargo.'(2) (2) Ins. Co. of 2 Bin. 547. (3) Mayo r. Maine F. & M. Ins. Co. 4 Mass. Rep. 374. In a case of insurance upon freight, the vessel was captured in the course of the voyage, and detained two months: being released, she pursued the voyage and earned freight. The assured claimed a particular average on account of the detention. Chief Justice Parsons said, 'The underwriters did not insure any particular time in which the voyage should be performed; but only that the freight should be earned. They are therefore not answerable for a partial loss, on account of the increased length of the voyage by the detention, any more than they would have been if the arrival of the vessel had been delayed by violent storms, which had driven her out of her course.'(3) The amount for which the underwriters are liable, in a partial loss of freight, is computed in the same manner as a partial loss on freight loss on the ship, except that the amount of the insurable interest is not calculated necessarily in reference to the commencement of the risk. If a part of the original cargo is discharged in the course of the voyage, or lost by inevitable accident, the amount of this interest at risk is thereafter less. Where the sum insured, whether in a valued or open policy, is less than the value of the interest at risk when a partial loss happens; the underwriter pays the same proportional part of the loss, that the sum insured is of the value of the interest at risk; but if the sum insured is equal to the value at risk, he pays the whole of the loss. For what part of a partial the underwriter is liable. There is no difficulty, it seems, in adjusting the amount of a partial loss on freight, since the whole amount of the interest is definitely fixed by the bills of lading or charterparty, or, in case of the ship and cargo belonging to the assured, the amount is determined by estimation, according to the current rate of freight for the same voyage, and the whole amount of the interest and that of the loss being ascertained, the rate per cent of the loss is readily found. In case of partial loss on this interest the insurer does not take the risk of the responsibility of the shipper or consignee; he does not guaranty that the part of the freight earned shall be paid; he is exonerated as far as the freight is earned, and it is only in case of total loss and abandonment, whereby he is put in the place of the assured, that he takes the risk of recovering of the shippers or consignees the part of the freight which is earned. Section 3. On Goods. In case of the destruction of a part of the goods, the underwriter pays their value according to the invoice or valuation; and the rule is the same in case of the loss of half of the value of the goods by sea-damage or otherwise, though they remain in bulk. Except in one case, which will be mentioned, the underwriter has nothing to do with the state of the markets in adjusting a particular average on goods, the amount of which will be the same, whether the goods come to a losing or gaining market. The insurer does not engage to make good all which the assured has failed of gaining in consequence of the perils insured against, but only what he has lost of the value insured, (1) V. Supr. that is the invoice price or valuation.(1) c. 14. of the goods. A particular average is usually adjusted at the port of de- Partial loss by livery. If the loss is occasioned by the entire destruction of a the destruction of a part part of the goods insured, the insurer is liable to pay for them, as far as they are covered by the policy, at the price at which they are insured, and such a loss is easily adjusted, there being no difference of opinion or practice respecting it.(2) If the particular average is occasioned by damage to the goods, whereby their value is diminished, though they remain in bulk, there seems to be but one, and that a very plain way of estimating the degree of damage. If in consequence of the damage the goods sell for only half what the same goods would have sold for if sound, the direct loss by the damage is fifty per cent, and the insurer must pay, not half of the price of sound goods at that market, but half of the value at which he insured the goods. This is too obvious to admit of any doubt.(a) (a) Lewis v. Rucker, 2 Burr. 1167; Johnson v. Sheddon, 2 East, 581; Hurry v. Roy. Ex. Ass. Co. 3 B. & P. 308; Usher v. Noble, 12 East, 639; Dick v. Allen, Park, 167; Lawrence v. N. Y. Ins. Co. 3 Johns. Cas. 217. (2) Supr. 313. In insurance against fire the insurers usually stipulate in the policy Partial loss in to pay the whole of any loss which does not exceed the amount in- insurance sured; that is, if 1000 dollars be insured on furniture, goods, or a against fire. house worth 2000 dollars, and damage happen by fire to the amount of 1000 dollars, the insurer pays for the whole damage; whereas, according to the principles of adjusting a partial loss under a marine policy he would pay for but half of it. In a policy on profits or commissions, it is frequently agreed to Partial loss on adjust any loss at the same rate as on the goods. In case of damage profits and to the goods, or the destruction or absolute loss of a part of them, commissions. Whether the loss by payment of full freight on da maged goods is within the policy. (1) Vol. 1. s. 38. p. 39.& p. 214. cas. xvi. Whether loss by duties, &c. on damaged goods is within the policy. (2) Ut Supr. An adjust ment on the net proceeds But a question still occurs which has caused much discussion and perplexity. Magens thinks that the loss by payment of full freight on damaged goods, is to be included in an estimate of a partial loss. He supposes the goods to be damaged fifty per cent in value, without any diminution of their bulk, and accordingly that the full freight is due at the port of destination.(1) Suppose that the goods, if they had arrived sound, would have sold for 1000 dollars, but arriving in a damaged state, though undiminished in quantity, they are sold for 500 dollars, the freight being 100 dollars. By the damage to the goods, the assured has lost fifty dollars in the freight, since he pays 100 dollars to place the value of 500 dollars in the market; whereas, had the goods arrived without damage, he would, at the same expense, have placed the value of 1000 dollars in the same market. Magens thinks that this loss ought to fall upon the insurers. The same question occurs in relation to wharfage, duties, &c. in case the assured has to pay more on the damaged goods in proportion to their value, than he would have been liable to pay had they arrived sound. Magens (2) has involved this question in great perplexity by saying, that in order to cover these losses, the particular average ought to be adjusted on the net proceeds, according to the rule of computing the same kind of damage in adjusting a general average. It will readily appear that the calculation upon the net proceeds will not be correct upon any principle whatever. Supis not correct. pose the invoice value of goods insured, in an open policy, to be 500 dollars, of which the freight and other charges in question are 200 dollars. If the goods had arrived sound, the gross sales would have been 1000 dollars, but being damaged they sell for only half of that sum, and yet the freight and other charges in question are supposed to be the same. According to Ma it is plainly a loss of the same proportional part of the profits, and |