freight is earned. But if the vessel can be repaired in sufficient time to carry her cargo without frustrating the objects of the voyage by delay, or the cargo is in a condition to be shipped by another vessel and another vessel is procurable, there is not a total loss of freight.25

Partial Loss

The term "particular average" is nearly synonymous with "partial loss," and policies which contain clauses "warranted against particular average" or "warranted against average" are practically policies insuring against total loss only.20

The measure of recovery in case of partial loss is strikingly different in marine and fire insurance. If a house is insured against fire for $5,000, and the value of the house is $10,000 and the loss is $5,000, the insured recovers the full value of his policy. Under similar circumstances in marine insurance, he only recovers such proportion of the loss as the insured portion bears to the total value, it being considered that as to that part of the value which is not insured he is his own insurer, and must contribute to the loss to that extent.27 In arriving at these proportions, the

25 Hugg v. Augusta Ins. Co., 7 How. 595, 12 L. Ed. 834; Jordan v. Warren Ins. Co., 1 Story, 342, Fed. Cas. No. 7,524.

26 Lowndes on Marine Insurance (2d Ed.) 70, defines particular average as "loss or damage of the thing insured, not amounting to total loss, and not including the cost of measures taken for its preservation from a greater loss." Gow on Marine Insurance, p. 189, defines it as "the liability attaching to a marine insurance policy in respect of damage or partial loss accidentally and immediately caused by some of the perils insured against, to some particular interest (as the ship alone, or the cargo alone) which has arrived at the destination of the venture." In Kidston v. Empire Marine Insurance Co., L. R. 1 C. P. 535, 2 C. P. 357, the cost of measures taken for preservation from greater loss is excluded as particular average and dubbed "particular charges."

272 Pars. Mar. Ins. 405; Ursula Bright S. S. Co. v. Amsinck (D. C.) 115 Fed. 242; Peninsular & O. S. S. Co. v. Atlantic Mut. Ins. Co.

actual value of the subject insured is taken, except where there is an insured value fixed in the policy, in which case the insured value is taken.

SAME-ABANDONMENT

38. Abandonment is the surrender by the insured, on a constructive total loss, of all his interest, to the insurer, in order to claim the whole insurance.

(a) Under the American rule, if the cost of saving and repairing a vessel exceed one-half her value when repaired, the owner, by giving the underwriter notice of abandonment, may surrender his vessel to the underwriter, and claim for a total loss. (b) Under the English rule, he can do the same thing if the ship is so much injured that she would not be worth the cost of repair.

This is the most radical difference between the American and English law of marine insurance. Under the American law, as stated above, the right of abandonment is governed by the facts as they appear at the time of the abandonment. If, therefore, at that time, under the highest degree of probability, the cost of saving and repairing the vessel would exceed one-half of her value when repaired, the insured may abandon.28

The title of an insurer acquired by an abandonment relates back to the disaster.29

In the absence of special stipulations, the cost must exceed one-half the value of the vessel when repaired at the

(D. C.) 185 Fed. 172; Atlantic Mut. Ins. Co. v. Peninsular & O. S. S. Co., 194 Fed. 84, 114 C. C. A. 162.

§ 38. 28 Bradlie v. Maryland Ins. Co., 12 Pet. 378, 9 L. Ed. 1123; Royal Exch. Assur. v. Graham & Morton Transp. Co., 166 Fed. 32, 92 C. C. A. 66; Fireman's Fund Ins. Co. v. Globe Nav. Co., 236 Fed. 618, 149 C. C. A. 614.

29 Gilchrist v. Chicago Ins. Co., 104 Fed. 566, 44 C. C. A. 43.

place of disaster, and the policy value of the vessel or her value in the home port is no criterion.

31

30

In consequence of these decisions, it has become common to provide in the policy that the right of abandonment shall not exist unless the cost of repairs exceeds one-half the agreed valuation. Such a stipulation is valid, but there also the right of abandonment is determined by the facts as they exist at the time, and is not devested by the fact that the vessel may subsequently be saved for less. Currie v. Bombay Native Ins. Co.31 was a case of insurance on cargo and disbursements. The vessel was wrecked, and the captain made no effort to save the cargo, deeming it impracticable. It appeared from the facts that the cargo could have been partially saved if he had. The ship was a total wreck. The court held that this was not a total loss of the cargo by the peril insured against, but that it was a total loss of the disbursements.

SAME-AGREED VALUATION

39. The valuation fixed in the policy is binding, though it may differ from the actual value.

In passing upon the rights and obligations of insured and underwriters, the valuation in the policy, except as above stated, is taken as conclusive upon the parties. Although this may sometimes partake of the nature of wager policies, yet the convenience of having a certain valuation as a basis to figure on, and the diminution of litigation thereby, have caused the courts to hold the parties to their valuation. The firmness with which they hold to this doctrine may be judged by BARKER v. JANSON,32 where, at the

30 Orient Mut. Ins. Co. v. Adams, 123 U. S. 67, 8 Sup. Ct. 68, 31 L Ed. 63.

time the policy attached, the ship, on account of injuries, was practically of no value at all, yet the court held both parties bound by the valuation.

In North of England Iron S. S. Ins. Ass'n v. Armstrong, 33 a policy of insurance was effected for £6,000 on a vessel valued at £6,000. She was sunk in collision, and the underwriters paid for a total loss. Her real value was £9,000. Subsequently £5,000 was recovered from the colliding vessel. The court held that it all belonged to the underwriter by subrogation to the insured, and that the assured could not take any part of it in payment for the actual valuation of his vessel uninsured.

On the other hand, in the Livingstone 34 the Circuit Court of Appeals for the Second Circuit held that, where the recovery from the wrongdoer exceeded the value of the policy, the underwriter was entitled only to such part of the recovery as reimbursed him for the amount paid out, and that any excess over the insured value went to the owner of the ship.

The basis of the American holding is that the insurer ought not in equity to expect more than he had paid out. The basis of the English holding is that an abandonment vests the title in the underwriter as of the time of the disaster, that if he subsequently raises the wreck it is his, that the damages recoverable from the other party are nothing more than a substitute for the wreck, and that the insured was responsible for any hardship, as it was the result of the undervaluation, on the basis of which he had paid the pre

mium.

It must be confessed that the English reasoning is substantial logic, if not substantial justice.

The idea that the damages recoverable from the wrong-doer are a substitute for the vessel is elementary in Ameri

33 L. R. 5 Q. B. 244.

34 130 Fed. 746, 65 C. C. A. 610, reversing a strong opinion by Judge Hazel (D. C.) 122 Fed. 278.

can law. For instance, where a vessel owner desires to claim the benefit of the Limited Liability Act and surrenders his vessel for the benefit of her creditors, the right of action against a third party for the damage goes with it.35 In another respect the American and English decisions diverge as to the effect of a valuation in a policy.

In a salvage case, the salvage award is apportioned between vessel and cargo according to values, which are passed upon by the court as one of the facts in the case. As the salvors look to the properties salved, they are not bound by or concerned with any valuation that may be agreed upon between owners and insurers in a policy. Now suppose that in a proceeding to recover salvage the court finds as a fact that the ship is worth $100,000 and the cargo $50,000; and that an award of $30,000 is made on such valuations. The vessel would be liable to the salvors for $20,000 of this, and the cargo for $10,000.

Now suppose that the owner has insured his ship on a valuation of $75,000. If this value were taken in distributing the salvage award, the proportionate share of the ship would be $18,000 and of the cargo $12,000. As salvage is a peril of the sea, there is no question of the insurer's obligation to refund one of these two sums to the owner.

In America it is held that the insurer must refund to the insured the amount charged against the ship in the court proceeding, regardless of the method of arriving at the values which the court may adopt, provided the total amount recovered on the policy is within the policy limit; that the other rule would make the owner a constructive insurer of the excess of value over the policy valuation and result in holding him to the policy valuation while not holding the insurer to it.3°

35 Post, § 169, p. 369.

36 International Nav. Co. v. British & Foreign Marine Ins. Co. (D. C.) 100 Fed. 304. The decision was in 1900, by Judge Addison Brown of New York.