Excepted Risks, "Free from Average."

403

The freight of goods was insured, and the goods were necessarily removed from the ship to allow of repairs being made to her, and they were then forwarded to their destination by rail; the goods might have been transhipped at a much less cost; it was held, that the probable expense of such transhipment was recoverable under the suing and labouring clause. Lee v. S. Insur. Co., L. R., 5 C. P. 397.

Under a policy, effected by the plaintiffs, on their lighters in the Thames, to include all losses, damages, and accidents amounting to 20l. and upwards in each craft to goods carried by the plaintiffs as lightermen, and from which losses, &c., the plaintiffs might be liable to the owners thereof; the underwriter is liable to pay the whole loss, without regard to the value of the property at risk. Joyce v. Kennard, L. R., 7 Q. B. 78.

Excepted risks "free from average."] We have incidentally seen that there are often clauses excepting certain risks. Thus, there is ordinarily a memorandum by which certain goods are "warranted free from average, unless general, or the ship be stranded" (ante, p. 395). An assurance with a warranty, "free from particular average," is equivalent to an insurance against total loss and general average, only; and in such a case, if a ship be disabled from continuing her voyage owing to a peril insured against, and the subject of insurance be forced to be landed, and expense is properly incurred in sending it on by another ship; that is particular average, and the insured cannot recover. Gt. Indian Peninsula Ry. Co. v. Saunders, 1 B. & S. 41; 30 L. J., Q. B. 218; 2 B. & S. 266; 31 L. J., Q. B. 206, Ex. Ch.; Booth v. Gair, 15 C. B., N. S. 291; 33 L. J., C. P. 99. But, this warranty does not prevent a recovery, under the suing and labouring clause, of expenses incurred in preserving the subject-matter of insurance, and averting a loss; Kidston v. Empire Marine Insur. Co., L. R., 1 C. P. 535; L. R., 2 C. P. 375, Ex. Ch.; in such case the whole expense is recoverable and not a proportionate part only. Dixon v. Whitworth, 4 C. P. D. 371; reversed in C. A. on another point, W. N., 1880, p. 43, E. S. But, only such expenses as were incurred in endeavouring to avert a total loss, can be recovered thereunder; Meyer v. Ralli, 1 C. P. D. 358. Salvage awarded against the ship in the Admiralty Court is not recoverable under this clause: Lohre v. Aitchison, 4 Ap. Ca. 755, D. P. ; nor, the costs of the proceedings in that court; Dixon v. Whitworth, supra; nor, the expense of a refit to enable the ship to complete her voyage, S. C.

Where the insurance was on a ship and cargo, with a warranty "free from average or claim from jettison or leakage, unless consequent on stranding, sinking, or fire," and the ship, during the voyage, by bad weather, became leaky, and having put into port was unable to proceed, and the ship and goods were sold, the assured was held entitled to recover as an average loss. Carr v. R. Exch. Assur. Co., 5 B. & S. 433; 33 L. J., Q. B. 63.

There is not a total loss of part, but only particular average, where some bales of insured silk were so damaged as to make it prudent to sell them, if a portion of each bale might have been saved and sent home at a moderate expense, retaining its saleable character as silk. Navone v. Haddon, 9 C. B. 30; 19 L. J., C. P. 161. And, where memorandum goods of the same species are shipped, whether in bulk, or in packages, not expressed by distinct valuation, or otherwise, in the policy to be separately insured, and there is no general average nor stranding, the ordinary memorandum exempts the underwriters from liability for a total loss or destruction of part only, though one or more entire packages be entirely destroyed. Rulli v. Janson, 6 E. & B. 422; 25 L. J., Q. B. 30, Ex. Ch., in which case the earlier decisions were reviewed. See Spence v. Union Marine Insur. Co., L. R., 3 C. P. 427; cited ante, p. 398. Where, however, goods essentially different in

nature and kind are insured under a general description as "masters' effects," the warranty is divisible, and means that the insurers will be liable for a total loss only of any of the specific articles insured under that description. Duff v. Mackenzie, 3 C. B., N. S. 16; 26 L. J., C. P. 313; Wilkinson v. Hyde, 3 C. B., N. S. 30; 27 L. J., C. P. 116. And, where the policy was on a ship and machinery in it, which were separately valued, and there was the clause "average payable on the whole or upon each as if separately insured," with the usual memorandum, and the ship caught fire and was damaged, but not the machinery, it was held that the expense of putting out the fire was not a particular average of the hull, but ought to be apportioned between the hull and the machinery, being an expenditure for the benefit of both equally. Oppenheim v. Fry, 5 B. & S. 348; 33 L. J., Q. B. 267, Ex. Ch.

A usage that underwriters are not liable, under the ordinary form of policy, to general average on account of the jettison of timber stowed on the deck, is a valid custom, and not inconsistent with the terms of such policy. Miller v. Tetherington, 6 H. & N. 278; 30 L. J., Ex. 217; 7 H. & N. 954; 31 L. J., Ex. 363, Ex. Ch.

A policy on profits to be earned by a British ship made "free from average, but, without benefit of salvage," is void under 19 Geo. 2, c. 37, s. 1; Smith v. Reynolds, 1 H. & N. 221; 25 L. J., Ex. 337; De Mattos v. North, L. R., 3 Ex. 185; Mortimer v. Broadwood, 20 L. T., N. S. 398; E. T. 1869, C. P. So, a similar policy on commission, or profit, on ship and ships, &c., if it does not exclude British vessels. Allkins v. Jupe, 2 C. P. D. 375.

or

Damages.] By 3 & 4 Will. 4, c. 42, s. 29, the jury may, if they think fit, give damages in the nature of interest, over and above, the money recoverable in all actions on policies of assurance; but, this does not apply in respect of a delay in payment, occasioned only, by there being no person entitled to give a discharge for the amount. Webster v. British Empire Assur. Co., 15 Ch. D. 169, C. A.

Defence.

Under Rules, 1883, O. xix., rr. 17, 20, ante, pp. 283, 284, a denial of the contract operates as a denial of the making thereof in point of fact only, and not its sufficiency in point of law. Hence, an insufficient subscription of the policy by the defendant, within 30 & 31 Vict. c. 23, s. 7, ante, p. 248, which avoids the policy, must now be specially pleaded.

As to defences arising from want of stamp or alterations avoiding the policy under the stamp acts, vide ante, pp. 249, 250.

The two companies incorporated by 6 Geo. 1, c. 18, viz., the London Assurance and the Royal Exchange Assurance, are empowered by 11 Geo. 1, c. 30, s. 43, to plead in a general form, and this privilege is not taken away by 5 & 6 Vict. c. 97, s. 3. Carr v. R. Exch. Assur. Co., 1 B. & S. 956; 31 L. J., Q. B. 93. Nor, it would seem, is it affected by the J. Acts. See Garnett v. Bradley, 3 Ap. Ca. 970, per Ld. Blackburn, cited ante, p. 274. See also Rules, 1883, O. xix., r. 12, ante, p. 283, which, however, reserves the right to plead "not guilty by statute," only.

In an action brought under 31 & 32 Vict. c. 86, s. 1, ante, p. 379, by the assignee of a policy, the defendant cannot set off or counter-claim, a debt or claim accruing to him from the assured, prior to his assignment of the policy. Pellas v. Neptune Marine Insur. Co., 5 C. P. D. 34, C. A.

Concealment; misrepresentation; fraud.] If the assured conceal any material fact which relates to the risk insured, the policy is void; Carter v.

Concealment.-Misrepresentation.-Fraud.

405 Boehm, 3 Burr. 1905. Every fact which would affect the judgment of a rational underwriter, governing himself by the principles and calculations on which underwriters do in practice act, although it does not increase or diminish the risk incurred, must be disclosed; Ionides v. Pender, L. R., 9 Q. B. 131; Rivaz v. Gerussi, 6 Q. B. D. 222, C. A., cited post, p. 406; even, though the fact was once known to the underwriter, if it was not present to his mind, at the time of effecting the insurance; Bates v. Hewitt, L. R., 2 Q. B. 595. And, the assured is bound to communicate all the information he has received, though he does not know it to be true, and though it afterwards turns out to be false. Lynch v. Hamilton, 3 Taunt. 37. The question is whether the fact concealed would have influenced the mind of a reasonable underwriter if communicated. Stribley v. Imperial Marine Insur. Co., 1 Q. B. D. 507. If a principal, effect an insurance, in ignorance of a material fact, which ought to have been communicated to him, by an agent, having charge of the subject-matter of insurance, the insurance is void. Fitzherbert v. Mather, 1 T. R. 12; Proudfoot v. Montefiore, L. R., 2 Q. B. 511. But, where the agent without fraud neglects to communicate to the owner damage done to the vessel, this damage is excepted out of the policy. Gladstone v. King, 1 M. & S. 35. To prove the defence of concealment of a material fact, it lies on the defendant to prove, not only the fact, and the plaintiff's knowledge, but, also the non-communication of it to the defendant; but, slight evidence is enough, and the mere subscribing of the policy may be evidence of it, where the suppressed fact is one which would have prevented a reasonable man from subscribing; as, that the ship had been so long abroad, on her voyage, as to be a missing ship. Elkin v. Janson, 13 M. & W. 663. It is sufficient to communicate facts, without the opinion or conclusion founded upon those facts. Bell v. Bell, 2 Camp. 479. Mere rumours or news in the public papers need not be mentioned. 3 Kent, Com. 285; but see Durrell v. Bederley, Holt, N. P. 283. Facts which the underwriter is presumed to know need not be communicated, as that a ship, classed A 1 at Lloyd's, will be struck off the list unless re-surveyed, in the fourth year from the registration. Gandy v. Adelaide Marine Assur. Co., L. R. 6 Q. B. 746. But, the peculiar danger of a new port at which the ship is insured by the policy, and, the existence of which was unknown to the underwriter, must be disclosed. Harrower v. Hutchinson, L. R., 5 Q. B. 584, Ex. Ch., reversing S. C., L. R., 4 Q. B. 523. As to the admissibility of the evidence of an underwriter or other witness, as to his opinion of the materiality of a fact concealed, or of whether the fact, if known, would have altered the terms of insurance, vide ante, pp. 165, 166.

As there must be no concealment of a material fact, so there must be no misrepresentation of any such fact. Such misrepresentation will avoid the policy, though the actual loss is unconnected with the fact misrepresented or concealed, and though there be no fraud intended by the insurer. Seaman v. Fonerau, 2 Str. 1183. In Flinn v. Tobin, M. & M. 367, Ld. Tenterden, C. J., told the jury that a verbal mis-statement of the quantity of the cargo which the ship was about to carry would not vitiate a policy on the ship unless it was fraudulent. The question, as stated by Kent (3 Com. 283), is "Whether there was, under all the circumstances, a fair representation, or, a concealment; if the misrepresentation or concealment was designed, whether it was fraudulent; and, if not designed, whether it varied materially the object of the policy, and changed the risk understood to be run. If the representation was by fraudulent design, it avoids the policy, without staying to inquire into its materiality; and if it was caused by a mistake or oversight, it does not affect the policy, unless material, and, not true in substance." So, a mis-statement as to the name or age of the ship avoids the policy. Ionides v. Pacific Insur. Co., L. R., 6 Q. B. 674 ; L. R., 7 Q. B. 517,

Ex. Ch. But, in the case of an open policy on goods, in ships to be afterwards declared, a mistake as to the description of the ship made in the declaration is not material. S. C. In Anderson v. Thornton, 8 Exch. 425, it was held that a plea alleging a material mis-statement as to the time of sailing, fraudulently made, may be supported by proof of material mis-statement, but without fraud. If the representation is not a positive assertion, but only an expression of the speaker's opinion, expectation, or belief, this will not avoid the policy, if the assertion is made bona fide, and in ignorance of the untruth. Barber v. Fletcher, 1 Doug. 305; Bowden v. Vaughan, 10 East, 415; Anderson v. Pacific, &c. Insur. Co., 21 L. T., N. S. 408, P. C.; see Ionides v. Pacific Insur. Co., ante, p. 405. It is sufficient, however, if a representation be substantially correct, and it need not, like a warranty, be strictly and literally complied with. Pawson v. Watson, Cowp. 785. See as to life policies, and the distinction between marine and life policies, Wheelton v. Hardisty, & E. & B. 232; 26 L. J., Q. B. 265; cited post, p. 410. In the case of insurance of chartered freight, the non-disclosure of a power in the charterer to cancel the charter-party is fatal. Mercantile Steam SS. Co. v. Tyser, 7 Q. B. D. 73.

The slip, though not admissible in evidence as a contract, by reason of the 30 & 31 Vict. c. 23, s. 7, is, by mercantile usage, treated as the contract for insurance, vide ante, p. 249. Hence, facts coming to the knowledge of the assured after the slip is signed, but, before the policy is delivered out, need not be disclosed to the underwriter. Lishman v. Ñ. Maritime Insur. Co., L. R., 8 C. P. 216; L. R., 10 C. P. 179, Ex. Ch. See also Cory v. Patton, L. R., 7 Q. B. 304; and L. R., 9 Q. B. 577. So, where the assured conceals from the underwriter a material fact, when the slip is signed, and the underwriter delivers out the policy in conformity with the slip after the fact has come to his knowledge, it is a question for the jury whether the underwriter elected to go on with the policy; if not, the policy does not bind him; Morrison v. Universal Marine Insur. Co., L. R., 8 Ex. 197, Ex. Ch.; and where the underwriter stated, when he issued the policy, that he should rely on the concealment, it was held that he might do so; Nicholson v. Power, 20 L. T., N. S. 580, Éx. Ch., E. T. 1869.

In an action against a second or subsequent underwriter, it has been the practice to admit evidence of representations to the first underwriter, on a presumption that the subsequent underwriter gave credit to them. Pawson v. Watson, Barber v. Fletcher, supra; Marsden v. Reid, 3 East, 572. This rule is confined to representations made to the first underwriter, that is, the first on the policy. S. C.; Bell v. Carstairs, 2 Camp. 543. The principle of the rule was questioned by Ld. Ellenborough, C. J., in the last case, and in Forrester v. Piĝou, 1 M. & S. 13.

If goods insured are over-valued with intent to defraud the underwriters, the contract is void, and, the assured cannot recover, even for the value actually on board; Haigh v. De la Cour, 3 Camp. 319; and, even without fraud, an excessive over-insurance may be a material fact, and, if concealed from the underwriter, the policy be void; Ionides v. Pender, L. R., 9 Q. B. 531. So, where there were successive open policies, on goods to be declared, and the assured, fraudulently declared the goods at risk, at an under-value, on the earlier policies, the policies effected subsequently, to such false declarations, were held void, and were ordered to be cancelled. Rivaz v. Gerussi, 6 Q. B. D. 222, C. A.

Illegality.] A contravention of law by the assured, having direct relation to the subject of the risk, will vitiate the policy. Thus, where a ship was loaded in contravention of the 16 & 17 Vict. c. 107, forbidding a ship to sail from certain ports at certain times in the year with any of the cargo on

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407

deck, and the plaintiff insured the cargo with the express knowledge of the mode of loading, it was held that the plaintiff could not recover for any part of the cargo; Cunard v. Hyde, 2 E. & E. 1; 29 L. J., Q. B. 6; aliter, if the assured had no knowledge of the mode of loading; S. C., E. B. & E. 670; 27 L. J., Q. B. 408. If the master so loaded, without the knowledge of his owner, the owner may recover on an insurance of freight. Wilson v. Rankin, 6 B. & S. 208; 34 L. J., Q. B. 62; L. R., 1 Q. B. 162, Ex. Ch. So, the owner may recover, where the master has, without his knowledge, in contravention of the Merchant Shipping Act, 1854, s. 318, taken passengers on board without a certificate. Dudgeon v. Pembroke, L. R. 9 Q. B. 581.

Payment.] It is a good defence to show a custom that credit taken between the insurance broker and underwriter should be taken as payment to the assured by the underwriter, after the amount has been adjusted between him and such broker. Stewart v. Aberdein, 4 M. & W. 211. But, the assured, is not bound by such a custom, if he had no knowledge of it. Sweeting v. Pearce, 9 C. B., N. S. 534; 30 L. J., C. P. 109, Ex. Ch. adjustment indorsed on the policy, produced by the assured, with the defendant's name struck out of it, is not evidence for the defendant that the amount so adjusted has been paid. Adams v. Sanders, M. & M. 373.

Return of Premium.

An

A claim for a return of premium is often added to a claim on a policy; and the question of the right to recover arises on the failure of the plaintiff to establish his case on the policy.

When plaintiff entitled to a return.] If the policy is void ab initio, or where there is no insurable interest, and, this proceeds through misinformation or other innocent cause; or, where an interest is less than that insured; the premium or part of it may be recovered. 3 Kent, Com. 341. Where there are two insurances at different times, together exceeding the interest insured, the excess of premium is to be recovered from the last insurers, and not the first. Fisk v. Masterman, 8 M. & W. 165. When several insurances are effected at the same time, and before the risk commenced, they are to be taken as one policy, and the return must be pro ratâ; semb. S. C.

If the risk has never commenced there must be a return; as if the ship never sailed, or, the policy is avoided by failure of warranty, without fraud. 3 Kent, Com. 341. But, if the risk has once commenced, or the policy be void for illegality, or for any fraud of the assured, there is no return. Ib.; Allkins v. Jupe, 2 C. P. D. 375, ante, p. 404; and see Stone v. Marine Assur. Co. &c., 1 Ex. D. 81. The defendant having insured a cargo for a certain vogage, effected a re-insurance with the plaintiff on the same cargo and risk after the ship had, unknown to either party, arrived safely at her destination: it was held that the premium was payable on the re-insurance. Bradford v. Symondson, 7 Q. B. D. 456, C. A. Where the policy is avoided by material misrepresentation or concealment, without fraud, the premium may be recovered, and the policy is conclusive evidence of payment of the premium. Anderson v. Thornton, 8 Exch. 425. Where the voyage and the risk are divisible, and part is not run, there may be a return of a proportionate part of the premium. As, where the voyage was from London to Halifax, Nova Scotia, to depart with convoy from Portsmouth, and when