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Arnould on the law of marine insurance and average online

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now almost universally inserted in
policicH on steamships. Gow, 119.
The clause (for the full text of which
see the Institute Glauses for policies
on Hull, pott, App. B.) provides that
the insurance covers loss or damage
'* through explosions, bursting of
boUers, breakage of shafts, or through
any latent defect in the machinery or
hull, provided such loss or damage
has not resulted from want of due
diligence by the owners of the ship,
or any of them, or by the manager."



As to this clause, see Jackson r.
Mumford (1902), 8 Com. Cas. 61 ;
9 Com. Cas. 114; Oceanic S.S. Co.
V. Faber (1906), 11 Com. Cas. 179;
Cleveland Transit Co. v, Ins. Co. of
North America (1902), 115 Fed. B.
431. In Jackson v. Mumford, supra ,
Kennedy, J., held that the breakage
of a connecting rod under the stress
of a trial was not a breakage of a
shaft within the meaning of thia
clause ; but he held in the same oase
that in the policy (which was effected
by a ship builder) '* trials'* was a
peril insured against and covered the
loss ; and his judgment was affirmed
on appeal (1904), 9 Com. Cas. 114.



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CHAP. II.] SALVAGE. 1043

captured property, or in repairing damage done to the ship by Sect. 868.
the perils insured against, &c.

The subject of general average contribution is of too great
extent, and has too important a connection with the law of
Marine Insurance to be treated of incidentally in this place,
and must be reserved for a separate chapter.

863. "With the subject of salvage, except so far merely as Salvage.
it concerns the assured and the underwriters, we do not pro-
pose to deal ; the whole doctrine having been discussed in
several well-known treatises on shipping, to which branch of
the law maiitime its consideration more property belongs.

The liability of the underwriter for salvage depends not Salvage is

« recovernlile

upon Ms having engaged to indemnify against it by any under no
express words in the policy, but upon its being made by the bu^^^ J^ioss*'
law of the land, or the general law maritime, a direct and aris'iigr from

isenis insured

immediate consequence of perils against which he does against.
insure.

Hence, in order to recover salvage charges, the assured
need not, and in fact ought not, to declare for loss by the
payment of salvage ; but he should declare as for that species
of loss which occasioned the payment of salvage — tis, for
loss by perils of the sea, in case of salvage from shipwreck ;
for loss by capture, when the salvage is a remuneration to
re-oaptors (r).

(r) This was so before the Mar. it will appear thaf salvage charges"
Ins. Act (see Gary v. King (1736), are recoverable as a loss by perils
Ca. temp. Hardwioke, 304 ; Aitchi- insured against, and not as particular
son V. Lohre (1879), 4 App. Cas. 765 ; charges under the suing and labour-
Ballantyne v. Mackinnon, [1896] 2 ing clause (Mar. Ins. Act, s. 78,
Q. B. 456), and is now declared to sub-s. 2). Nor can they be regarded
be so by sect. 66 of the Act ; see as particular average, being recover-
infra, § 865. The Act expressly able notwithstanding that the sub-
recognises a distinction, which was ject-matter insured is warranted free
first established by Aitohison v, from particular average (Mar. Ins.
Lohre, tupra, between ** salvage Act, s. 76, sub-s. 2). They must,
charges" to which alone the rule in however, apparently be regarded as
the text is applicable, and salvage constituting a partial loss (Mar. Ins.
services rendered under contract ; see Act, s. 56, sub-s. 1), and are not re-
sect. 66, sub-sect. 2. From this and coverable under a policy against total
the following paragraphs of our text loss only : Dixon v, Whitworth



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1044



LOSSES BY THE PERILS INSURED AGAINST. [PART III.



Sect. 868.



The suing and

labouring

clause.

Aitchison v,
xliohie.



Although a salvage award is a judgment in reniy the
underwriter is not thereby estopped from showing that there
was in reality no peril of the sea or other occasion for salvage
services (s).

864. In Aitohison v. Lohre (^), an attempt was made to
recover in respect of payments made to t-alvors, as made not
in consequence of perils of the sea, but under the suing and
labouring clause, which provides that " it shall be lawful for
the assured, their factors, servants, and assigns, to sue,
labour, and travel for, in, and about the defence, safe-
guard, and recovery of the said goods and merchandises,
and ship, &c., or any part thereof, without prejudice to
this insurance, to the charges whereof we the insurers will
contribute." In a vast majority of cases it is apparent that
it would make no diflEerence under which head such payments
were recoverable, provided they were in fact recoverable ; but
the facts of Aitchison r. Lohre were pecidiar. It was an
action on a policy of insurance for 1,200/. on the " Crimea," in
the usual form, and containing the clause above mentioned.
It appeared that in the course of her voyage the vessel had
sustained much damage by sea perils, so that she was become
leaky and water-logged, helpless, and not navigable, and in
great danger of being completely lost ; in this state, there-
fore, those on board signalled the steamer *' Texas "for assist-
ance, which accordingly took her in tow and brought her into
Queenstown. In the Queen's Bench Division such was the
estimate of the damage sustained by the ship that the assiired,



(1880), 4 Asp. M. C. 327 ; see post,
^ 902. Salvage under oon tract, on
the other hand, is recoverable as
particular charges, under the suing
and labouriug dause, or as general
average (Mar. Ins. Act, s. 65, sub-
8. 2), even though the policy contains
the f.p.a. warranty, or is agaiust
total loss only.

(») Ballant^ne v. Mackinnon,
[1896] 2 Q. B. 455. Cf. Dent r.



Smith (1869), L. R. 4 Q. B. 414, in
which the Court of Queen*s Bench
held that where part of a salvage
award was, by the sentence of a
foreign Court, charged against pro-
perty which had been landed before
the salvage operations were executed,
the assured could recover it from his
underwriter.

(t) (1877-1879), 2 Q.' B. D. 501 ;
3 Q. B. D. 558 ; 4 App. Gas. 755.



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CHAP, n.] SALVAGE. 1046


who had elected to repair, had judgment for 100/. per cent., Sect. 864.
i.e., for the full sum insured ; and as this, in the opinion of
that Court, exhausted the policy, the action was dismissed as
to a further claim of 500/. for general average, and for salvage
paid by the assured as the contribution for ship under these
heads. The Court of Appeal affirmed the judgment for 100/.
per cent., and also held that under the suing and labouring
clause the assured was entitled to judgment for his further
claim. In the Lords, on the motion of Lord Blackburn, the
House affirmed the judgment for 100/. per cent., and reversed
the judgment as to the further claim on the ground that
general average and salvage do not come within either the
words or the object of the clause.

865. His Lordship, after quoting the words of the clause. Object of the
continued : " The object " of the clause " was to encourage t _j ™ ,
exertion on the part of the assured ; not to provide an addi- bum's judg-
tional remedy for the recovery by the assured of indemnity
for a loss which was, by the maritime law, a consequence of
the peril. In some cases the agents of the assured hire per-
sons to render services on the terms that they shall be paid
for their work and labour, and thus obviate the necessity of
incurring the much heavier charge which woidd be incurred
if the same services were rendered by salvors, who are to be
paid nothing in case of failure, and a large remimeration
proportional to the value of what is saved in the event of
success. I do not say that such hire may not come within
the suing and labouring clause. But that is not this case.
The owners of the ' Texas ' did the labour here, not as
agents of the assured and being to be paid by them wages
for their labour, but as salvors acting on the maritime law,
which, as explained by Lord Chief Justice Eyre in Nicholson
V. Chapman (w), gives them a claim against the property
saved by their exertions and a lien on it, and that quite
independently of whether there is an insurance or not, or
whether, if there be a policy of insurance, it contains the

(m) 2 H. Bl. at p. 267.



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1046
Sect. 866.



Effect of
Buing and
labouring
clause iu a
policy of
re-insurance*



LOSSES BY THE PERILS INSURED AGAINST. [PART HI.

suing and labouring clause or not. The amount of such
salvage occasioned by a peril has always been recovered
without dispute under an averment that there was a loss by
that peril (see Gary v. King (x) ) ; and I have not been able
to find any case in which it was recovered under a count for
suing and labouring " (y).

The fine distinction drawn by his Lordship between salvors
acting on the maritime law and salvors working under a
special contract will be duly observed by the reader. The
point established by the case is that salvage expenses, in order
to be recoverable under the clause, must be shown to have
been incurred for services rendered in the particular case by
the " factors, servants, or assigns " of the assured, within the
strictest meaning of those words (2).

The law as settled by this decision is stated in sect. 65 of
the Marine Insurance Act in the following terms : —

(1) Subject to any express provision in the policy,
salvage charges incurred in preventing a loss by perils
insured against may be recovered as a loss by those
perils.

(2) " Salvage charges" means the charges recoverable
under maritime law by a salvor independently of contract.
They do not include the expenses of services in the nature
of salvage rendered by the assured or his agents, or any
person employed for hire by them, for the purpose of
averting a peril insured against. Such expenses, where
properly incurred, may be recovered as particular charges
or as a general average loss, according to the circum-
stances under which they were incurred.

866. The limited effect of the suing and labouring clause
is well illustrated by XJzielli v. The Boston Marine Insurance
Company (a). The owners of a ship insured her by an



(z) Cas. t. Hardw. 304.

(y) Aitchison v. Lohre, 1*^ supra.
Cf. also Dixon v. Whitworth (1879),
4 C. P. D. 371 ; 4 Asp. M. L. C. 11 ;
reversed on appeal, 4 Asp. M. L. 0.
327.



(z) For a learned criticism of this
decision, see the 6th edition of this
work, p. 793, and Appendix to
Chap. II. Part IIL

(a) (1884), 16Q. B. D. U.



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CHAP. II.]



SALVAGE.



1047



ordinary policy at Lloyd's. Lloyd's underwriters re-insured Sect. 866.
their risk with the plaintiffs, who themselves re-insnred with
the defendants. All policies contained the usual suing and
labouring clause, and both the re-insurance policies appear to
have contained the ordinary clause declaring them to be
re-insurances subject to the same terms, &c. as the original
policies, and to pay as might be paid thereon. Damage was
sustained amounting to 88 per cent., in addition to which
Lloyd's underwriters incurred salvage expenses to the extent
of 24 per cent., for all of which, making 112 per cent., they
were reimbursed by the plaintiffs. It was held, however, by
the Court of Appeal that the plaintiffs were not entitled to
recover more than 100 per cent, from the defendants. The
salvage expenses were recoverable only as losses due to perils
of the sea. This being so, the damage of 88 per cent.,
together with 12 per cent, for the salvage, exhausted the
policy, notwithstanding the clause " to pay as may be paid
thereon, &c." (J). To the argimient that the remaining
12 per cent, for the salvage might be recovered under the
* suing and labouring clause the Court repUed that the Lloyd's
underwriters who had effected the salvage were not the
factors, servants, or assigns of the re-insuring plaintiffs (c).

In conformity with these decisions it is now expressly
enacted {d) that " salvage charges " (/.^., the charges recover-
able under maritime law by a salvor independently of con-
tract) {e) are not recoverable under the suing and labouring
elause.

867. It is established, therefore, that where particular Can Baivage
average damage sustained by a vessel, together with maritime recovered as
salvage charges incurred by the assured, exceeds 100 per j^^^p*'* ^ *^^^^
cent, the excess is not recoverable from underwriters. It is
to be noticed that both cases were cases where the damage



f



(h) On this point, see Bigham, J. 'a
oriticiBin in Western ABBuranoe Go.
of Toronto v. Poole, [1903] 1 K. B.
at p. 387.

(e) This deoision is also severely'



commented upon bj Mr. Maclachlan
(6th ed. p. 796).

{d) Mar. Ins. Act, s. 78, sub-s. 2.

(e) Id. 8. 66, sub-8. 2, supra,
(866,



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1048 LOSSES BY THE PERILS INSURED AGAINST. [PART III.

Sect. 867. was treated as particular average only. It does not by any
means follow that if the assured in the former case had
chosen, or if the assured in the latter case had been able, to
treat the loss as total, he would not have been entitled to
recover both the salvage charges and for a total loss, on an
analogous principle to that whereby an underwriter may, in
certain eases, be liable both for particular average damage
and for a total loss occurring in the same voyage (/). This
point, it appears, might have arisen in a later case {g) in
which the underwriters were in fttct held liable for a total
loss notwithstanding a previous payment of salvage charges,
but the decision turned on other grounds, namely, that the
salvage charges had in fact been incurred on account of the
underwriters in the first instance, and not on account of the
assured at all. It was held, therefore, that the underwriters
who had previously paid the salvage charges — but not, as it
was found, to any agent of the assured — were liable never-
theless to pay the latter for a total loss, without deduction in
respect of such previous payment.

Life salvage 868. Prior to 1846 salvage was awarded only in respect

not recover- „ . , , . t i

able. of services rendered to ship or cargo. It had indeed been

the practice of the Court of Admiralty, where Kves as well as
property were saved, to increase the reward payable, but in
respect of the saving of life alone salvage was never awarded.
It follows of course that life salvage, as such, was not re-
coverable from underwriters, because there was no such thing.
And although 9 & 10 Vict. c. 99, s. 19 (which is now repre-
sented by sect. 644 of the Merchant Shipping Act, 1894),
made life salvage payable as such (A), yet it is not recover-
able under a Lloyd's policy in the usual form. It is a risk,
however, which is sometimes specially insured against (e).

(/) See Livie f>. Janson (1810), 12 (1877), 2 P. D. 146; the Renpor

East, at p. 656. (1883), 8 P. D. 116.

{g) Buchanan r. London, &c. Ins. ^ (i) Nonoie v. Liverpool SaUing'

O). (1895), 66 L. J. Q. B. 92 ; I fffiip Owners' Mutual, &o. Assoo.,

Com. Cas. 166. [1896] 2 Q. B. 16 (C. A.).

(A) See The Cargo ex SchiUer ,



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CHAP. II.] PARTICULAR CHARGES. 1049

869. Another class of losses, which, though not specially Sect. 869.
enumerated in the policy, are nevertheless recoverahle there- "Particular
under, is that which is emhraced under the term " particular
charges.'* The distinction between " particular charges " and
" particular average " was first definitely established in our
Courts in Kidston v. Empire Insurance Co. (k), where the
jury, after hearing, the evidence of several average-adjusters
and other witnesses, found that there was in the business of
marine insurance a well-known and definite meaning affixed
by long usage to the term " particular average " tis dis-
tinguished from the term ** particular charges " — viz., that
" particular average " denotes actual damage done to or loss
of part of the subject-matter of insurance, but that it does
•not include any expenses or charges incurred in recovering
or preserving the subject-matter of insurance ; and that ex-
penses incurred in warehousing and forwarding goods are not
" particular average," but are termed ** particular charges."

Accordingly sect. 64, sub-sect. (2), of the Marine Insurance
Act states that ** expenses incurred by or on behalf of the
assured for the safety or preservation of the subject-matter
insured, other than general average and salvage charges, are
called particular charges. Particular charges are not included
in particular average " (7). They are recoverable from under-
writers when incurred after the arising of a peril insured
against, in order to prevent such peril causing a loss for
which the underwriters would be liable, if it were so caused.
In this event they are charges incurred " in and about the
defence and safeguard " of the subject-matter of insurance,

(k) (1866), L. R. 1 C. P. 536 ; 2 experieDoed in maintaining this dis-

C. P. 357. If Was, indeed, noticed tinction are dealt with elsewhere, in

in an earlier" case (Booth v, Gair the chapter on ** General Average."

(1864), 15 C. B. N. S. 291), but less Cf. McArthur, 173—177 (2nd ed.) ;

definitely, as the distinction, on the Carver on Carriage, s. 398.

facts of that case, proved immaterial. (/) ** A'particular average loss is a

Particular charges, incurred on be- partial loss of the subject-matter

half of one interest only,- are also t^ insured, caused by a peril insured

be distinguished from general aver-*' against, and which is not a general

age expenditure incurred on the joint average loss": Mar. Ins. Act,

account. The difficulties 8ometimes<^ s. 64 (1).

A. — VOL. II. 3 y



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1050



LOSSES BY THE PERILS INSURED AGAINST. [pART III.



Sect. 869.



Farther con-
sideration of
the suing and
labouring
olause.



Suing and
labouring
clause.



within the suing and labouring clause. In certain cases they
may also be recoverable from underwriters, apart from the
suing and labouring clause, as losses occasioned by a peril
insured against when they have been necessarily incurred in
consequence of such a peril — as, for example, expenses of
warehousing and forwarding cargo (m), when a peril insured
against has occasioned the necessity of such expenditure (n).

870. It is necessary to consider the suing and labouring
clause in somewhat further detail, as also to notice certain
decisions.

The clause is principally dealt with in sect. 78 (o) of the
Marine Insurance Act, 1906, which provides as follows: —

(1) Where the policy contains a suing and labouring
clause, the eogagement thereby entered into is deemed to
be supplementary to the contract of insurance, and the



{m) Landing, warehousing and
forwarding charges are someiimes
covered by express clauses. For a
case on such a clause, see Popham v.
St. Petersburgh Ins, Co. (1904), 10
Com. Cas. 31, 276. As to recovery
of similar expenses, io the absence of
such a clause, as suing -and labour-
ing, see St. Paul Fire & Mar. Ins.
Co. V. Pacific Cold Storage Co.
(1907), 157 Fed. R. 627.

(n) These could probably also be
recovered under the suing and
labouring clause, at the option of
the assured (see per Lord EUen-
borough in Li vie v. Janson (1810),
12 East, 665) ; and it is at least
doubtful whether even expenses in-
curred in order to avert a loss — such
as, for instance, those which were
held in Kidaton. v. Empire Ins. Co.
to be recoverable uud«:r the suing
and labouring clause — could not also
be recovered from underwriters as
money paid on their behalf, apart
from the clause. It is the captain's
duty in an emergency to act on behalf
of aU concerned. Might not expenses



Incurred by him in doing so be re-
covered by his owners from the
underwriters under an implied con-
tract of agency or indemnity, such
agency having been thrust upon
them or their servant by perils in-
sured against? Cf. Le Cbeminant
v. Pearson (1812), 4 Taunt. 367.
Some such view appears to have
been held in the American case of
White V. Republic Fire Ins. Co.
(1869), 57 Maine, 91. If it were so
decided, the effect of the suing and
labouring clause would appear to be
no more than to render certain that
which otherwise might have been
considered doubtful.

(o) Other sections of the Act which
deal with the suing and labouring
clause, either iu express terms or by
reference to its subject, viz., parti-
cular charges, are sect. 64 (2), ante,
§ 869; sect. 65 (2), ante, § 865;
sect. 76 (2), (4), post, §§ 871, 897;
and Rule 13 of the Rules for Con-
struction of Policy in Sched. I.,
post J § 885.



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CHAP, n.] PARTICULAR CHARGES.



1051



assured may recover from the insurer any expenses pro- Sect. 870.
perly incurred pursuant to the clause, notwithstanding
that the insurer may have paid for a total loss, or that
the subject-matter may have been warranted free from
particular average, either wholly or under a certain
percentage.

(2) General average losses and contributions and
salvage charges, as defined by this Act, are not recover-
able under the suing and labouring clause.

(3) Expenses incurred for the purpose of averting or
diminishing any loss not covered by the policy are not
recoverable under the suing and labouring clause.

(4) It is the duty of the assured and his agents, in all
cases, to take such measures as may be reasonable for the
purpose of averting or minimising a loss (p).

First, as is implied in sub-sect. (3) of this section, the
clause does not oome into operation except in anticipation of
** any loss or misfortune " that would fall upon the insurers
if it did happen. " If by perils insured against," said
Brett, L. J., *• the subject-matter of insurance is brought into
such danger that without unusual or extraordinary labour or
expense a loss will very probably fall on the underwriters,
and if the assured or his servants or agents exert unusual or
extraordinary labour, or if the assured is made liable to
unusual or extraordinary expense in or for efforts to avert
a loss, which, if it occurs, will fall on the underwriters, then
each underwriter will, whether in the result there is a total or
a partial loss, or no loss at all, not as part of the sum insured,
but as a contribution independent of and even in addition to
the whole sum insured, pay a sum bearing the same proportion
to the cost or expense incurred as the sum they would have
had to pay if the probable loss had occurred, or to the loss
which, because the efforts have failed, has occurred, as that
loss bears to the sum insured " (^).

(p) Aa to this Bub-section, see Aitohiaon (1878), 3 Q. B. D. at
} 7»ya. p. 666.

{q) Per Brett, L. J., in Lohre v,

3x3



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1062 LOSSES BY THE PERILS INSURED AGAINST. [PAKT III.

Sect. 870. The cases that established the above-mentioned limitation
of the applicability of the clause are Ghreat Indian Peninsular
Railway Co. v, Saunders (r), and Booth «?. Q-air (s).
Great Indian Jn the former case, the policy was on iron rails for Bombay

Peninsular ^ ' ., , ii-i

Railway Co. " warranted free from particular average unless the ship be
aun ere. g^g^j^^g^^ sunk, Or bumt." The vessel was compelled by
perils insured against to put into Plymouth in such a state as
not to be worth repairing, but she was not stranded, sunk, or
burnt. The rails were landed and sent on by other vessels at
a cost of 825/., the whole of which sum, inasmuch as the
original contract of carriage provided for payment of freight
" ship lost or not lost," was an extra expense incurred by the
shippers in consequence of the loss of the original ship. It
was held that for this sum the underwriters were not liable,
either under the suing and labouring clause or otherwise, on
the ground that at the time when the expenditure was in-
curred the iron was in no peril of total loss, for which alone
the underwriters were responsible.

In Booth fj. Gair (^), bacon was insured on a voyage from
New York to Liverpool " free from average, unless general,
or the ship be stranded, sunk, or burnt," with the suing and
labouring clause in ordinary form. The vessel became a con-
structive total loss, owing to perils of the sea, but without
being stranded, sunk, or burnt ; there was a partial, but no
total loss of the bacon, which was landed at Bermuda and
part sent on to Liverpool. No expenses appear to have been



Online LibraryJoseph ArnouldArnould on the law of marine insurance and average → online text (page 26 of 87)