Kidston v The Empire Marine Insurance Company
| Jurisdiction | England & Wales |
| Date | 1865 |
| Year | 1865 |
| Court | Exchequer |
Ship and Shipping - Marine Insurance - Constructive total loss of Freight - Suing and Labouring Clause - Particular Average - Evidence of Usage amongst Underwriters.
The plaintiffs effected an insurance with the defendants on the chartered freight of a ship, for a voyage from C. to E. The policy contained the usual suing and labouring clause, and a warranty against particular average. During the voyage the ship was so much damaged in a storm that it put into R., where it became a total wreck. The goods were landed and forwarded in another ship to their destination, at an expense less than the chartered freight, and on their arrival the chartered freight was paid. In an action to recover from the underwriters a proportionate part of the expense incurred in forwarding the goods by the second ship:—
Held, that there would have been a total loss of the freight at R. if the goods had not been forwarded, and that the plaintiffs were entitled to recover the sum claimed under the suing and labouring clause of the policy.
At the trial, evidence was given that expenses incurred in preserving the subject-matter of insurance were not “particular average,” but “particular charges,” as those terms were understood in the business of marine insurance:—
Held, that this evidence was admissible to shew the mode in which such expenses were treated by mercantile men; but that the usage proved by it was in affirmance of the common law, and did not control or vary the language of the policy.
APPEAL from the decision of the Court of Common Pleas, discharging a rule to enter a verdict for the defendants or a nonsuit.F1
The plaintiffs had effected an insurance with the defendants on the chartered freight, valued at 5000l., of a ship Sebastopol, on a voyage from the Chincha Islands to the United Kingdom. The policy contained the usual suing and labouring clause, and a warranty against particular average. The ship having been damaged in a storm put in to Rio, where she became totally lost, but the goods were landed and forwarded to their destination in another vessel, the Caprice, at a cost of 2467l. 11s. 10d., and the chartered freight was then paid to the plaintiffs. The action was brought to recover from the defendants a proportionate part of the sum so expended in forwarding the goods from Rio.
Evidence was given at the trial of the meaning of particular average as understood among merchants.F2
The facts are stated at length in the report of the case in the court below.
Mellish, Q.C. (Cohen with him), for the defendants. There was not in fact a total loss of the freight at Rio; nor could there have been even if the master had not forwarded the goods. It has been decided in Rosetto v. GurneyF3 that there is no total loss of goods if the cost of forwarding them would be less than the value of the goods when at their destination, and that it makes no difference whether they are actually forwarded or not; and in Farnworth v. HydeF4, that in calculating the cost of forwarding them you are to take into account only the extra cost occasioned by the loss of the original ship. By parity of reasoning, in the case of an insurance on freight, if the ship be lost at an intermediate port and, the goods being saved, the freight is still capable of being earned by forwarding the goods in another ship, there is no total loss, if this can be done at a less cost than the value of the original freight, whether in fact the goods are forwarded and the freight earned or not. The decision in the case of an insurance on goods does not at all turn on the fact that they still exist in specie, because, although they do so, yet if the cost of forwarding them would exceed their value when forwarded, they are considered as totally lost. The extent of the partial loss is the same, whether the goods are forwarded or not; just as in the case of a ship which is sold instead of being repaired, the extent to which the insurers are liable is not affected; only in the one case the amount of their liability is a matter of inference, and in the other it is known. The contract of insurance is one of indemnity, and the true question is, how much has been necessarily lost through perils of the sea. If the master might have saved one half the freight by forwarding the goods, and has not done so, that half has been lost by his own negligence, and not by perils of the sea; and the insurer, therefore, is not liable for it; and the loss is only a partial one. The master has three courses: he may either abandon the goods and freight; or send the goods on and earn the whole freight, at the expense of chartering a fresh ship; or he may enter into a new contract, to be paid freight pro ratâ. It cannot affect the liability of the underwriter which of these three courses he pursues.
[LUSH, J. Is the master bound to forward the goods? Unless he does so there is a total loss of the freight; do you not, therefore, import something more than the proximate cause of loss into the case when you say that the master could render the loss a partial one by sending the goods on?]
The master, upon principle, is bound to send on the goods, though that has never been decided. In Shipton v. ThorntonF5 the Court expressly abstained from the decision of that question; but in Phillips on Insurance, s. 1632, it is said: “If the ship is rendered unnavigable and cannot be repaired for the prosecution of the voyage, and another can be procured within a reasonable time and distance, and the master has means to procure such other at an expense materially less than the amount of the freight for the voyage, the underwriter on freights or profits is not liable to be prejudiced by the master's neglect to tranship, any more than the underwriter upon the cargo, and the loss will be adjusted as if the cargo had been transhipped and forwarded, and will be partial or total, according to the amount of the loss.” He refers to Jordan v. Warren Insurance Company.F6 Parsons on Maritime Law, vol. 2, p. 386, says: “If, although the ship itself be wrecked or otherwise lost, the master can tranship and forward the goods by reasonable endeavours, and at a reasonable cost, we have seen that it is his duty to do so; and if he neglects this duty the insurer is chargeable only in the same way and to the same extent as if the duty...
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