STORY, Circuit Justice.
The first exception is founded upon the clause in the policy (which is the common clause in the Boston policies), that the underwriters shall not be liable “for any partial loss on other goods on the vessel, or on freight, unless it amount to five per cent., exclusive in each case, of all charges and expenses incurred for the purpose of ascertaining and proving the loss; but the owners of such goods shall recover on a general average.” The argument in support of the exception seems to rest on the ground, that the damage done the Paragon itself was a partial loss only, less than 5 per cent.; and that it is not of the nature of a general average. In the opinion already expressed in this case, when it was formerly in judgment, I strongly inclined to think, that the loss by the collision was not to be deemed a general average in the sense of our law, although it was apportioned upon both the vessels. Peters v. Warren Ins. Co. [Case No. 11,035]. General average is commonly understood to arise from some voluntary act done, or sacrifice, or expense incurred, for the benefit of all concerned in the voyage, or adventure; and then it is apportioned upon all the interests, which partake of the benefit. But the mere fact, that an apportionment is made of a loss between the different parties in interest, if the loss itself does not arise from some act done, or sacrifice or expense voluntarily incurred, for the common benefit, does not make it necessarily a case of general average- by our law. Salvage is properly a charge, apportionable upon all the interests and property at risk in the voyage, which derive any benefit therefrom. But, although it is often in the nature of a general average, it is far from being- universally true, that, in the sense of our law, all salvage charges are [372]*372to be deemed a general average. On the contrary, these charges are sometimes a simple average, or partial loss. We must, therefore, look to the particular circumstances of the ease to ascertain, whether it be the one, or the other. So, expenses incurred on capture are sometimes a general average, and sometimes not. Thus, if the expenses are incurred for the benefit of all concerned, they are a general average. But, if there should be a capture of a neutral ship, solely on account of the cargo, which is owned by different persons, who are shippers, if no proceedings are had against the ship, but are against the cargo only, the expenses occasioned thereby will be apportioned upon the owners of the cargo, and are but a partial loss thereof, and not a general average; for such expenses are not for the benefit of the ship or freight, which, therefore, do not contribute thereto. See 2 Phil. Ins. (2d Ed., 1840) pp. 71-74, c. 15, $ 1; Id. p. 125, § 5; Id. p. 225, c. 16, § 3; Benecke & S. Average (by Phillips, Ed. 1833) pp. 101, 102, 139-141.
It has been said, in the argument for the plaintiff, that, whether this claim be a general average, or not, by our law, it is clearly a general average by the law of Hamburg; and that the foreign law must furnish the rule for the case under such circumstances. And in support of the argument reliance is 1 (laced upon the language of the adjustment of the despacheur, who states, that the Paragon, her cargo, and freight, are to bear one half of the expense of her own repairs, and to pay one half of the value of the Galliot; and the adjustment concludes by saying, that this sum (the one half) is to be borne by the ship, cargo, and freight, as “general average.” The argument certainly has considerable apparent weight. It is met, on the other side, by the suggestion, that what constitutes general average must be decided by our law, since the contract and its language must be interpreted by the laws of the place of the contract; and that when a case of general average under our law has arisen, then the foreign adjustment thereof may' be conclusive of the amount of such general average; but it is not otherwise. But this argument does not solve the whole difficulty. The real question is, whether the underwriters, by the terms of the policy respecting general average, mean such losses and expenses only, as are deemed general average by our law, or such losses and expenses, as arise in the course of the voyage, from any of the perils insured against, and are assessed upon and payable by the insured, as a general average under and in virtue of any foreign law. Now, the contract of insurance is á contract of indemnity against risks and losses by the perils insured against, not only in the home port, and on the ocean, but also in foreign ports. It naturally, therefore, looks to general averages, which may be incurred and enforced abroad, as well as at home. If by a peril, insured against, the insured is eom-pelled in a foreign port, by the local law, to pay a sum as general average, which, by the law of his own country would not be so. why may not such a loss or charge be properly deemed a general average in the sense of the policy? What difference in principle is there between deciding, that items or appor-tionments included in a foreign adjustment of a general average, although not belonging to a general average, or a proper apportionment, by the law of our own country, are, nevertheless, to be here paid for as a general average, and deciding that a loss, not a general average by our law, but a general average by the foreign law, and enforced there, is to be deemed and paid for here as a general average? In each case the loss, sought to be recovered, is, pro tanto, not a general average according to our law; and the principle, which is to govern, must be the same, whether the loss be greater or less, whether it apply to the totality of the claims, or to any item thereof. Now, certainly the weight of authority, both in England and America is, that the items included and the sums apportioned and paid according to the law of a foreign country, as a general average, in an adjustment thereof, made there, (and, a fortiori, if enforced by the public tribunals there,) are, quoad the items and the rule of apportionment, conclusive upon and payable by the underwriters here, as a general average, although not apportioned in the same manner, and not deemed items of general average by our law. This is certainly the doctrine in Simonds v. White, 2 Barn & C. 805; Loring v. Neptune Ins. Co., 20 Pick. 411; Strong v. New York Fireman Ins. Co., 11 Johns. 323; and Depau v. Ocean Ins. Co., 5 Cow. 63. The most important case the other way is Shiff v. Louisiana State Ins. Co., 6 Mart. [N. S.] 629. But there is great difficulty in holding, that this case ought to overcome the rule established in Simonds v. White, 2 Barn & C. 805, which puts the doctrine upon grounds of public convenience and policy, and the apparent intention of the parties. There is nothing unreasonable in construing the engagement of the underwriters in a policy to be, that they will pay, whatever the insured is compelled to pay as a general average, arising from the risks insured against. But I wish to be understood as not absolutely deciding this point, and it is the less necessary to consider it, because, assuming the sum claimed not to be a general average, it is nevertheless, as a partial loss, to be borne by the underwriters. The infirmity of the argument for the exception consists in separating the loss, incurred by the damage done to the Paragon itself, from the damage done to the other vessel, which was apportioned on the Paragon, and in considering them as independent losses Now, they are not so separable. The loss by the collision Vas an entirety; and the whole damage assessed upon, and payable by the Paragon, was a direct damage or partial loss, occasioned by the col[373]*373lision, and the items are not to be separated.
Free access — add to your briefcase to read the full text and ask questions with AI
STORY, Circuit Justice.
The first exception is founded upon the clause in the policy (which is the common clause in the Boston policies), that the underwriters shall not be liable “for any partial loss on other goods on the vessel, or on freight, unless it amount to five per cent., exclusive in each case, of all charges and expenses incurred for the purpose of ascertaining and proving the loss; but the owners of such goods shall recover on a general average.” The argument in support of the exception seems to rest on the ground, that the damage done the Paragon itself was a partial loss only, less than 5 per cent.; and that it is not of the nature of a general average. In the opinion already expressed in this case, when it was formerly in judgment, I strongly inclined to think, that the loss by the collision was not to be deemed a general average in the sense of our law, although it was apportioned upon both the vessels. Peters v. Warren Ins. Co. [Case No. 11,035]. General average is commonly understood to arise from some voluntary act done, or sacrifice, or expense incurred, for the benefit of all concerned in the voyage, or adventure; and then it is apportioned upon all the interests, which partake of the benefit. But the mere fact, that an apportionment is made of a loss between the different parties in interest, if the loss itself does not arise from some act done, or sacrifice or expense voluntarily incurred, for the common benefit, does not make it necessarily a case of general average- by our law. Salvage is properly a charge, apportionable upon all the interests and property at risk in the voyage, which derive any benefit therefrom. But, although it is often in the nature of a general average, it is far from being- universally true, that, in the sense of our law, all salvage charges are [372]*372to be deemed a general average. On the contrary, these charges are sometimes a simple average, or partial loss. We must, therefore, look to the particular circumstances of the ease to ascertain, whether it be the one, or the other. So, expenses incurred on capture are sometimes a general average, and sometimes not. Thus, if the expenses are incurred for the benefit of all concerned, they are a general average. But, if there should be a capture of a neutral ship, solely on account of the cargo, which is owned by different persons, who are shippers, if no proceedings are had against the ship, but are against the cargo only, the expenses occasioned thereby will be apportioned upon the owners of the cargo, and are but a partial loss thereof, and not a general average; for such expenses are not for the benefit of the ship or freight, which, therefore, do not contribute thereto. See 2 Phil. Ins. (2d Ed., 1840) pp. 71-74, c. 15, $ 1; Id. p. 125, § 5; Id. p. 225, c. 16, § 3; Benecke & S. Average (by Phillips, Ed. 1833) pp. 101, 102, 139-141.
It has been said, in the argument for the plaintiff, that, whether this claim be a general average, or not, by our law, it is clearly a general average by the law of Hamburg; and that the foreign law must furnish the rule for the case under such circumstances. And in support of the argument reliance is 1 (laced upon the language of the adjustment of the despacheur, who states, that the Paragon, her cargo, and freight, are to bear one half of the expense of her own repairs, and to pay one half of the value of the Galliot; and the adjustment concludes by saying, that this sum (the one half) is to be borne by the ship, cargo, and freight, as “general average.” The argument certainly has considerable apparent weight. It is met, on the other side, by the suggestion, that what constitutes general average must be decided by our law, since the contract and its language must be interpreted by the laws of the place of the contract; and that when a case of general average under our law has arisen, then the foreign adjustment thereof may' be conclusive of the amount of such general average; but it is not otherwise. But this argument does not solve the whole difficulty. The real question is, whether the underwriters, by the terms of the policy respecting general average, mean such losses and expenses only, as are deemed general average by our law, or such losses and expenses, as arise in the course of the voyage, from any of the perils insured against, and are assessed upon and payable by the insured, as a general average under and in virtue of any foreign law. Now, the contract of insurance is á contract of indemnity against risks and losses by the perils insured against, not only in the home port, and on the ocean, but also in foreign ports. It naturally, therefore, looks to general averages, which may be incurred and enforced abroad, as well as at home. If by a peril, insured against, the insured is eom-pelled in a foreign port, by the local law, to pay a sum as general average, which, by the law of his own country would not be so. why may not such a loss or charge be properly deemed a general average in the sense of the policy? What difference in principle is there between deciding, that items or appor-tionments included in a foreign adjustment of a general average, although not belonging to a general average, or a proper apportionment, by the law of our own country, are, nevertheless, to be here paid for as a general average, and deciding that a loss, not a general average by our law, but a general average by the foreign law, and enforced there, is to be deemed and paid for here as a general average? In each case the loss, sought to be recovered, is, pro tanto, not a general average according to our law; and the principle, which is to govern, must be the same, whether the loss be greater or less, whether it apply to the totality of the claims, or to any item thereof. Now, certainly the weight of authority, both in England and America is, that the items included and the sums apportioned and paid according to the law of a foreign country, as a general average, in an adjustment thereof, made there, (and, a fortiori, if enforced by the public tribunals there,) are, quoad the items and the rule of apportionment, conclusive upon and payable by the underwriters here, as a general average, although not apportioned in the same manner, and not deemed items of general average by our law. This is certainly the doctrine in Simonds v. White, 2 Barn & C. 805; Loring v. Neptune Ins. Co., 20 Pick. 411; Strong v. New York Fireman Ins. Co., 11 Johns. 323; and Depau v. Ocean Ins. Co., 5 Cow. 63. The most important case the other way is Shiff v. Louisiana State Ins. Co., 6 Mart. [N. S.] 629. But there is great difficulty in holding, that this case ought to overcome the rule established in Simonds v. White, 2 Barn & C. 805, which puts the doctrine upon grounds of public convenience and policy, and the apparent intention of the parties. There is nothing unreasonable in construing the engagement of the underwriters in a policy to be, that they will pay, whatever the insured is compelled to pay as a general average, arising from the risks insured against. But I wish to be understood as not absolutely deciding this point, and it is the less necessary to consider it, because, assuming the sum claimed not to be a general average, it is nevertheless, as a partial loss, to be borne by the underwriters. The infirmity of the argument for the exception consists in separating the loss, incurred by the damage done to the Paragon itself, from the damage done to the other vessel, which was apportioned on the Paragon, and in considering them as independent losses Now, they are not so separable. The loss by the collision Vas an entirety; and the whole damage assessed upon, and payable by the Paragon, was a direct damage or partial loss, occasioned by the col[373]*373lision, and the items are not to be separated. The whole loss was a charge in rem upon the Paragon; and the collision was the proximate canse thereof. This was the doctrine entertained by the supreme court, upon the hearing of this cause upon the writ of error. Peters v. Warren Ins. Co., 14 Pet. [39 U. S.] 99. We must treat the loss, then, as an aggregate partial loss, composed of two items, the one the direct damage done to the Paragon, the other the direct damage done to the other vessel, and assessed and charged upon the Paragon. These items, when united, far exceed 5 per cent. This exception is, therefore, overruled.
The next exception turns upon a very different consideration. It seems, that a bottomry bond was given to defray the amount of the sum awarded against the Paragon and charges; and that the bottomry holder was willing to waive the 12% per cent, interest payable upon the bond, if he was promptly paid the amount, and certain other conditions-were complied with. The agent of the bot-tomry holder at New York received from Mr. Peters, (one of the plaintiffs,) a draft on Hamburg for the amount, and charged a commission for indorsing that draft to his principal, and thereby becoming a guarantor of the draft. The bottomry bond • was thus taken up; and a less sum than the 12% per cent, was actually paid to the agent. The charge of this commission is now objected to. But I think it is without any just ground. If the underwriters seek to avail themselves of a diminished payment of interest upon the bot-tomry bond, they must take it cum onere. Mr. Peters acted with entire good faith in this part of the transaction; and it has been for- the benefit of the underwriters. The charge seems to me entirely reasonable and proper in itself; and the underwriters have no just cause to complain, that a less sum has been paid upon the bond, than might have been required under its terms. If they adopt Mr. Peter’s agency in taking up the bond, they must adopt it throughout. If they do not adopt it, they ought to pay the whole 12% per cent, bottomry interest due on the bond. I therefore overrule this exception also.
The same considerations will apply to the third exception. The interest, therein objected to, was a part of the agreement, upon which the payment of the 12% per cent, was surrendered by the bondholder. And besides; it is in itself most reasonable, that the bondholder should be paid the interest upon his advances, not merely up to the time, when the draft was received, but up to the time, when it would arrive at maturity, and be paid.
As to the exception by the plaintiff of the disallowance by the auditor of the claim of Mr. Peters for a commission, for settling and paying the bottomry bond; it appears to me, that it was rightly rejected by the auditor for the reason stated by him. It was the primary duty of the plaintiffs to pay the bottomry bond, in order to entitle themselves to recover the amount thereof from the underwriters. If the owner pays money to repair damages to his ship, he is not entitled to claim from the underwriters any commission on his disbursements; and the present case is not distinguishable from that in principle.
On the whole, my judgment is, that the report ought to be confirmed.