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

31

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.30 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,82 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.

33

In North of England Iron S. S. Ins. Ass'n v. Armstrong, 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 3 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 wrongdoer 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°

85 Post, § 169, p. 369.

36

86 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.

On the other hand, the English courts hold that the liability of the insurer must be settled by the terms of the contract between him and his insured, that he is liable only for that part of the salvage represented by the valuation named in such contract, and that to make him pay the entire amount would be to let the insured collect out of his policy on an interest which he, the insured, had purposely left uncovered and on which he had paid no premium."

SAME SUBROGATION OF INSURER

40. An insurer who has paid the insurance is subrogated to the rights of the insured against others liable to the insured for the loss.

The insured is entitled to recover his loss from the underwriter, though he may possess other remedies for it. For instance, if he can recover back part of the loss in general average, the underwriter must still pay him, and look to the collection of the average himself, and not force the insured to exhaust his remedies on general average.38

But, when the underwriter has paid the loss, he is entitled by subrogation to all the rights of the insured against any other parties for the recovery of all or part of what he has paid. In such case, he stands in the shoes of the assured, and has no greater rights than the assured himself would have, so that if the assured has stipulated away his right by any enforceable clause in a bill of lading or otherwise, the underwriter cannot recover. This right of subro

87 Balmoral S. S. Co. v. Marten, [1900] 2 Q. B. 748; [1901] 2 K. B. 896; [1902] A. C. 511. It is noteworthy that the English judges all agreed, including Bigham in the trial court, A. L. Smith, Vaughan, and Stirling in the Court of Appeal, and Lords Macnaghten, Shand, Brampton, Robertson, and Lindley in the House of Lords. To the author the argument seems all in favor of their view.

§ 40. 88 International Nav. Co. v. British & Foreign Marine Ins. Co. (D. C.) 100 Fed. 304.

gation springs, not necessarily from assignment, but from the general principles of equity.39

SAME-SUING AND LABORING CLAUSE

41. In addition to the amount of his loss, the insured may recover, under the suing and laboring clause of the policy, expenses incurred by him in protecting the property.

In the old English policy this clause was in the following language: "And in case of any loss or misfortune it shall be lawful to the assured, their factors, servants, and assigns, to sue, labor and travel for, in, and about the defense, safeguard, and recovery of the said goods and merchandise, and ship," etc., "or any part thereof, without prejudice to this insurance."

In later policies the clause has been modified largely in the interests of the underwriter, but the general language is the same. This clause is intended, in mutual interest, to encourage the assured to do everything towards making the loss as light as possible; and the expenses thereby incurred are recoverable outside of the other clauses of the policy, though in some instances it enables the assured to recover more than the face value of the policy. In other words, the assured may recover a certain amount under that clause of the policy giving him the right to recover for loss caused by the perils of the sea, etc., and this additional amount as expended for the general benefit, and this, too, often in policies insuring against total loss only. And,

89 See, as illustrating the extent of this doctrine, Liverpool & G. W. Steam Co. v. Phenix Ins. Co., 129 U. S. 397, 9 Sup. Ct. 469, 32 L. Ed. 788; Mobile & M. Ry. Co. v. Jurey, 111 U. S. 584, 4 Sup. Ct. 566, 28 L. Ed. 527; Wager v. Providence Ins. Co., 150 U. S. 99, 14 Sup. Ct. 55, 37 L. Ed. 1013; Fairgrieve v. Marine Ins. Co., 37 C. C. A. 190, 94 Fed. 686; Hall v. Nashville & C. R. Co., 13 Wall. 367, 20 L. Ed. 594.