I H.L.C., 286 IRVING V.

MANNING [ 1847]
objects; and that even if the objects were not fully ascertained, if the purposes of the
bequest were charitable, the Court could supply the omission. This is undoubtedly
t r ue; and I agree with the Vice Chancellor that the probability is that the legacy was
given for some purpose that would be considered to be a charitable purpose. But
it cannot, at the same time,- be denied that a municipal corporation may take
property in trust for the benefit of individuals, and for purposes altogether private,
and it is impossible to say, with that degree of legal certainty which would justify
your Lordships in giving effect to this bequest, that such was not the case in the
present instance.
For these reasons, which in substance are the same, though less elaborately stated
than those upon which the Vice Chancellor rested his decision, I have come to the
[286] conclusion that the legacy of 60,000 must fail. The same reasoning and
the same objections will apply to the legacy of 140,000. I submit to your Lord-
ships, therefore, that the judgment of the Court below should be affirmed.
I beg leave to state, that the Lord Chancellor, who is unable to give his attendance
here to-day, entirely concurs in this opinion. He was present during the whole
of the argument.
Lord Brougham.This case, though of very large amount, 140,000 and
60,000, making 200,000 altogether, appears to me to rest upon exceedingly plain
and simple grounds. I entirely agree with my noble and learned friend in the view
which he has taken of the bequest, both as regards the first argument on the con-
struction of the bequest, and the second argument with respect to its possible
application. I am clearly of opinion that the right construction has been put upon
it by the Court below, t hat it fails altogether, and that the property i n question
goes according to the destination pointed out by the decree; and, therefore I agree
with my noble and learned friend's proposition to your Lordships, t hat this judg-
ment should be affirmed.
Under the peculiar circumstances of the case (I do not enter into details), I
sub.mit to your Lordships that it is not a case in which costs should be given.
Lord Campbell.In the course of my experience, I never read a judgment more
cautiously expressed, and better reasoned than that of his Honour the Vice Chan-
cellor Wigram in this case. I have only to state to your Lordships, t hat after
having carefully considered the arguments on both sides, I entirely concur in the
judgment which has been proposed.
The appeal was accordingly dismissed, and the decree appealed from was affirmed,
without costs.
[287] JOHN IRVING-,Plaintiff in Error;. CHARLES JOHN MANNING and
JOHN L. ANDERSON,Defendants in Error [June 29 ; July 1, 8, 23, 1847].
[Mews' Dig. xii. 708; xiii. 1139, 1224. S.C. 1 C.B. 168; 2 C.B. 784; C C.B. 391.
Followed in Barker v. Janson, 1868, L.R. 3 C.P. 307; and cf. Rankin v. Potter,
1873, L.R. 6 H.L. 144; Burnand v. Rodocanachi, 1880, 5 C.P.D. 426; AitcJiison
v. Lohre, 1879, 4 A.C. 761.]
Policy of InsuranceTotal loss.
A vessel is totally lost, within the meaning of a policy, when it becomes, as a
- ship, of no use or value to the owner, and is as much lost as if it had gone to the
bottom of the sea, or had been broken to pieces, and the whole or great part
of the fragments had reached the shore as wreck.
A loss is also to be considered as total where a prudent owner, if uninsured,
would not have repaired.
In a valued policy the agreed total value is conclusive.
A policy of insurance is not a perfect contract of indemnity. It must be taken
with this qualification, that.the parties may agree before hand in estimating
the value of the subject assured by way of liquidated damages.
A ship was insured in a policy, in which the value was stated at 17,500. The
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IRVING V. MANNING [ 1847] I H.L.C., 288
ship was injured by storms, was surveyed, and the repairs were estimated
at 10,500. When repaired, the vessel would have been of the marketable
value of 9000. The assured abandoned and claimed as for a total loss.
The jury found that, under the circumstances existing in the case, a prudent
owner, uninsured, would not have repaired the vessel:
Held, by the Lords, affirming the judgment of the Court below, t hat the assured
could recover as for a total loss.
This was a writ of error on a judgment of the Court of Exchequer Chamber, which
had affirmed a judgment of the Court of Common Pleas, in an action of assumpsit
brought against John Irving, the defendant in the Court [288] below, as the re-
presentative of the Alliance Marine Insurance Company. The plaintiffs below were
the managing owners of a vessel called the General Kyd, upon which a policy of
insurance had been effected with this Company for the sum of 3000. The ship
was valued in the policy at 17,500, and was insured for a voyage " at and from
China to Madras, while there, and back to China, not east of Hong Kong, with leave
to call at the Straits." The first count of the declaration was on this policy, and
the loss claimed was a total loss, which "was averred to have happened through the
perils of the sea. There were the usual money counts. The defendant pleaded
to the first count that the vessel was not wholly lost in manner and form, etc.; and
to the remaining counts non assumpsit.
The cause was tried before Mr. Justice Cresswell, at Guildhall, at the sittings after
Trinity Term, 1844, when a verdict was found for the plaintiffs. The facts were
stated in the form of a case for the opinion of the Court, and were afterwards turned
into a special verdict, which stated t hat on the 6th June, 1843, the plaintiffs effected
with the defendants the policy on their ship, the General Kyd, for the purpose of
bona fide covering and protecting themselves from the loss of the said ship, together
with its stores, seamen's wages, and other matters not constituting part of the
permanent value of the shi p; t hat no insurance was effected by them on the freight;
that the ship was of the burthen of one thousand three hundred and eighteen t ons;
was built originally, and at great expense, for and employed in the trade of the
East India Company, and was, on the said East India Company ceasing to' trade,
sold to the plaintiffs for 11,000; that at the time of effecting the policy the ship
was, together with stores, seamen's wages, and other matters not constituting part
of the permanent value of the ship, of the value to the plaintiffs of 17,500, and
was insured for that sum; that the plaintiffs were interested, as the declaration set
forth, [289] and that the ship set sail on the voyage mentioned; that during the
risk, and while prosecuting the voyage, the ship was damaged by perils of the sea,
so as to become incompetent to proceed on the said voyage, unless repaired as after
mentioned; that the necessary expenditure to repair such damage, so as to render
the ship sea worthy, and competent to proceed on the voyage, would have amounted
to a sum of not less than 10,500, and that if such repairs had been done, and such
expenditure had been incurred, the ship being so repaired would have been worth a
sum not exceeding 9000, and which was its marketable value, as well at the
period of effecting the said policy, as also immediately before the said damage;
that a prudent owner, being uninsured, would not have repaired the vessel, and that
the vessel was duly abandoned to the underwriters.
The question was, whether, under the circumstances set forth in the special verdict,
the defendant was liable as for a total loss. The Court of Common Pleas gave
judgment for the plaintiffs (1 Com. Bench Rep. 168). The defendant brought a
writ of error in the Exchequer Chamber where that judgment was affirmed (by Lord
Chief Baron Pollock, Justices Patteson, Coleridge, and Wightman, and Barons Parke,
Alderson, and Rolfe; see 2 Com. B. 784). The writ of error was then brought in
this House. The judges were summoned, and Barons Parke and Alderson, Justices
Patteson, Coleridge, Coltman, and Maule, Baron Rolfe, Justices Wightman and Cress-
well, Baron Piatt, and Justices Erie and Vaughan Williams, attended their Lordships.
Sir F. Kelly, and Mr. Serjt. Channell (Mr. Lathom J. Browne was with them)
for the plaintiff in error. The judgment of the Court below rests upon the au-[290]-
thority of two cases; Allen v. Say rue (8 Barn, and Cres. 561' ; 3 Man. and Ryl. 9), and
Young v. Turing (2 Man. and Gr. 593; 2 Scott, N. R, 752). It is submitted that the
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I H.L.C., 291 IRVING V. MANNING [ 1847]
principle declared in both those cases, that there is, in respect of a question of partial
or total loss, no distinction between an open and a valued policy, is erroneous, and
that, at all events, such a- principle cannot govern the decision in this case.
There are three classes of cases in which total loss may occur. The first is
where the ship absolutely sinks and is in fact lost; the second, where the ship itself
may not be in fact totally lost, but may be unable to continue the voyage, being
injured past repai r; and the third, where the ship can be repaired, but the expense
of repair will be so considerable, that after the repairs have been effected, the vessel
will fetch less in the market than the sum expended in repairing it. This third
class is now known as the class of a constructive, total loss. The present case is of
that class; and the owners insist that they may refuse to expend a sum of 10,500
in repai rs; may therefore convert a loss which is only partial, and capable of re-
paration, into a total loss; may thereby cast on the insurers a loss of < 17,500, and
thus gain a large profit on the loss of their vessel. It is submitted that they are not
entitled to this advantage.
Nothing is clearer than that a policy of insurance is a contract of indemnity, and
in no case will the law give the party insured more than an indemnity. If the
assured can here recover as for a total loss he will obtain more than an indemnity;
he will do so even upon his own statement of the value of the thing insured. The
policy is on the ship alone; stores and other matters are not insured. The ship is
not said to be worth . 17,500, but to be so together with stores, provisions, and
seamen's wages. To allow the assured to recover the whole of that sum will be to
allow him to recover more than an indemnity for the thing he has insured, by taking
into calculation things which he has not insured.
[291] But he will also obtain more than an indemnity, even with regard to the
ship itself, if he should be allowed to recover as for a total loss. Under the circum-
stances which exist in this case, the vessel might have been repaired, and might have
continued the voyage. The voyage was not, therefore, totally lost, it miglit- have
been continued had the vessel been repaired, and a profitable freight might have
been earned. The assured was not entitled to make this question one of a comparison
of advantages and disadvantages, and on the balance of that comparison to decide,
to put an end to the thing insured, and claim as for a total loss. The practice of
claiming a total loss where the ship is not past repairing, is one of very modern
origin. It is one of a dangerous kind, and may introduce fraud into insurance
cases.
Although the law considers the ship, upon being abandoned, to be totally lost,
still, when that abandonment takes place upon a valued policy, and the value on the
policy so far exceeds that which is proved to be the real value of the ship, the law will
not allow the assured to recover the value stated in the policy, for that would be to
break through a great legal principle, and to give the assured more than an indemnity.
There are several cases in which the party has not been permitted to recover more
than the actual value of the ship. Hamilton v. Mendez (1 Sir W. Bl. 276; 2 Burr.
1198) is one of that kind. There the ship had been captured, and recaptured, and
abandoned, but the recapture of the vessel having been effected, and the vessel brought
safe into port before action "brought, the Court held (2 Burr. 1214) that " t he plain-
tiff, upon a policy, can only recover an indemnity according to the nature of his case,
at the time of the action brought, or, at most, at the time of his offer to abandon." -
The case of Lewis v. Ritcker (2 Burr. 1167) [292] is to the same effect, when the
principle adopted in that case comes to be attentively considered; for there it was
distinctly said (2 Burr. 1171) that " t he only effect of the valuation is fixing the
amount of the prime cost/' and the assured only recovered the real amount of the loss.
It is t rue that, in the case of a valued policy, where there has been an actual
total loss, no question can arise as to the sum to be paid to the assured, for that
sum has been fixed by the policy itself, which, according to Lord Mansfield in the
cases just cited, definitively settles what shall be taken as the prime cost of the things
insured; but where, as in this case, the loss has not been an actual total loss, but the
owner has the option to repair or abandon, it is not consistent with justice, nor can it
be reconciled to the policy of the law, that the assured shall receive the whole value
agreed upon in the policy, when that has only been agreed upon as that which is to
be paid in the event of an actual total loss. That agreement can only be carried
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IRVING V. MANNING [ 1847] I H.L.C., 293
into effect where the loss is actually total. Here the ship would be, when repaired,
of the value of 9000, and it cannot be said that, that being so, the underwriters
must pay the sum of 17,500.
It cannot be contended that, because the policy is a valued policy, the sum stated
in it is conclusive as against the insurer, and against him alone. The case of Hamil-
ton v. Mendez (1 Sir W. Bl. 276; 2 Burr. 1197), already cited, shews that the real
amount of the loss may be considered upon a valued policy. And the case of Forbes
v. Aspinall (13 East, 323) is even more directly an authority for that proposition.
There, upon a valued policy upon freight, the plaintiff was only allowed to recover
for the freight on the fifty-five bales of cotton actually on board at the time of the
loss. And in accordance with that doctrine is the opinion of Mr. [293] Justice Story,
as quoted in an American work on Insurance (Phillips on Insurance, vol. 2, p. 273),
where it is said, " In giving an opinion on this question, Mr. Justice Story says,
' In what respect does the case of the ship differ from the case of the goods, as to the
ascertainment of the damage? Can the valuation in the policy be a more correct
guide in the one case than in the other? The question in each case is necessarily the
samewhat is the present value of the property compared with its value before the
injury
1
? and for the same purpose; to fix the extent of the damage sustained by the
accident. One should suppose that this was the true measure of the damage in all
cases in which it is attainable. The valuation on the policy cannot, in the case of
the ship, any more than of the goods, measure the proportion of the damage, because
the value may, in the mean time, have essentially changed. And yet it is that propor-
tion which is the object of the inquiry. The law deems the ship worth repair, unless
injured more than half its value. At what time?Surely at the time of the i nj ury/
Peele v. The Merchants Insurance Company (3 Mason, 27). The doctrine of Mr.
Justice Story has been distinctly adopted by the Supreme Court of the United States;
Patapasco Insurance Company v. Southgate " (5 Pet. S. C. R. 604).
In the next page of that work it is said, " On the other hand the Supreme Court
of Massachusetts has laid down the doctrine, that the rule of abandonment for
damage over half of the value, refers to the value in the policy. . . . In the first of the
decisions referred to, this Court says the value in the policy is prima facie, and,
in the absence of other testimony, the true value. Winn v. The Colonial Insurance
Company'
3
(11 Pick., 279). But this doctrine, in laying down which Mr. Justice
Story himself took part, [294] does not in reality contradict the former, for it
admits that " other testimony " may be given to shew the true value, and if so,
the value stated in the policy ceases to be conclusive between the parties. It is,
therefore, submitted that the policy must, in the case of a merely constructive total
loss, be treated as an open policy, and the real amount of the loss must be ascertained.
If, as the assured contend, the policy is to be treated as an open policy, when the
question of the propriety of repairing the ship is under consideration, it must equally
be so treated when the amount payable in respect of the loss is to be determined.
It is open for all or closed for all purposes. If it is closed for all, then it is clear
that the owners had no right to abandon on account of the expence of repairing, and
then to claim for a total loss; for the ship existed in specie and might have been
repaired, and, being repaired, would then have been a. good sea risk. The principle
adopted in Hamilton v. Mendez (which case was not cited either in Allen v. Sugrue,
or in Young v. Turing) is that which must govern the present case. The judgment of
the Court below is in contradiction to the first principles of marine insurance law,
and must be reversed.
The Attorney General and Sir F. Thesiger (Mr. Greenwood was with them) for
the defendants in error.
The question here is not, what is the amount to be paid? but has there, or has
there not been a total loss? For the purposes of this case there is no distinction
between an open and a valued policy. If so, the assured was entitled to recover,
for there can be no doubt that the loss here was a total loss. The facts shew it to be
so, and it is so found in the special verdict, which declares that, under the circum-
stances existing in this case, a prudent owner being uninsured would not have
repaired the vessel. It is contended that the fact of the policy being a valued policy
cannot affect the question of the right to recover [295] as for a total loss, when the
loss is shewn to be in the nature of a total loss.
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I H.L.C., 296 IRVING V. MANNING [ 1847]
It is said that a policy of insurance is a mere contract for indemnity, and the
main objection to the right of the assured rests upon that argument. It is in some
respects a contract of indemnity, but not so as to prevent the right of the assured
to recover as for a total loss upon the assessment of t hat total loss made in the policy
itself. That this is a valued policy cannot affect the question, whether this is a
case of total loss or not. It would have been a total loss upon an open policy, and the
special verdict finds that the circumstances of the loss were such that a prudent
uninsured owner would not have repaired the vessel. Upon an open policy it is there-
fore clear that the plaintiff would have been entitled to recover for a total loss; why
should he not do so upon this which is a valued policy? This is an attempt to over-
t urn the decision in Allen v. Sugrue (8 Barn, and Cr. 561; 3 Man. and Ry. 9), which
has been recognized as an authority ever since it occurred. It is t rue t hat neither
in that case, nor in Young v. Turing (2 Man. and Gr. 593 ; 2 Scott, N. C. 752), which
confirmed and adopted the former, was the case of Hamilton v. Mendez referred to.
But it is impossible to doubt that that case was known to the counsel who argued,
and the judges who decided 'both the latter cases, and t hat it was not cited simply
because it was not deemed applicable; and it is not, for the only question there was
to what extent the goods insured had been injured. It is not denied t hat a policy
of insurance is in some respects a contract of indemnity, but that indemnity is not
to be measured by the mere amount for which the vessel would sell at the moment
of the abandonment being made. If that measure of value was alone applied to it,
the assured would not be indemnified. The indemnity is to be measured by what
[296] was agreed to be the value of the ship when the insurance was made. That
was the rule which the Court applied in the case of Shaw v. Felton (2 East, 109),
though there the value of the thing insured was daily becoming less during the voyage.
There an insurance was effected on ship and goods, valued at a certain sum, on a
voyage to Africa and the West Indies. The assured was held entitled to recover on
a total loss which happened at the latest period of the voyage, although a consider-
able part of the estimated value consisted of stores and provisions for the purchase
and sustenance of slaves during the voyage. The judgments of Mr. Justice Lawrence
and Mr. Justice Le Blanc are important on this poi nt The former said (2 East,
115), " As the practice of binding parties as to the amount of their interest by valued
policies has obtained ever since the statute of Geo. II., it would require very strong
reasons to show that it is wrong. The effect of a valued policy is not to conclude
the underwriter, and prevent him from showing that the assured had no interest,
and that in fact it was a mere wagering policy within the st at ut e; but in order
to avoid disputes as to the quantum of the assured's interest, the parties agree that it
shall be estimated at a certain value. Here it is not pretended that the subject
matter of the insurance was not of the value estimated in the policy. Then how
does this differ from the case of an open policy in this respect. Would it not be
sufficient for the assured in an open policy to prove that at the time the ship
sailed the subject matter of the insurance was of such a value? Is not that the
period to look to, and not the state of the thing at the time of the total loss happen-
ing?" And Mr. Justice Le Blanc said (2 East, 116), "The value of the property
must be continually diminishing, and if the loss should happen at the latter end of
a long voyage, no doubt the [297] property must be considerably deteriorated by
the usual wear and tear, and yet it is never objected that the underwriter is not
liable for the original value." There is no authority whatever which supports the
doctrine t hat the assured is not entitled to recover beyond the actual loss, as measured
by the value of the ship at the moment that loss occurs, while both these judgments
lay down an exactly opposite rule. The case of Allen v. Sugrue is opposed to such
a doctrine as that which is contended for on the other side; and there are two cases
which occurred between the period of the decision of Allen v. Sugrue and Young v.
Turing, both of which proceed on the principles recognized and adopted in those
decisions. One of these is the case of Edington v. Jackson (tried at York in the year
1832) before Mr. Baron Alderson. The notes taken in that case, by Mr. Justice
Cresswell then at the bar, on an application for a new trial, give this account of the
case. The action was on a valued policy, and there Lord Tenterden said it may be
prudent not to have a valued policy, but we must decide the question of total loss or
not just as we should in a case of an open policy; and the Court, composed of Justices-
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IRVING V. MANNING [ 1847]
I H.L.C., 298
Littledale, Parke, and Patteson, expressly concurred with that opinion. The other
case was that of Heme v. Bay, before Mr. Justice Maule (tried at Liverpool, in the
year 1842), in which that learned judge expressly adopted the rule as laid down
in the case of Allen v. Sugrue, and his ruling there was never afterwards questioned.
Then came the case of Young v. Turing (2 Man. and Gr. 593; 2 Scott, N. C. 752),
and considering the circumstances in that case, it is impossible to imagine a stronger
authority for the doctrine now contended for on the part of the defendants in error.
In delivering the judgment of the Court, Lord Chief Justice Tindal said (2 Man.
and Gr., 601; 2 So., N. C. 761), " I am not aware of any [298] case or principle in
the law of insurance which makes the estimated value in the policy a circumstance
on which the question of total or partial loss ought to turn. The agreed value in
the policy of the subject insured is intended to save the expence and doubt that may
attend the investigation of value, as affecting the quantum of compensation only*
It may operate, according to events, to the advantage or detriment of either par t y;
and where no fraud exists, both are bound by it." No cases can be cited to impeach
the doctrine thus distinctly laid down, and the attempt now made is therefore a mere
attempt to avoid its application to the present case. It is, in substance, contended
on the other side, that the fact of a policy being valued, ought to be taken into con-
sideration in deciding the question of total or partial loss. Such a proposition cannot
be maintained, yet if not maintainable, the arguments on the other side are absolutely
inapplicable and valueless.
There are two classes of losses, total and partial, but the expression " constructive
total loss" is not a happy one; it introduces confusion into the subject. Whether
the loss is total by the absolute sinking of the ship to the bottom of the sea, or by the
circumstance that it has sustained such an injury, and is in such circumstances that
no prudent uninsured owner would attempt its repair, there is equally a loss of the
vessel and the voyage, and an end of the risk. Both-cases must proceed on the same
principle. It is not pretended to be denied that if the vessel here had been actually
sunk, the owner would have been entitled to recover the full amount stated in the
policy. Suppose it had been known that at the moment when the ship foundered
in the open sea it was only worth 5000, it cannot be pretended that the underwriter
would have been entitled to say, " I will only pay you 5000." Yet he might say
so if it is true that, to all intents and in every respect, a policy of insurance is a
mere contract of indemnity, and nothing more. In some respects it is a contract
[299] of indemnity, but it is a contract which, in the case of a valued policy, while
it promises an indemnity, settles and declares what shall be the amount of that in-
demnity. The case of Lewis v. Rucker, so much relied on by the other side, is an
authority for that proposition. In that case, Lord Mansfield says (2 Burrow's
Reports, 1171), " a valued policy is not to be considered as a wager policy, or like
interest or no interest; if it was, it would be void by the act 19 Geo. 2. The only
effect of the value is fixing the amount of the prime cost, j ust as if the parties admitted
it at the trial. . . . It is settled that upon valued policies the merchant need only
prove some interest to take it out of the 19 Geo. 2, because the adverse party has
admitted the value; and if more was required, the agreed valuation would signify
nothing. But if it should come out in proof that A. had insured 2000, and had
interest on board to the value of a cable only, there never has been, and I believe there
never will be, a determination that by such an evasion the Act of Parliament may be
defeated." This last expression clearly shows what was Lord Mansfield's meaning
when he spoke of a policy of insurance being a contract of indemnity.
A similar observation may be made with regard to what Lord Mansfield says in
Hamilton v. Mendez (2 Burr. 1198; 1 Sir W. Bl. 277): It is clear that a policy
being a contract of indemnity is an expression which must be understood with respect
to the subject matter. There a capture and recapture had taken placethere was
nothing but a delay of the voyage; and the question was whether the assured, by the
mere act of his own will, had a right to turn a partial into a total loss. The point
of that judgment may be found in this expression of Lord Mansfield (2 Burr. 1212),
" If the thing in truth was safe, no artificial reasoning shall be allowed to set up a
[300] total loss." But in that very judgment he assumes that total loss may depend
on something besides the actual destruction of the vessel, and he says (Id. 1209), " It
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I H.L.C., 301 IRVING V. MANNING [ 1847]
does not necessarily follow that because there is a recapture, therefore the loss ceases
to be total."
The case of Aspinall v. Forbes (13 East, 323) has nothing to do with the present.
There the insurance was on freight, and the ship was lost when only some of the
goods on which freight was to be earned were on board. Of course, though that was
a valued policy, the value was fixed upon the freight of a full cargo, and when only
a small part of the cargo was on board, that which had to give rise to the freight was
not in existence. Lord Ellenborough distinctly put the judgment upon that ground.
Provided the thing on which the insurance was to take effect, and on which the value
was calculated, was in existence, the policy would attach, and, when once it had
attached, the value in the policy must be taken as conclusive. Thus: suppose there
was a valued policy on a ship, and after the policy was effected, but before the loss,
a decree of the Government should issue, which produced the result of lessening the
value of all shipping by one-half, that would not affect the right of the insured to
recover the value according to which he had insured.
The argument here amounted to this, that if the expences of repairs do not
exceed the value of the policy, then the loss is to be deemed only a partial loss. But
it is impossible to produce any decision, or any declared principle of law, to support
such a proposition. The grounds on which the assured may recover for what is
called a constructive total loss, are those on which a prudent uninsured man would
not go to the expence of repairs, but would put an end to the voyage. Such have
always, hitherto, been deemed sufficient. But it is now, [301] for the first time, con-
tended t hat t hat is not the test, but that a new element must be introduced into the
discussion of the questionthat the value fixed in the policy must be taken into con-
sideration, and that if that value exceeds the amount required for repairs, though that
amount may itself be greater than the value of the vessel after the repairs have been
executed, the owner must nevertheless repair the ship and submit to the loss. This
would be to put him, when insured, into a worse position than if he had not been
insured, and would convert what the plaintiff in error asserts to be a contract of in-
demnity into a contract to incur loss without the hope of indemnity.
According to all the principles of marine insurance law there has been a- total
loss, and if so, then the assured are entitled to recover the value fixed in the policy.
The fact t hat a value has been so fixed cannot affect the question, which is simply,
whether the loss is a total or a partial loss?
As there can be no doubt that it is a total loss, the title of the assured is complete,
and the judgment of the Court below must be affirmed.
Sir F. Kelly in reply.There is in this case a conflict of principles. The first
principle controverted here is that a policy of insurance is a contract of indemnity,
and nothing more; the next is that which governs the Courts with respect to a
valued policy. The parties here have admitted the value of the ship.y That fact
must be taken as settled, and then it is said that where the ship is insured on a
valued policy, and is totally lost, there can be no inquiry into the value at the time
of the loss, for the parties, as between themselves, have admitted it. But taking that
argument to be true in part, and t rue as applicable to cases of actual total loss, it is
not true when the case is merely one of constructive total loss. From all [302] the
authorities, the paramount principle on which a distinction is founded may be
deduced. In the case of a ship positively lostsunk to the bottom of the seathere
can be no conflict of principle, the contract is one to indemnify the assured for the
loss actually sustained. But if the loss is not actual, but only constructive, all the
circumstances attending it must be taken into consideration, and in that sense of
the word the policy is an open policy. A different doctrine cannot be reconciled
with the principle that a contract to indemnify is of the very essence of a policy of
insurance.
The ship here is valued at 17,500. As between the parties it is therefore
said, that it must be taken as conclusive that the ship is of t hat value. But if so, it
must be so taken for all purposes, against the owner as well as against the under-
writer. Then how stands this case? The owner comes into Court and claims for
a total loss. When he has proved that the ship has been totally lost he may recover
the value stated in the policy; but to prove that it will cost him 10,500 to repair the
ship, does not prove that the ship is totally lost, and till he gives that proof he cannot
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IRVING V. MANNING [ 1847] I H.L.C., 303
be entitled to recover. As the proof stands in the present case, the owner has merely
proved that he has sustained a loss of 9000, and yet he claims to recover 17,500.
That is not indemnity, it is profit. A party cannot be permitted thus to prove a
loss of a certain amount, and on that proof to recover something which far exceeds
that amount.
To pass from the principle of law to the decided cases. There can be no doubt
that all those cases are unfavourable to the claim of the owners. In Hamilton v.
Mendez the Court held, that though value was not generally an open question on
a valued policy, yet, that cases might arise in which it would be absolutely necessary,
in order to maintain other and more important principles of law, to shew what was
the real value.
[303] And in Lewis v. IZucker, Lord Mansfield said, that he desired it to be
understood that in a valued policy the plaintiff could not recover more than the actual
value when the loss occurred. And that principle is the more strongly to be en-
forced in this case, because, though the ship alone was insured, the valuation was
made on the ship, the stores, provisions, and seamen's wages. The case of Forbes
v. Aspinall fully supports this argument. There the insurance was on freight, and
the damage claimed was for more cargo than was on board the ship when it was lost,
and there it was held, that where the valuation is for a greater sum than is actually
lost, the indemnity cannot go beyond that loss.
It is clear that where there is a valued policy, the sum mentioned in it must be
taken to be the value of the ship as respects both parties, and for all purposes what-
ever, or for none, and cannot be treated as a fixed sum for one purpose, and an un-
fixed and unsettled sum for another. It cannot, therefore, be treated as a settled
amount for the purpose of the demand on the underwriter, but as an unsettled and
unascertained amount, when the conduct of the assured in putting an end to the
voyage and converting a partial into a constructive total loss comes to be considered.
Yet, unless this inconsistent mode of dealing with the policy can be supported, it
is clear that the assured cannot here make out a title to claim as for a total loss.
The Lord Chancellor moved that the following question be put to the Judges:
" Whether, in the judgment upon the special verdict in this case, the damages ought
to be taken on property assessed at 3000, or at 1500? "
The Judges requested time to consider the question.
[304] Mr. Justice Patteson, in the absence of Barons Parke and Alderson, stated
the answer of the judges in the following t er ms : I am desired by the judges, who
heard the whole of the argument at your Lordships' bar, to give their answer to this
question, and to state their opinion that the plaintiff below was entitled to recover,
upon the facts found by the special verdict, the sum of 3000.
Upon the record it appears that the action was on a policy for 3000 on a ship
valued at 17,500. The other facts found by the special verdict show, that it was
fairly valued at that sum (and, indeed, it would be assumed that it was so, unless
fraud had been pleaded and proved), and then it is found that the vessel during the
voyage was so damaged as to be incompetent to proceed without repai rs; that the
necessary expenditure, in order to repair and make it seaworthy, would have
amounted to 10,500, and that the ship would have been then worth 9000 only,
which was its marketable value then and at the time of the policy; that a prudent
owner, uninsured, would not have repaired the vessel; and that it was duly abandoned
to the underwriters.
If this had not been the case of a valued policy it is clear that on the facts found
there was a total loss; for a vessel is totally lost, within the meaning of a policy,
when it becomes of no use or value as a ship to the owner, and is as much so as if
the vessel had gone to the bottom of the sea, or had been broken to pieces, and the
whole or great part of the fragments had reached the shore as wreck; and the course
has been in all cases in modern times to consider the loss as total where a prudent
owner, uninsured, would not have repaired.
In an open policy, therefore, the assured would have been entitled to recover for
a total loss, the amount to be ascertained by evidence.
What difference then arises from the circumstance that the policy is a valued
policy?
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I H.L.C., 305 IRVING V. MANNING [ 1847]
[305] By the terms of it, the ship, etc., for so much as concerns the assured, by
agreement between the assured and assurers, are and shall be rated and valued
at 17,500, and the question turns upon the meaning of these words.
Do they, as contended for by the plaintiff in error, amount to an agreement that
for all purposes connected with the voyage, at least for the purpose of ascertaining
whether there is a total loss or not, the ship should be taken to be of that value, so
that when a question arises whether it would be worth while to repair, it must be
assumed that the vessel would be worth that sum when repaired?
Or do they mean only, that for the purpose of ascertaining the amount of com-
pensation to be paid to the assured, when the loss has happened, the value shall be
taken to be the sum fixed, in order to avoid disputes as to the quantum of the assured's
interest 1
We are all of opinion that the latter is the true meani ng; and this is consistent
with the language of the policy, and, with every case that has been decided upon
valued policies.
In the case of Lewis v. Rucker (2 Burr. 1167), on a valued policy on goods, the
amount to which the underwriter was held liable for a partial loss was ascertained
by computing such a proportion of the value in the policy as the difference between
the price for which sound goods would have sold at the port of delivery, and that for
which the damaged goods, actually sold, bore to the price for which sound goods
would have sold. So that in estimating the extent of the loss, that is, in determining
whether it was a loss to the extent of one half, one third, or to any other extent, the
value in the policy was wholly disregarded, and nothing was considered but the
state of the goods as ascertained by their selling prices. If sound goods would have
brought double [306] the price of the damaged, the loss was one half, or fifty per
cent., whatever the value in the policy might be. But the extent and nature of the
loss being ascertained by this comparison, the underwriter was held liable to pay the
proportion so ascertained of the value in the policy; and this mode of treating partial
losses on goods is always adhered to. Now the question whether a loss is total or
partial, is a question of the same nature as the question, what is the extent of a
partial loss? and there is the same reason in both cases for excluding the consideration
of the value in the policy from the inquiry as to the extent of the loss, and for treats
ing that value as binding on the question of, how much the subject so> totally or
partially lost was worth; so that the mode of determining the question, whether the
loss was total or not, which has been adopted in this case, agrees, in so far as it
excludes the consideration of the value in the policy, with that in which the inquiry
into the extent of a partial loss on goods is always conducted. Such has been the
construction put upon valued policies in the cases which are questioned in this writ
of error; Allen v. Sugrue (8 Barn, and Cres. 561); Young v. Turing (2 Man. and Gr.
593); and Egginton v. Lawson, 1832; and Heme and Hay, 1842, cited by Sir F.
Thesiger. Those cases have now been considered, for many years, as having settled
the law, and have been the basis on which contracts without number have been
formed, and they ought not on slight grounds to be departed from. The principle
laid down in these latter cases is t hi s: that the question of loss, whether total or not,
is to be determined just as if there was no policy at all; and the established mode of
putting the question, when it is alleged that there has been, what is perhaps impro-
perly called, a constructive total loss of a ship, is to consider the policy altogether out
of the question, and to inquire what a prudent uninsured owner [307] would have
done in the state in which the vessel was placed by the perils insur.ed against.
If he would not have repaired the vessel, it is deemed to be lost.
When this test has been applied, and the nature of the loss has been thus deter-
mined, the quantum of compensation is then to be fixed.
In an open policy, the compensation must be then ascertained by evidence.
In a valued one, the agreed total value is conclusive; each party has conclusively
admitted that this fixed sum shall be that which the assured is entitled to receive in
case of a total loss.
It is argued that this course of proceeding infringes on the generally received
rule, that an insurance is a mere contract of indemnity, for thus the assured may
obtain more than a compensation for his loss; and it is so.
A policy of assurance is not a perfect contract of indemnity. It must be taken
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PINKUS V. RATCLIFF GAS CO. [ 1846- 47] I H.L.C., 308
with this qualification, that the parties may agree beforehand in estimating the
value of the subject assured, by way of liquidated damages, as indeed they may in
any other contract to indemnify.
The Lord Chancellor (July 23).My Lords, in this case of Irving v. Manning,
which was before your Lordships a short time since, your Lordships called in the
assistance of the learned judges. All the learned judges who were present at the
hearing, were clearly of opinion that the judgment of the Court below was correct,
and in that opinion all the noble and learned Lords who attended that hearing also
concur. I have therefore only to move your Lordships to afl&rm the judgment of the
Court below in favour of the defendant in error.
Lord Campbell.My Lords, I am extremely glad that a question which has
agitated Westminster Hall for the [308] last thirty years is at last solemnly decided
by a judgment of your Lordships. It is a question of great importance to the com-
merce of this country. I entirely concur in the opinion expressed by my noble and
learned friend upon this subject.
My Lords, it appears to me that upon the just construction of this contract,
the plaintiff was entitled to recover the sum which the jury has awarded him. If
you look at the contract, it seems to me that it was definitively determined that, for
all purposes, the value of the ship would be taken at the sum of 17,500. There
was nothing illegal in this contract; we have only to put a construction upon it,
and if it be a just construction, and there is neither any rule of common law nor any
statute to prevent that construction being carried into effect, we are bound to give
effect to it, and to pronounce in favour of the plaintiff below.
I repeat that I rejoice that this question, which has so long agitated Westminster
Hall, is now for ever set at rest, and is satisfactorily decided.
Judgment affirmed, with costs.
[309] HENEY PINKUS,Appellant; THE RATCLIFF GAS-LIGHT and COKE
COMPANY, GEORGE OFFOR, and others,Respondents [May 11, 12, 18,
25, June 8, 15, 1846; July 21, 1847].
AgreementsSpecific performanceCompaniesLien.
The appellant having claimed to be a partner with one Paynter in gas works,
which the latter had erected and was about to sell to a Company then about to
be formed, it was agreed between them, for the purpose of ending their dis-
putes respecting the ownership of the gas works, that Paynter should be at
liberty to sell the works at such price as he pleased, upon accounting to the
appellant for the value of the works at a certain rate, and that Paynter should
hold shares for the appellant in the company to the value of 2000 for two
years. The Company having been formed, and having purchased the gas
works from Paynter, the appellant filed a bill against him, and obtained a
decree for specific performance of their agreement. Before that decree was
made, the Company was dissolved, and the gas works were sold to the Ratcliff
Gas-light and Coke Company. The appellant then filed a new bill against
Paynter, the Ratcliff Company, the directors of the dissolved company, and
the assignees of Paynter, who had become bankrupt, to establish a lien upon
the gas works for what should be found due to him under the former decree,
as well as to carry out the former decree against all these part i es:
Held, by the House of Lords, affirming a decree of the Vice Chancellor, that the
sale of the gas works by Paynter to the London Company was authorised by
the appellant' s agreements; that he had no just claim against the Company,
or lien on the property, and that the supplemental bill was properly dis-
missed, with costs, as against all the defendants, except Paynter and his
assignees.
This was an appeal against a decree of the Vice Chancellor of England, in a suit
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