AVERAGE It may be of interest to refer briefly to one or two main principles which govern an adjustment. The fundamental idea is that the several interests at risk shall contribute in proportion to the benefits they have severally received by the completion of the adventure. Contributions are not made in proportion to the amounts at stake when the sacrifice was made, but in proportion to the results when the adventure has come to an end. An interest which has become lost after the sacrifice, during the subsequent course of the voyage, will pay nothing; an interest which has become depreciated will pay in proportion to the diminished value. The liability to contribute is inchoate only when the sacrifice has been made. It becomes complete when the adventure has come to an end, either by arrival at the destination, or by having been broken up at some intermediate point, while the interest in question still survives. To this there is one exception, in the case of G. A. expenditure. Where such expenditure has been incurred by the owner of one interest, generally by the shipowner, the repayment to him by the other interests ought not to be wholly dependent upon the subsequent safety of those interests at the ultimate destination. If those other interests or some of them arrive, or are realized, as by being landed at an intermediate port, the rule (as in the case of G. A. sacrifices) is that the contributions are to be in proportion to the arrived or realized values. But if all are lost the burden of the expenditure ought not to remain upon the interest which at first bore it; and the proper rule seems to be that contributions must be made by all the interests which were at stake when it was made, in proportion to their then values. Again, the object of the law of G. A. is to put one whose property is sacrificed upon an equal footing with the rest, not upon a better footing. Thus, if goods to the value of £100 have been thrown overboard for the general safety, the owner of those goods must not receive the full £100 in contribution. He himself must bear a part of it, for those goods formed part of the adventure for whose safety the jettison was made; and it is owing to the partial safety of the adventure that any contribution at all is received by him. He therefore is made to contribute with the other saved interests towards his own loss, in respect of the amount “made good” to him for that. The full £100 is treated as the amount to be made good, but the owner of the goods is made to contribute towards that upon the sum of £100 thus saved to him. The same principle has a further consequence. The amount to be made good will not necessarily be the value of the goods or other property in their condition at the time they were sacrificed; so to calculate it would in effect be to withdraw those goods from the subsequent risks of the voyage, and thus to put them in a better position than those which were not sacrificed. Hence, in estimating the amount to be made good, the value of the goods or property sacrificed must be estimated as on arrival, with reference to the condition in which they would probably have arrived had they remained on board throughout the voyage. The liability to pay G. A. contributions falls primarily upon the owner of the contributing interest, ship, goods, or freight. But in practice the contributions are paid by the insurers of the several interests. Merchants seldom have to concern themselves with the subject. And yet in an ordinary policy of insurance there is no express provision requiring the underwriter to indemnify the assured against this liability. The policy commonly contains clauses which recognize such an obligation, e.g., a warranty against average “unless general,” or an agree-
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ment that G. A. shall be payable “as per foreign statement,” or “ according to York-Antwerp Buies ”; but it does not directly state the obligation. It assumes that. The explanation seems to be that the practice of the underwriter to pay the contribution has been so uniform, and his liability has been so fully recognized, that express provisions were needless. But one result has been that very differing views of the ground of the obligation have been held. One view has been that it is covered by the sue and labour clause of an ordinary policy, by which the insurer agrees to bear his proportion of expenses voluntarily incurred “ in and about the defence, safeguard, and recovery ” of the insured subject. But that has been held to be mistaken by the House of Lords (A itchison v. Lohre, 4 A.C. 755). Another view is that the underwriter impliedly undertakes to repay sums which the law may require the assured to pay towards averting losses which would, by the contract, fall upon the underwriter. Expenses voluntarily incurred by the assured with that object are expressly made repayable by the sue and labour clause of the policy. It might well be implied that payments compulsorily required from the assured by law for contributions to G. A., or as salvage for services by salvors, will be undertaken or repaid by the underwriter, the service being for his benefit. But the decision in Aitchison v. Lohre negatives this ground also. The claim was against underwriters on a ship which had been so damaged that the cost of repairs had exceeded her insured value. A claim for the ship’s contribution to certain salvage and G. A. expenses which had been incurred, over and above the cost of repairs, was disallowed. The view seems to have been that the insurer is liable for salvage and G. A. payments as losses of the subject insured, and therefore included in the sum insured, not as collateral payments made on his behalf. This bases the claim against the insurer upon a fiction, for there has been no loss of the subject insured; in fact, the payment has been for averting such a loss. And it suggests that the insurer is not liable for salvage where the policy is free of particular average, which does not accord with practice. An important question as to an insurer’s liability for G. A. arose recently in the case of the Brigella (1893, P. 189), where a shipowner had incurred expenses which would have been the subject of G. A. contributions, but that he alone was interested in the voyage. There were no contributories. He claimed from the insurers of the ship what would have been the ship’s G. A. contribution had there been other persons to contribute in respect of freight or cargo. The claim was disallowed on the ground that there could be no G. A. in such circumstances, and therefore no basis for a claim against the insurer. The liability of the insurer was thus made to depend, not upon the character of the loss, but upon the fact of contribution or possibility of contribution. But this was not followed in Montgomery v. Idemnity Co. (1900, 6 Com., Ca. 19). There ship, freight, and cargo all belonged to the same person. He had insured the cargo but not the ship. The cargo underwriters were held liable to pay a contribution to damage done to the ship by cutting away masts for the general safety. The loss was in theory spread over all the interests at risk, and they had undertaken to bear the cargo’s share of such losses. Their liability did not depend upon the accident of whether the interests all belonged to one person or not. This agrees with the view taken in the United States. As to Particular Average, see under Insurance (Marine). Authorities.—Lowndes on General Average, 4th ed., London, 1888.—Abbott’s Merchant Ships and Seamen, 13th ed., London, S. IL — 5
