But the next objection appears to me to be a very serious one, and I cannot see that there is any satisfactory answer to it. First of all it appears that the rules were altered on the 29th March 1869, by which "members were struck out so that you might insure any one by special risks or on voyage policies. This appears to have been done, not according to the rules, at a general meeting, but at a meeting of the committee. But Mr. Cory, one of the applicants before me, was insured by policies, the last of which was dated on the 8th Sept. 1868, which is of course long before the 29th March 1869; he is, therefore, not bound by these alterations, and he never authorised his credit to be pledged. I decline to enter into the position of the other applicant, Mr. Hawkesley. But, as I said, according to the well-established rule now in suits, as regards misjoinder, you could always amend by striking out the applicant. It is not necessary to go into the question whether or not Mr. Hawkesley has sanctioned these alterations because Mr. Cory alone could support the application.

Then there being no valid alteration, the rule appears to me to authorise the managers to insure members only on these terms.

Then it is argued that the mere issuing of a policy to a person on these terms makes him a member; now I am unable to accede to that. Members are defined, and they are defined to be people who insure for a year, and insure each other's ships for that year, and the way they insure is by making contributions. But these people never insured anybody for a year; they did not insure anybody for any time whatever. They simply paid a premium as every insurer does, and it seems to me to be an abuse of terms to say that a man who pays a premium thereby pays a contribution to the insurance of his own ship. That is not the meaning of the rule. The plain and literal and common-sense meaning coincide in this case, as they generally do, and in my opinion the issuing of a policy to any person not already a member was not authorised by this rule, and consequently the act of the agents was wholly unauthorised; the power of attorney under which they acted or assumed to act did not confer upon them the authority to enter into this contract, and consequently the contract itself does not bind the association. It appears to me that persons who enter into these contracts have no right to complain. They must have had notice of the nature of the hody which was contracting with them, and of course notice of the rules and regulations which form the constitution of the company. As I said before, considering the enormous importance of the question to the parties, and the nature of the objections, I thought it right to give my opinion on this objection also.

On these grounds the only conclusion I can come to is that if the question of delay is not decided adversely to the applicants, the alleged creditors are not creditors of the association, and their debts ought not to be allowed.

Now the question of delay is toa certain extent no doubt to be dealt with as a matter of discretion. The law seems to me to stand in this way. By a general order, which was authorised by Act of Parliament, the ordinary practice of the Court of Chancery has been extended to winding-up cases, and according

[ROLLS.

to the ordinary practice of the Court of Chancery, after a chief clerk has made a certificate and eight days have expired, you cannot get rid of that certificate except on special grounds. The nature of those special grounds has nowhere been strictly defined, but it must be something substantial, and it also must be at a time when you do not very much vary the position of the parties. Now in the present case it must be remembered that the certificate is obtained by the official liquidator, who in a sense represents everybody. The persons who now apply had no direct intervention in the matter. They are not in quite as bad a position, if I may say so, as parties to a suit, who are present when the decision is given; their direct intervention is caused by an attempt to make them pay something, and then their attention is first aroused. In the next place the creditors have done nothing more than prove they did not obtain a dividend, and they have not obtained a call; therefore, their position is not affected except to the extent of any costs they may have incurred subsequently, and which the court may give them. And thirdly it must be and no doubt will be considered that the questions upon which the official liquidator at first had to decide, and the questions which the court has now to decide, are not matters which every one can decide for himself: they are not matters, so to say, so plain, and so clear, and so easy that every policy holder must be considered to have known them from the beginning and to have stood by and acquiesced in what has taken place. The mere length to which this argument has gone, and the nature of the discussions which has taken place, I think will be sufficient to show that. Looking, therefore, to the fact that in the other cases as great an amount of delay has not been considered Eufficient to induce the court to say that the rights of the parties are finally established, and considering that the special reasons I have mentioned are to my mind very strong indeed, I think there is no such delay as should preclude the applicants from the relief, which they would, otherwise, be entitled to.

That being so, I think the proper order to make is to expunge the debts, and, considering that the creditors have been brought here after this lapse of time, I think it would be only right to provide for their costs, as well as for the costs of the appellants and the official liquidator, out of the estate subject to the winding-up I think inasmuch as there may be a question as to whether the creditors or alleged creditors are not entitled to obtain a return of their premiums from somebody, it would be right to add to the order that it is made without prejudice to any application which they may be advised to make to obtain the return of the premiums so paid.

Solicitors: F. W. Hilbery; W. W. Wynne; Westall, Roberts, and Barlow.

PRIV. Co.]

JUDICIAL COMMITTEE OF THE
PRIVY COUNCIL

ON APPEAL FROM THE SUPREME COURT OF HALIFAX,
NOVA SCOTIA.

Reported by JAMES P. ASPINALL, Esq., Barrister-at-Law.

March 17, and 18, 1875.

(Present, The Right Hons. Sir J. W. COLVILE, Sir
BARNES PEACOCK, Sir MONTAGUE E. SMITH, Sir
R. P. COLLIER, and Sir HENRY KEATING.)
THE COBEQUID MARINE INSURANCE COMPANY v.
BARTEAUX.

Marine insurance Master's power of saleStringent necessity-Total loss-Notice of abandonment.

The master of a ship may, under certain circumstances, effect the sale of his ship so as to thereby render the underwriters liable for a total loss without notice of abandonment, but he can only do so in cases of stringent necessity-that is to say, a necessity that leaves the master no alternative, as a prudent and skilful man acting bonâ fide for the best interests of all concerned and with the best and soundest judgment that can be formed under the circumstances, but to sell the ship as she lies. If he comes to this conclusion hastily, either without sufficient examination into the actual state of the ship, or without having previously made every exertion in his power, with the means then at his disposal, to extricate her from the peril or to raise funds for her repair, he will not be justified in selling, even though the danger at the time appear exceedingly imminent. THIS was an appeal from the judgment of the Supreme Court of Halifax, Nova Scotia, of the 8th Feb. 1873, discharging a rule nisi obtained by the appellants for a new trial in an action brought by the respondent against the appellants.

The action was brought by the respondent to recover 4000 dollars and interest upon a policy of insurance effected with the appellants in the sum of 4000 dollars upon the brigantine Foyle, valued at 8000 dollars, for twelve months, that is to say, from the 23rd June 1868, at noon, until the 23rd June 1869. The policy was a time policy in the usual form.

The writ and declaration were issued on the 10th Aug. 1870, and contained two counts on the policy for a total loss, and a common money count for interest. To the counts upon the policy the appellants pleaded five pleas, and to the money count never indebted. The third plea, which denied that the vessel was lost by the perils insured against, and the fourth plea, which averred that the alleged loss was caused by the fraud and negligence of the respondent and his servants, and not by the perils of the sea, are the only pleas material to this appeal.

The cause came on for trial before the Chief Justice of the Supreme Court of Halifax and a jury, on the 11th Oct. 1871. At the trial, the appellants admitted the making of the policy, and also that the respondent was interested in the vessel, and evidence was adduced of (amongst other things) the following facts:

The respondent was part owner of the Foyle, the vessel insured, of which he owned 44/64ths, James Roy her master 16/64ths, and one Downie 4/64ths. On the 15th June 1869, the Foyle, a brigantine of 243 tons register, then a good vessel, about three years old, and worth about 10,000 dollars,

[PRIV. CO.

left the harbour of Lingan, in Nova Scotia, with a cargo of coals, bound for Boston, and anchored outside the bar of the harbour. At 11 a.m. on the following day, the 16th June, the Foyle proceeded on her voyage, with a whole sail breeze from the south-west. About thirty minutes after getting under way the vessel ran upon a sunken reef off the southern head of Lingau Bay, distant about three miles from Lingan, about one mile from Bridgport, and at the utmost half a mile from the shore. The vessel struck about an hour before high water on a shelving ledge-not a sharp rock -on the western side of the reef, almost broadside

on.

The master of the Foyle, upon the vessel strik. ing the reef, threw the sails aback, but she would not back off. He then signalled for the tugboat at Lingan, and a kedge anchor with sixty or seventy fathoms of line was run out, and all the strain it would bear put upon it. The tugboat soon arrived, and at high water took a hawser from the Foyle. An attempt was then made to get the vessel off by jerking at the hawser, but without success, the hawser having twice parted. The master of the Foyle and the master of the Lingan tugboat then consulted, and the master of the tugboat having told the master of the Foyle that he thought it was of no use trying any more with the boat, and that the master of the Foyle had better get the coals out of the vessel, for if the wind came from the north he would lose her, left the Foyle and returned with his tug to Lingan. After dinner the crew of the Foyle commenced to throw the cargo overboard, but they did not discharge more than about ten tons of coal. At the next high water, between 12 and 1 a.m. of the 17th June, another attempt was made to get the vessel off by heaving on the kedge anchor, but failed.

On the morning of the 17th June the wind began to change to the north, and about 5 a.m. the master of the Foyle, being very uneasy, went ashore, noted his protest, and procured three persons, namely, James McDonald a shipwright, and Richard Laffin formerly a shipmaster, both of Lingar, and John Diggins master of a schooner belonging to Eastport, in the United States, to go on board the vessel to survey her. The surveyors got on board the vessel between 10 and 11 a m. the same day, the 17th June, and at the time they went ashore, which was between 11 a.m. and noon, the wind was about W.N.W., hauling northwardly. They agreed that the vessel should be condemned, but, to give every chance of getting her off, to wait until two o'clock of the 18th June before selling her, and advertisements were written out to the effect that the vessel would be sold at that time. They, however, about an hour afterwards, deter. mined to sell the vessel on the same day, the 17th June at four o'clock. The reason given by Richard Laffin, the only one of the surveyors who was called at the trial, for the change of determination was, that the wind actually went round to the north-east before the survey was written out.

Upon coming to this conclusion, the surveyors made a report in writing of their survey, in which they stated as follows:

We find that the said vessel has stranded off the southern head of Lingan Bay, exposed to the storms of the Atlantic, making water, lying on a reef, and in a very dangerous position, considerably hogged on the port side, badly strained, rolling heavily on her bilge. We also find that the said

PRIV. Co.]

vessel lies in such a dangerous position that, should the wind happen to change and blow from the north-east, south-east, or east, she would propably go to pieces immediately. We therefore recommend that the said vessel be advertised and sold this day, without running the risk of leaving her overnight, that she may be stripped of her sails and rigging, and sold as soon as possible for the benefit of all concerned."

Richard Laffin, who was examined for the plaintiff (resp.) at the trial, admitted in cross-examination that he could not say that the vessel was making water, that she had a list to port of only two or three strakes, or from 18in. to 2ft., and that, if she was either hogged or strained as stated by the surveyors, she would have been leaking. Evidence was given by the defendants (apps.) to show that upon these points the survey was incorrect.

About 1 p.m. of the same day, the 17th June, the Glace Bay tug went up to the Foyle and backed close to her. John Dunlap, the mate of the Glace Bay tug, then threw a line to the Foyle, but it was refused, and a man on board prevented another from catching it. On the 17th June, between four and five in the afternoon, the master of the Foyle sold the vessel and cargo by public auction in Lingan, two or three advertisements having been put up in Lingan about two hours before the sale. The vessel was sold for about 1000 dollars, and was bought by Richard Laffin, one of the surveyors, for his two nephews.

Immediately after the sale, preparations were made by the purchasers to get the vessel off. Between seven and eight in the evening of the same day, thirty men were taken down to the vessel with the Lingan tugboat and a schooner. Fifty to sixty tons of coal were discharged out of the vessel into the schooner, and ten tons were thrown overboard. They worked steadily until 3 a.m. on the morning of the 18th June, and the Foyle's bower anchor was then ran out and let go, and by hauling on the anchor and kedge, and jerking at a new 7-in. hawser which had been hired for the purpose, the vessel was got off about half-past three in the morning of the 18th June, without having sustained any damage whatever, except the loss of a small piece of her shoe.

During the whole of the time the vessel was on the reef the weather was fine, and although the wind got round to the north on the 17th June, and there was a breeze in the afternoon, the weather was not severe at all on that day; but it was alleged that if the wind had continued in the north, it would have been impossible to have got the ship off.

There were four tugs and abundance of men from Lingan to Cow Bay; and 80 to 100 men at Bridgport, whose services could have been obtained by the master of the Foyle, and he had the same means of extricating his vessel as were actually used by the purchasers to get her off within his reach and in his power.

There was conflicting evidence as to the wind to be expected on the 17th June. The statement of the master was, that on the 17th he "expected a strong breeze,' and that at the time of the sale "there were indications of a heavy blow," and Richard Laffin stated that at the time of the sale it "had the appearance of being rough," but they were contradicted upon this point by the master of the Lingan tugboat; a witness for the respondent, who stated that the wind" was going down at the

[PRIV. Co.

time of the sale," and also by the witnesses who were called for the appellants, whose evidence was to the effect that it was usually fine in June, July, and August, and that the middle of June was the finest season at Lingan, and that gales, to injure a vessel lying where the Foyle was, were unusual in June, and that there were no indications of a heavy blow.

There was also a conflict of opinion between the witnesses for the respondent and those for the appellants as to the course a prudent uninsured owner would have pursued under the circumstances.

At the close of the respondents' case, the counsel for the appellants moved for a nonsuit, on the grounds, amongst others, that there was no notice of abandonment, and that the sale was not justifiable, but the Chief Justice refused to nonsuit the respondent.

The Chief Justice directed the jury as follows: "The want of a notice of abandonment could only be excused by the necessity of the sale, if that necessity existed. This was a point of a good deal of nicety, which he would reserve, if the appellants' counsel desired it, for the consideration of the court. The main question was the alleged necessity for the sale, and the jury must look with a sharp and jealous eye at the transaction, marked by many unusual and suspicious circumstances. There was no evidence of a fraudulent stranding. A resident would have avoided the shoal, but it was not on the chart, and it was unknown to the master. Being competent to command the ship, his ignorance or want of caution in this matter afforded no defence to the underwriters; but, being on shore, had he exerted himself with sufficient promptitude and energy? The Chief Justice here cited the rules of law, as laid down in Arnould, and in our own decisions, and put it to the jury whether the master ought to have been content with the discharge of only ten tons of coal on the 16th, and should not have called in on that and the succeeding day a body of miners or other men in the neighbourhood, and attempted by their aid what the purchasers actually effected. The jury should consider, too, whether the holding of the sale on a day sooner than was at first intended was a bona fide and honest act, or was the result of any contrivance or collusion. The survey also had been hurriedly and incautiously drawn; all these facts, on which I forbore to give any opinion, were to be taken into account. There was no proof of the vessel having been overvalued or overinsured, and the master disclaimed any interest in the purchase. Still, if he had precipitated the sale for want of firmness or of judgment, this was one of the cases where the owners must suffer from it. He could sell his own quarter, but not the other three-quarters, so as to bind the insurers, unless an extreme over-mastering necessity, a moral necessity for the sale, had been shown to the satisfaction of the jury. I lastly told them, that if they found for the respondent this was not one of the cases in which, as I thought, they should give interest, and that the defendants were entitled to credit for one-half of the net proceeds, being 474 dollars for 3526 dollars."

The jury found a verdict for the respondent for 3526 dollars.

On the 14th Oct 1871 the appellants obtained a rule nisi for a new trial, on the grounds of misdirection, the verdict being against law and evidence.

PRIV. Co.]

On the argument of the rule, on the 8th Feb. 1873, the Supreme Court gave judgment discharging the rule unanimously on the question of misdirection, but Mr. Justice Wilkins dissenting on the question whether the verdict was against evidence.

The judgment of the majority of the court, delivered by Mr. Justice Ritchie, was founded upon the argument that, although the master of the Foyle did not appear to have exercised all the means in his power to get his ship off, and had not exerted himself with sufficient promptitude and energy as to justify the sale of the ship, yet this was a question for the jury and not for the court, and the Chief Justice having left the question to them, and they having found for the plaintiffs, their finding ought not to be disturbed. Mr. Justice Wilkins differed from the rest of the court upon the ground that there was no necessity for a sale shown upon the facts proved, and that the finding of the jury, being in opposition to those facts, ought to be set aside.

From this judgment the appellants, on the 28th Feb. 1873, applied for and obtained from the Supreme Court of Halifax leave to appeal to Her Majesty in Council, and they appealed accordingly upon the following, amongst other grounds:

1. Because there was no evidence upon which a jury could properly proceed to find that there was a total loss of the vessel by the perils insured against.

2. Because the verdict was against the evidence. 3. Because notice of abandonment was necessary.

4. Because the learned judge misdirected the jury, and led them to suppose that even if the vessel could have been extricated from her position by means within the reach of the master, and that if he sold the vessel without first exhausting those means, the sale might still be justified by necessity.

5. Because the question whether the master could, by means within his reach, and which he could reasonably use, have extricated the vessel, was not clearly put to the jury.

6. Because the learned judge ought to have explained to the jury that the true question in the case was, whether the vessel under the circumstances, was in such a condition, take all things together, that it was not worth while to pursue her any further, or to make any further attempt to save her, with a view to recovering her and restoring her as a seagoing ship, or that the assured would have been justified as a prudent man in abandoning her, and giving up all further intention of extricating her from her position.

7. Because owing to the want of a proper understanding of the law, and of the effect of the sale, the jury found a verdict wholly unwarranted by the evidence.

8. Because there was a miscarriage of justice, and the verdict for the respondent ought to be set aside and a new trial granted.

Watkin Williams, Q.C., and Wood Hill, for the appellants.-There are two questions in the present case; first, whether the case is one of total loss or average loss; secondly, whether, assuming a constructive total loss, the master did right in selling, or should have given notice of abandonment, and have kept the ship and done his best with her.

First, we submit that there was no total loss

[PRIV. Co.

upon the facts proved. Where a ship is stranded or damaged, if it is absolutely and physically impossible to restore her, she is an absolute total loss; but, assuming the physical possibility of restoring her to her former condition, then the test of her being a total loss is not whether it is best and most expedient under the circumstances, in the interests of her owner, to sell or to try and restore her at great risk and expense, but whether the outlay in trouble and expense will exceed the value of the ship when rescued and repaired. A partial loss cannot be turned into a total loss, even by a prudent sale by a master; the test is not whether a prudent owner, uninsured, would have sold, but whether the cost of repairing (or for warding of goods) would exceed the value of the thing insured when restored.

Reimer v Ringrove, 6 Ex. 263;

Navone v. Haddon, 9 C. B. 30;

Parsons on Marine Insurance, vol. 1, pp. 148, 149, 150. The power of a master to sell, so as to bind his owners and their underwiters, is entirely limited by the necessities of the case. In Arnould on Marine Insurance (4th edit., vol. 1, p. 333), it is said, "The exercise, however, of this power (to sell) is most jealously watched by the English courts, and rigorously confined to cases of extreme necessity, a necessity that leaves the master no alternative as a prudent and a skilful man, acting bona fide for the best interests of all concerned, and with the best and soundest judgment that can be formed under the circumstances, but to sell the ship as she lies. If he came to this conclusion hastily, either without sufficient examination into the actual state of the ship, or without having previously made every exertion in his power, with the means then at his disposal, to extricate her from the peril or to raise funds for her repair, he will not be justified in selling, even though the danger at the time appear exceedingly imminent." Cambridge v. Anderton, 2 B. & C. 691;

Idle v. The Royal Exchange Assurance Company, 3
Brod. & B. 151; 8 Taunt. 755.

There is no loss by sale in marine insurance law; an assured can only recover for a total loss after a sale where the facts of the case show a total loss, independently of the sale. [Sir H. S. KEATING.— That is to say if the facts were such as to occasion a necessity for an immediate sale, a total loss accrues as soon as the sale takes place. The sale does not make the total loss, but is justified by a proper apprehension of it; but if the ship is not actually lost there would be no total loss if the sale did not take place, so that in one sense there is a loss by sale.] But in this case there were no facts justifying the sale. It appears from the evidence that the ship could have been extricated from her position by means within the reach of the master and this being so, the master assuming that he acted bonâ fide in the sale, was not under such a necessity to sell as to constitute the sale a total loss, either constructive or actual. The ship was not in imminent danger of destruction at the time of the sale, and it is only such danger as would have justified sale and constituted a total loss.

Secondly, but even supposing the ship had been so damaged that she would have been a constructive total loss, we submit that the facts show that it would have been a more prudent thing on the part of the master to have kept her and given notice of abandonment. Her rescue was so easy, and the means at his disposal so abundant, that