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A ship is not seaworthy if it is not in a "fit state, as to repairs, Chap. X. equipment and crew, and in all other respects, to encounter the

ordinary perils of the voyage.

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ment."

By "adjustment" is meant the settlement in case of loss "Adjustbetween the assured and the underwriters of the amount to be paid by each underwriter.

First. In the case of a valued policy, if the loss be total, the whole sum mentioned in the policy must be paid; if the loss be partial, the sum to be paid bears the same ratio to the value named in the policy as the difference at the port of delivery between the price of the goods damaged and the price of sound goods of a similar nature bears to the latter price; if some only of the goods be totally lost, the sum to be paid bears the same ratio to the sum mentioned in the policy as the actual value of the goods lost bears to the actual value of the cargo.?

Second. Under an open policy, in case of partial loss to a ship, an arbitrary rule is adopted of making the underwriters pay only two-thirds of the costs of repairs. If the policy be on goods and the loss be total, the amount to be paid is the price at which they were invoiced when loaded on the ship, together with the premium on insurance, and commission. If the loss be partial, the underwriter pays the same ratio of the invoice price, adding to it premium and commission, as the selling price of sound goods bears to the selling price of damaged goods at the port of delivery.

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The question of the assignment of policies has been dealt with in a former chapter."

Fire Assurance.

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Policies of fire assurance are not, in the nature of them, Policies of fire assignable, nor intended to be assigned, from one person assurance.

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Dudgeon v. Pembroke, L. R. 9 Q. B. 581; 1 Q. B. D. 96; 2 App. Cas. 281; Thompson v. Hopper, 6 E. & B. 172.

1 Hedley v. Pinkney, [1892] 1 Q. B. 64; Ballantyne v. Mackinnon, [1896] 2 Q. B. 455; Sleigh v. Tyser, [1900] 2 Q. B. 333; Rathbone v. MacIver, [1903] 2 K. B. 378. See post, 426, u 4.

2 Lewis v. Rucker, 2 Burr. 1167; Goldsmid v. Gillies, 4 Taunt. 803; 14

R. R. 671; Tobin v. Harford, 17 C. B.
N. S. 528.

3 Usher v. Noble, 12 East, 639; 11
R. R. 505.

+ Usher v. Noble, sup. ; Waldron v.
Coombe, 3 Taunt. 162; 12 R. R. 629;
Cator v. G. W. Insurance Co., L. R. 8
C. P. 552.

5 Ante, p. 133.

Chap. X.

Contracts of indemnity.

Insurable interest.

Re-instatement of property insured.

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another, without the consent of the office," nor have they been made assignable by statute. Upon a sale of the property insured, no interest in the policy or insurance moneys passes to the purchaser unless it has been so agreed.?

They are contracts of indemnity, the assuror engaging to make good, within certain limited amounts, the losses sustained by the assured in their buildings and effects. And it follows, as in other contracts of indemnity, that, upon payment of the amount of the loss, the assuror is entitled to be put in the place of the assured, and to succeed to all the ways and means by which the assured might have protected himself against or reimbursed himself for the loss. Therefore, after a contract for sale of property insured under which the purchaser is not entitled to the benefit of the insurance, the vendor, if he is paid the full purchase-money without abatement, cannot also recover or retain the insurance money, for he has suffered no loss. And, as in all cases of assurance, whether on lives, ships, or other things, the assuror must be informed by the party effecting the assurance of all material facts affecting the subject-matter."

It is necessary that the party insuring should have an interest or property at the time of insuring, and at the time the fire happens.7

In 1774 the statute 14 Geo. 3, c. 78,8 was passed, which, in case of fires within the City of London and certain other limits, enabled and required the assurors to expend the insurance money upon the property upon request by any person interested in the property or upon suspicion of arson. It has been held that these provisions are not confined to property within the places mentioned in the Act, but are of general application." The section does not apply to insurances of chattels.10

1 Lynch v. Dalzell, 4 Bro. P. C. 431 ;
quoted by Lord Hardwicke in Sadlers'
Co. v. Badcock, 2 Atk. 557.

124 Rayner v. Preston, 18 Ch. D. 1.
3 Dalby v. India, &c. Assurance Co.,
15 C. B. 387, per Parke, B. See ante,
p. 138.

4 Darrell v. Tibbitts, 5 Q. B. D. 560 ;
per Cairns, L. C., Simpson v. Thomson,
3 App. Cas. 284; West of England Co. v.
Isaacs, [1897] 1 Q. B. 226; ante, p. 142.

5 Castellain v. Preston, 11 Q. B. D. 380.

6 Lindenau v. Desborough, 8 B. & C. 586.

Sadlers' Co. v. Badrock, 2 Atk. 555; Rayner v. Preston, 18 Ch. D. 1, 7. And see 14 Geo. 3, c. 48, ante, p. 140. 8 S. 83.

Exp. Goreley, 4 De G. J. & S. 477. But see Westminster Fire Office v. Glas gow, &c. Soc., 13 App. Cas. 699.

10 Lees v. Whiteley, 2 Eq. 143.

CHAPTER XI.

DEBTS-GUARANTEES.

Debts.

Debt must

be ascertained sum-and

due.

A DEBT is an ascertained sum of money due from one person to Chap. XI. another. As a debt must be an ascertained sum, damages that may be recovered in an action are not a debt until their amount is ascertained by judgment. As the money must be due, rent, or the gale of an annuity, is not a debt till it becomes due. But a debt is not the less a debt because the payment is deferred until the happening of an event which must happen. On the other hand, a contract to pay a certain sum of money on the happening of an event which may never happen does not create a debt unless and until the event happens. A liability of this nature is sometimes called a contingent debt. A contract to lend money does Contract to not create a debt, and if the money is not lent the intended borrower is only entitled to damages for the actual loss caused by the breach of contract.5

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lend money.

debts.

An "equitable debt" is a liquidated sum of money owing in Equitable equity from one person to another, e.g., where a trustee holds a sum of money in trust for his cestui qui trust absolutely; but "a trustee is not an equitable debtor to the cestui que trust until there is money in his hands which he ought to pay to his cestui que trust, or until he has made himself personally liable to pay money to his cestui que trust by reason of some breach of trust or default in the performance of his duties as trustee."7

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Chap. XI.

Married woman.

Interest on debts.

At common law.

In equity.

A married woman is not in the position of an ordinary debtor, even though she has separate estate; she cannot be made a bankrupt unless she trades separately, and she cannot be committed to prison under the Debtors Act.3

It has never been the practice by our law to allow interest upon all debts merely on the ground of delay in payment, whether upon money lent or money due for goods sold, unless by agreement or mercantile usage; nor at common law could damages be given for non-payment of such debts. But interest may be payable on debts-(1) at common law; (2) in equity, in certain cases; (3) as damages, by statute."

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(1) At common law, and in equity, following the law, interest is not payable on a debt except (i) under an express contract to pay interest; (ii) under a contract implied from the course of dealing between the parties or the usage of trade; (iii) under a written contract to pay a sum of money on demand, or on a certain day, interest is payable as from the time of demand made, or from the day appointed for payment; (iv) by the usage of trade, where the debt is secured by a bill of exchange or promissory note."

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(2) Interest is payable in equity on money wrongfully, fraudulently, or vexatiously withheld," and equity usually decreed interest in cases of purely equitable demands-for instance, in suits against trustees who misapply trust moneys, and in suits for equitable waste; 12 or where money would have become payable as an ascertained sum under a contract if the defendant had not wrongfully prevented anything from becoming due; in which case the sum would be treated as a debt in equity, though it is not a

1 Re Grissell, 12 Ch. D. 490, per
Cotton, L. J.; Pelton v. Harrison, [1892]
1 Q. B. 118.

2 Re Lynes, [1893] 2 Q. B. 113; Re
Hewett, [1895] 1 Q. B. 328; Re A
Debtor, [1898] 2 Q. B. 576; Re Frances
Handford & Co., [1899] 1 Q. B. 566; Re
Worsley, [1901] 1 K. B. 309.

3 Scott v. Morley, 20 Q. B. D. 120.
4 Per Kay, L. J., L. C. & D. R. Co.
v. S. E. R. Co., [1892] 1 Ch. 148;
[1893] A. C. 429.

5 Calton v. Bragg, 15 East, 223; 13
R. R. 451; Re Edwards, 61 L. J. Ch. 22.
6 See,
as to interest, Leake
Contracts, Pt. V. Ch. I. s. 4, pp. 780

ct seq.

on

7 Webster v. British Empire Co., 15 Ch. D. 178, where the cases are collected; and L. C. & D. R. Co. v. S. E. R. Co., sup.

8 Higgins v. Sargent, 2 B. & C. 348; 26 R. R. 379; Re Anglesey, [1901] 2 Ch. 548.

9 Lowndes v. Collens, 17 Ves. 27. 10 Calton v. Bragg, 15 East, 223; 13 R. R. 451.

11 Meredith v. Bowen, 1 Keen, 270; Pearse v. Green, 1 Jac. & W. 135; 20 R. R. 258.

12 See M. L. R. P. p. 46; Phillips v. Homfray, [1892] 1 Ch. 465.

debt at law, and, if it would have carried interest in case it had Chap. XI. become payable at law under the contract, interest will be payable

in equity.1

charged on

If in any settlement or contract there is " a provision that a Money sum of money is to be charged on land and the money is to be land. paid at a fixed time, the sum itself being fixed, then, as between the owner of the land and the person entitled to the money, although nothing is said in the settlement or contract as to interest, in the eye of a Court of Equity, from the date fixed for payment of the money, that money bears interest. There might be, no doubt, circumstances so strong as to negative the presumption that interest was payable; but certainly this is the rule, and it is illustrated by loans upon the security of a memorandum of deposit of title deeds of land. There the money so charged bears interest whether there is an express provision for payment of interest or not. So in the case of portions raisable out of land at a fixed time and to a fixed amount: they certainly bear interest. So also legacies charged on land, which stand on a different footing from legacies not so charged, carry interest from the death."2

Trustees or executors improperly retaining trust moneys instead of investing or paying them over, are generally charged with simple interest, and in some cases under special circumstances with compound interest.3

mortgage debts.

Where the condition of a bond is for repayment of a sum Bond or of money at a fixed date with interest thereon, or where there is a covenant in a mortgage deed for payment of the mortgage debt at a fixed date and of interest thereon in the meantime, but no covenant for payment of any subsequent interest, the Court will allow subsequent interest at the same rate, but apparently not so as to exceed £5 per cent.5

(3) By the Civil Procedure Act, 1833,6 upon all debts the jury By statute.

1 Per Lindley, L. J., in L. C. & D. R. Co. v. S. E. R. Co., [1892] 1 Ch. 140–

143.

* Per Romer, L. J., Re Drax, [1903] 1 Ch. 781.

3 Seton, 1164; Re Emmett, 17 Ch. D. 142; Re Hulkes, 33 Ch. D. 552; Re Sharpe, [1892] 1 Ch. 169; Christmas v. Jones, [1897] 2 Ch. 190; Re Barclay, [1899]1 Ch. 674.

* Re Dixon, [1900] 2 Ch. 561.

5 Re Roberts, 14 Ch. D. 49; Ex p. Furber, 17 Ch. D. 191; Mellersh v. Brown, 45 Ch. D. 225. As to a mortgagee's right to six months' interest in lieu of notice to pay off, see Smith v. Smith, [1891] 3 Ch. 550; Fitzgerald v. Mellersh, [1892] 1 Ch. 385.

63 & 4 Will. 4, c. 42, s. 28. See L. C. & D. R. Co. v. S. E. R. Co., [1892] 1 Ch. 140; [1893] A. C. 429.

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