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about $20,000 in value, prevents the loss from being "total" within the terms of its policy.

on a cargo of sugar shipped on board the British ship John E. Sayre, at and from Iloilo to Montreal, Canada. The respondent answered, the cause came on to be heard upon the pleadings, proceedings, and proofs, and resulted, June 15, 1897, in a decree in favor of the libellant for the full amount of the insurance, with interest and costs. The case was taken on appeal to the United States circuit court of appeals, where, on April 23, 1898, a final decree was entered reversing the decree of the district court, and ordering that the libel be dismissed, with costs in both courts to the appellant. On the libellant's petition, on May 10, 1898, a writ of certiorari was granted, under which the cause and the record and proceedings therein were removed into this

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On April 29, 1893, the respondent company insured for the libellant's benefit:

Mr. Wilhelmus Mynderse argued the cause, and Messrs. Butler, Notman, Joline, & Mynderse filed a brief, for petitioner:

Insurance under the phrase "total loss” simply is satisfied by a constructive total loss with a seasonable abandonment.

Arnould, Marine Ins. 952; McArthur, Marine Ins. 275; Lowndes, Marine Ins. 132; 2 Parsons, Maritime Law, 338-341; Phillips, Ins. §§ 1485, 1487.

If the underwriter desires to protect himself from liability for a constructive total loss, he makes his insurance read "against actual total loss only or free from all average."

Monroe v. British & Foreign Marine Ins. Co. 5 U. S. App. 179, 52 Fed. Rep. 777, 3 C. C. A. 280; Burt v. Brewers & Maltsters' Ins. Co. 78 N. Y. 400; Carr v. Security Ins. Co. 109 N. Y. 504, 17 N. E. 369.

A "constructive total loss" of a vessel or cargo occurs when more than 50 per cent of its value has been destroyed.

Phillips, Ins. § 1608; 2 Parsons, Maritime Law, 371; Heebner v. Eagle Ins. Co. 10 Gray, 131, 69 Am. Dec. 308; Greene v. Pacific Mut. Ins. Co. 9 Allen, 217; Snow v. Union Mut. Marine Ins. Co. 119 Mass. 592, 20 Am. Rep. 349.

"$15,000 on profits on cargo sugar; against total loss only; valued at sum insured; shipped on board the British ship John E. Sayre at and from Iloilo to Montreal." At that time the Sayre was at sea prosecuting the voyage. The libellant had 2,462 tons of sugars on board of her, amounting in value to $181,000, and had just completed insurance of the sugars to the amount of $166,145 in the Atlantic Mutual, of which insurance the respondent was informed before its insurance on profits was made. In July following the Sayre stranded on the coast of Newfoundland, and all the cargo was lost excepting about 300 tons, which was saved by the aid of salvors, of which one half went to them as their agreed compensation. The agreement was originally made by the master soon after the stranding; but a few days afterwards the agent of the Atlantic Mutual appeared, to whom the master Even a defendant underwriter may be held turned over the salvage operations. He conresponsible for a constructive total loss firmed the previous agreement with the where there has been no formal abandonsalvors; reimbursed to the master the ex-waived an abandonment or that his actions ment, upon the ground either that he has penses already incurred by him, and thence- indicated that the proceedings were sufficient

forward, with the libellant's consent and the [612] lefendant's knowledge and acquiescence, took the complete control and disposition of the cargo. The agent eventually bought from the salvors the moieties of the sugars allotted to them under the agreement, and then shipped all the sugar saved to the order of the insurers to Montreal. The value of all the sugar that reached Montreal was about $20,000, and the expenses and salvage charges paid by the Atlantic Mutual thereon, and the additional freight to Montreal, exceeded $11,000, so that out of the whole cargo worth $181,000, less than $9,000 net was saved. The Atlantic Mutual settled with the libellant as for a total loss, under its policy of $166,145, and it turned over the sugars saved in part settlement of that sum, on about the basis of the average pro rata policy valuation. The respondent contested its liability upon the policy on profits on the ground chiefly that the receipt by the libellant of a portion of the sugars, viz.,

An abandonment of profits is not necessary or proper when there is an insurance upon the goods themselves, for the reason that the insurer on goods has a right to a complete and absolute abandonment of the cargo with all of its increments and incidents.

Tyser, Marine Ins. § 109; 2 Parsons, Maritime Law, 394; Phillips, Ins. § 1503; Mumford v. Hallett, 1 Johns. 433.

to constitute an abandonment.

Marine Ins. 950, 959; Phillips, Ins. § 1678.
2 Parsons, Maritime Law, 398; Arnould,
and filed a brief for respondent:
Mr. Clifford A. Hand argued the cause

Loss of the cargo is regarded as a prerequisite of loss of profits independently of any state of market.

Patapsco Ins. Co. v. Coulter, 3 Pet. 222. 7 L. ed. 659; Loomis v. Shaw, 2 Johns. Cas. 36.

The rule of constructive total loss of over 50 per cent of the value is not applicable to a policy on profits, in favor of the owner of the goods.

2 Phillips, Ins. 3d ed. p. 356.

As an abandonment of the profits alone can pass nothing it is not easy to see that there can be any effectual abandonment of profits, or that an actual partial loss of profits can be made constructive total loss by abandonment. If a part of the goods, the profits on which are insured, is lost, this is necessarily a partial loss of the profits.

612-614

2 Parsons, Marine Ins. 170; Waln v. Thompson, 9 Serg. & R. 115, 11 Am. Dec. 675; Tom v. Smith, 3 Cai. 245.

The rule of 50 per cent does not apply if any substantial part of the goods insured arrives in safety at its destined port. Nor can a loss of part of the goods at the port of destination be made a constructive total loss by abandonment, however large that part may be.

2 Parsons, Marine Ins. 159; Forbes v. Manufacturers' Ins. Co. 1 Gray, 371.

Underwriters are free from all partial losses of every kind which do not arise from the contribution toward a general average.

Biays v. Chesapeake Ins. Co. 7 Cranch, 415, 3 L. ed. 389; Hernandez v. Sun Mut. Ins. Co. 6 Blatchf. 317, Fed. Cas. No. 6,415; Saltus v. Ocean Ins. Co. 14 Johns. 138; Wash burn & M. Mfg. Co. v. Reliance Marine Ins. Co. 50 U. S. App. 231, 82 Fed. Rep. 296, 27 C. C. A. 231; Morean v. United States Ins. Co. 1 Wheat. 219, 4 L. ed. 75.

Neither Wallerstein v. Columbian Ins. Co. 44 N. Y. 204, 4 Am. Rep. 664, or Great Western Ins. Co. v. Fogarty, 19 Wall. 640, 22 L. ed. 216, admits of the idea that, where the loss does not extend to at least totality of value, the underwriter who has undertaken the risk against total loss only, or with a warranty against average, can be charged with liability. The farthest claim of both these cases is to consider annihilation of value an equivalent of physical annihilation of the subject insured.

[612, *Mr. Justice Shiras delivered the opinion of the court:

Insurance Company the latter had insured
the former against the loss of the cargo in
the sum of $166,145. On April 29, 1893, the
ship being still on her voyage, the refining
company entered into a contract with the
Insurance Company of North America, of
which the material terms were as follows:

"This to certify that, on the 29th day of
April, 1893, this company insured under pol-
icy 117,407, made for Robert Hampson, fif-
teen thousand and dollars on profits on
cargo sugar against total loss only, valued
at sum insured, shipped on board of the
Br. ship John E. Sayre at and from Iloilo to
Montreal, and the loss, if any, subject to
the terms and conditions of the policy, has
been made payable to the order of Canada
Sugar Refg. Co. Ltd. on surrender of this
certificate.'

It was provided in the policy referred to
in the certificate that "the acts of the in-
sured or assurers, or of their joint or re-
spective agents, in preserving, securing, or
saving the property insured, in case of dam-
age or disaster, shall not be considered or
held to be a waiver or acceptance of aban-
and likewise, "it is further
donment;"
agreed that if the said assured shall have
made any other insurance upon the premises
aforesaid, prior in date to this policy, then
this insurance company shall be answerable
only for so much of the amount as such prior
insurance may be deficient towards fully
covering the premises hereby insured, with-
out any deduction for the insolvency of all
or any of the underwriters, and shall return
the premium upon so much of the sum by
them insured as they shall be by such prior
insurance exonerated from.”

The district court held that, by the strand*It is admitted that notice of the prior in-[614) ing of the vessel John E. Sayre, there had surance was given to the Insurance Combeen caused, under the provisions of the conthe Canada pany of North America at the time when it tract of insurance between Sugar Refining Company and the Insurance entered into its contract with the refining Company of North America, a total loss of company; nor does it appear that the inprofits, and accordingly entered a decree insurance company, before the libel was filed, favor of the libellant for the full amount of 82 the insurance, with interests and costs. Fed. Rep. 757.

The circuit court of appeals, being of the opinion that there had not been a total loss of profits within the meaning of the contract, reversed the decree of the district court, with directions to dismiss the libel. 58 U. S. App. 22, 87 Fed. Rep. 491, 31 C. C. A. 65.

This difference of opinion arose from opposite views of the legal conclusion to be drawn [613]from the evidence of the facts *attending the Did those loss of the vessel and its cargo. facts disclose a total loss of the cargo, and, consequently, a total loss of profits? Or did they disclose that, within the meaning of the contract, a portion of the cargo was delivered to and received by the insured at the port of destination, and that, therefore, there was not a total loss of profits?

On February 10, 1893, the ship John E. Sayre, having on board a cargo of sugar belonging to the Canada Sugar Refining Company, sailed from Iloilo for Montreal. By several contracts of insurance between the refining company and the Atlantic Mutual

claimed that it was exonerated from any
portion of its liability by reason of such
prior insurance, or ever tendered a return
of any part of the premium by reason of any
such alleged exoneration.

On July 6, 1893, the ship stranded on the
coast of Newfoundland, and ultimately be-
The crew left the ves-
came a total wreck.
sel, but the master remained, and, in the dis-
charge of his duty as agent of all whom it
might concern, made an arrangement with
the local fishermen for the saving of cargo
by them at one half of what was saved. This
resulted in removal from the wreck of a por-
tion of the cargo until July 8, when the work
was finally abandoned. On that day an
agent of the Atlantic Mutual Insurance
Company arrived in the interest of that com-
He at once took charge, and relieved
pany.
the master, who, under instructions of the
owner of the vessel, turned over the rescued
portion of the cargo to the agent. The pre-
vious disbursements made by the master,
amounting to $200, were paid to him by the
the Atlantic Mutual Insurance
agent of
Company.

The agent thereupon adjusted the claims 175 U. S.

The responsive allegations of the answer
were as follows: "This respondent further
admits and avers, upon information and be-
lief, that from the wreck of said ship John
E. Sayre there were forwarded to Montreal,
the place of destination, and there delivered
to and received by the libellant, about nine
thousand nine hundred mats of the said su-
gar of about three hundred and twenty-five
tons net weight, and of the value of about
twenty thousand dollars," and "this respond-
ent, upon information and belief, denies that
the sugar so delivered to the libellant was
of a supposed total loss."
a payment by any underwriter on account

of the salvors, in pursuance of the agreement | Montreal at the time it was received by the made by the master. The portion saved libellant was about $20,000." from the wreck weighed about 320 tons, of which about one half was apportioned and set off to the salvors; but nearly all of the sugars so assigned to the salvors were subsequently purchased from them by the agent. The agent likewise paid to the shipowner his ocean freight, and reconditioned the sugars saved from the wreck, placed them in new bags, and then shipped them to Montreal on the coasting steamer Tiber. The total expenditures of the Atlantic Mutual Insurance Company, in respect of the salvage, the care, reconditioning, and forward ing of the sugars, amounted to upwards of $10.000 not including the ocean freight, nor the freight from Newfoundland to Montreal. The evidence under this issue, on the part Thus far, in the history of the transac-of the libellant, consisted chiefly of the bills [615]tions, there seems to be a substantial agree of lading, three in number, and dated Au

ment between the statements of the courts

below of the facts upon which they based their respective judgments. But we here meet with a difference, which, in the view we take of the case, is of controlling importance. The district court, in the opinion by Judge Brown, states that the agent of the Atlantic Mutual Insurance Company, after having settled with the master and with the salv

ors, "shipped all the sugar saved to the order of the insurers to Montreal;" and that "none of the sugar ever came to the libellant in the ordinary course of the voyage, or through any delivery to the libellant as consignee by the carrier; but only through a delivery by the insurer of cargo, after a practical abandonment to the latter, and through a settlement by the insurer as upon a total loss, in which the sugar was received by the libellant upon an equitable basis in part payment, and as the equivalent of its value in cash, as any other property might

have been received."

gust 4, 1893, given by the master of the
steamer Tiber to Harvey & Co. of St. Johns,
N. F., and calling for the delivery of the
saved sugar to the Atlantic Mutual Insur-
ance Company at Montreal; and of the testi-
mony of Drummond, of Harvey, and of Pike.
of the Canada Sugar Refining Company;
Drummond testified that he was president
that, as such, he made a settlement with a
representative of the Atlantic Mutual In-
about 300 tons of sugar were accepted by
surance Company at Montreal, whereby
the refining company from the Atlantic In-
in part payment of the claim of the refining
surance Company, at market rates of value,
company against the Atlantic Mutual Insur-
the sugar was shipped from Newfoundland
ance Company for total loss of cargo; that
to the Atlantic Mutual Insurance Company
at Montreal, and, in the opinion of the wit-
the time of the settlement.
ness, belonged to the insurance company at

The circuit court of appeals, in its narra- the firm of Harvey & Co., commission merHarvey testified that he was a member of tion of events, states that "the master was chants, St. Johns, Newfoundland; that in about to arrange for the transportation to July and August, 1893, his firm acted for Montreal of the part not going to the salv- the Atlantic Mutual Insurance Company, unors, when the Atlantic Mutual Insurance der instructions from that company; that Company, which meantime had been in his firm acted through Robert G. Pike as formed of the disaster, intervened and took their representative; that the sugar saved entire control. That company carried out from the wreck of the John E. Sayre was the agreement made by the master with the forwarded to Montreal to the order of the salvors, paying them an equivalent in lieu*Atlantic Mutual Insurance Company; that[617] of one half of the sugar saved, and caused the sugar saved to be reconditioned and shipped to Montreal on the steamer Tiber, and delivered upon arrival there to the libel

lant."

the John E. Sayre, did his firm have any
connection with or receive any instructions
from the Canada Sugar Refining Company,
or any of its officers or agents, or with the
owners of the John E. Sayre.

for expenses incurred by his firm in paying the salvors, the master's expenses, and for storing, weighing, reconditioning, and reshipping the sugar, their firm received payment from the Atlantic Mutual Insurance Referring to the pleadings, we find it Company in the sum of $10,066.97; that at averred in the libel that the sugar, after hav-no time, either before or after the wreck of ing been brought to Montreal by the Atlantic Mutual Insurance Company, "was received by the libellant on account of and in part payment for the loss sustained by the said libellant, under its insurance with the Atlantic Mutual Insurance Company, and that Pike testified that he was sent by Harvey credit was given therefor to the said Atlan- & Co. to the scene of the wreck; that he tie Mutual Insurance Company in the there, on July 8, 1893, took entire charge of amount at which the said 325 tons of sugar the sugar that had been saved; that he were insured with the said the Atlantic Mu- settled with the master and with the salvors; tual Insurance Company; and that the mar-that he reconditioned the sugar and shipped [616]ket value of the said 325 tons of *sugar in it to Montreal, to the Atlantic Mutual Insur

ance Company; that everything he did was in | sufficient expression of an intention to aban-
pursuance of instructions from Harvey & don." 2 Phillips, Ins. 387.
Co., as agents of the Atlantic Mutual Insur-
ance Company of New York; that he never
at any time had any communication with
the Canada Sugar Refining Company, or
their officers or agents.

As the Canada Sugar Refining Company and the Atlantic Mutual Insurance Company agreed upon an actual abandonment and settled on the basis of a total loss, it is not perceived that, in the absence of any allegation or proof of fraud, the Insurance Company of North America can be heard to raise any question as to the formality of the pro

In the absence of any evidence offered under this issue by the Insurance Company of North America we think it clear that the saved remnants of the sugar were taken ex-ceedings. clusive possession of by the agents of the Atlantic Mutual Insurance Company, were by them forwarded on account of that company to Montreal, and were finally turned over to the Canadian Sugar Refining Coupany, at an agreed valuation, in part payment of the claim of the latter for total loss of cargo.

It is also evident, as we think, that the facts disclose an actual abandonment by the Canada Sugar Refining Company to the Atlantic Mutual Insurance Company, and the acceptance by the latter of such abandonment. Owing to the prompt action of the insurance company in taking charge and control of the cargo, and in adopting the agreement of the master with the salvors, it was not necessary for the assured to go through with all the usual forms of an abandonment. Neither of the parties seem to have acted upon the supposition that any other or more formal act of abandonment was necessary.

[618] *In Columbian Ins. Co. v. Catlett, 12 Wheat. 394, 6 L. ed. 669, where the effect of actual abandonment, as dispensing, if accepted, with formal notice, was considered, Justice Story said:

"The latter gives notice of an intention to abandon, because, in its terms, it includes an actual abandonment. It has a tacit ref

erence to the clause in the policy, and must be deemed as a notice to abandon, and, at the same time, a declaration that it shall operate as an abandonment in the case, as soon as by law it may. In our judgment, it was a continuing act of abandonment, and became absolute at the end of the sixty days. It was an abandonment in præsenti, to take effect in futuro. Neither the form of the notice, nor the abandonment, is prescribed in the cause. They may be in one or two instruments; they may be in direct terms, or by fair and natural inference. It matters not how they are given or executed; it is sufficient, in point of fact, that they have been given or executed."

"If an abandonment is wanting in any formality, the insured may waive all objection; and they do this by calling for the proof and acting as if the abandonment were altogether sufficient." 2 Parsons, Maritime Law, 398.

"The rule dispensing with any particular form of abandonment amounts substantially to the rule that it is sufficient for the assured to signify distinctly that he abandons, and he could not signify this more distinctly than by claiming a total loss. I therefore conclude that the claiming of total loss is a

It was suggested, but apparently was not pressed at the argument, that there ought to have been abandonment to the Insurance Company of North America. In Mumford v. *Hallett, 1 Johns. 433, where there were[619] separate contracts of insurance on cargo and on profits, and where it was contended that the assured, by having abandoned the goods to the underwriter, had disabled himself from recovering the insurance on profit, it was said:

"But admitting that this is to be regarded as a valued policy, it is said that the assured, by abandoning the cargo to its underwriters, has put it out of the power of the defendant to receive any salvage on the profits, and that, therefore, he has no right to recover in this suit. This is a dilemma which the defendant ought to have foreseen at the time of his subscription. He must have supposed there was a policy on the cargo, which, in case of disaster, would naturally be abandoned to those who had insured it. It is idle to complain of what must have been clearly his own understanding of the contract; nor is it reasonable in him to expect that for the purpose of recovering on a small policy, on profits, a merchant should, by not abandoning the cargo, forego his insurance on that subject."

We shall content ourselves in this respect by quoting the conclusion expressed in 2 Phillips on Insurance, § 1503:

"A policy upon expected profits does not seem to offer anything upon which an abandonment can operate, and it does not appear from any speculation or any judicial opinion relating to this subject, which has come to my knowledge, that an abandonment of this interest can be of any importance to the underwriters, otherwise than as a notice that a total loss is claimed; and if this is its only effect, an abandonment is not necessary.

Under an abandonment of freight the underwriters may, in some instances, avail themselves indirectly of what has been done towards earning freight. They may receive the freight pro rata for the part of the voyage performed previously to the event on account of which the abandonment is made. But not so of profits; there is no profit, or anything like a profit, pro rata itineris peracti, which can be assigned, or prove to be of any value to the insurers. It does not appear, therefore, that an abandonment of profits can be anything more than It has never a nugatory ceremony. been hinted that the assured *can make any[620] claim upon the insurers for the profits on goods abandoned to them, and if he has no such right, he cannot transfer it to the un175 U. S.

derwriters on profits, or to any other per- | Philadelphia to Gibraltar and ulterior ports

sons."

with a cargo of flour. There was an insurance on profits in the sum of $5,000. While the vessel lay at Gibraltar, before the discharge of her cargo, she and her cargo were totally lost by fire. In an action brought on the policy of insurance on profits in the circuit court of the United States for the district of Maryland, the court was asked to instruct the jury that as the assured had offered no evidence that the flour, if deliv ered and sold at Gibraltar, would have yielded a profit, they were not entitled to

The refusal of the court so to

charge was approved in this court, in an opinion by Mr. Justice Johnson, from which we quote, as follows:

To briefly rehearse the facts, this is a case where the owners of a cargo of sugar had insured the same in the Atlantic Mutual Insurance Company, on and before April 29, 1893, at and for the sum of $166,145; had, on April 29, 1893, insured the profits on the cargo against total loss only in the sum of $15,000 in the Insurance Company of North America; on July 6, 1893, the ship, while on her voyage, stranded on the coast of Newfoundland, became a total loss, and the voyage came to an end; the master, represent-recover. ing all concerned, contracted with local fishermen to give them one half of the sugar they could save; on July 5, 1893, the insurers of the cargo, having been notified of the disaster, took charge and possession of the remnants of the cargo, and purchased from the salvors the portion which, under the agreement with the master, was theirs; the sugar was then transported by a vessel chartered by the insurers, and on their account, to Montreal; the value of the sugar that reached Montreal was about $20,000, and the expenses, salvage charges, and the additional freight from Newfoundland to Montreal, paid by the Atlantic Mutual In-loss of profits, otherwise than by the loss of surance Company, exceeded $11,000; the in

surers on the cargo settled with the refining company as for a total loss under its policy for $166,145, and the sugar saved was turned over to the refining company in part settlement of that sum on the basis of the average pro rata policy valuation. The value of the entire cargo on April 29, 1893, when the insurance on profits was effected, was alleged in the libel and admitted in the answer to have been about $181,000.

The error of the circuit court of appeals, as we view the case, was in regarding the portion of the cargo that was saved and paid for by the Atlantic Insurance Company as having been carried to Montreal and there delivered to the refining company as the owner thereof, and as respects which, in that state of facts, the refining company should be deemed to have received profits on a part of the cargo.

[621] *Without finding it necessary to enter into a discussion of refined distinctions, considered in some of the cases, between an actual and a technical total loss, we think it evident that the refining company would not receive the indemnity for which it bargained and paid unless it is permitted to recover in the present case. By such recovery it will not receive more than will, with what it has received from the Atlantic Mutual Insurance Company, make up its whole loss.

"The third prayer for instructions is in these words: "That the plaintiffs had offered no evidence that the sales of the flour at Gibraltar would have yielded the plaintiffs a profit, and that, therefore, they were not entitled to recover.' This was refused, and the question is whether the defendants were entitled to it, as prayed.

"This instruction presents two propositions: 1. That it was necessary to prove

the cargo. 2. That the plaintiff was limited
With regard to the second, it is clear *that[622]
to proof of profits on a sale at Gibraltar.
the instruction was properly refused, for
there was nothing in the policy to prevent
inal cargo to the Pacific, although the course
the assured from proceeding with the orig-
of trade would have sanctioned him in sell-
But the first proposi-
ing and replacing it.
tion is one of more difficulty.

"Courts of justice have got over their dif insurable interest; but how and where that ficulties on the question whether profits are interest must be established by proof, in case of loss, is not well settled. Here, again, there appears to be a conflict between the British and American decisions.

"The earliest of British decisions, that of Barclay v. Cousins, 2 East, 544, certainly supports the doctrine that the profits sink with the cargo, or, at least, that the loss of one is prima facie evidence of the loss of the other, and throws the onus probandi upon the defendant.

Such is the intimation of the court (page 551), and the recovery was had in that case without proof that profit would have been made had the cargo arrived at the destined port. In the case of Henrickson v. Margetson, 2 East, 549, of which a note is given in that case, the recovery was also had without proof that the profits would have been made, or any other proof It certainly cannot be successfully claimed than an interest in and loss of the cargo; that, in order to recover, the refining com- and Lord Mansfield seems to have suggested pany was bound, in this suit on a valued pol- the true ground for dispensing with such icy on profits, to put in evidence to show proof, to wit, the utter impracticability of that it would have received profits if the making it, without the spirit of prophecy voyage had been completed, and the entire to determine the precise time when the vescargo had arrived safely. Such a conten-sel would arrive at her destined port. tion was considered and determined in Pa- "The two subsequent cases which are tapsco Ins. Co. v. Coulter, 3 Pet. 222, 7 L. cited in the elementary books to sustain ed. 659. That was a case where the ship the contrary doctrine are not full to the Mary was proceeding on a voyage from point. In that of Hodgson v. Glover, 6

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