AVERAGE

AVERAGE,¹ a term used in maritime commerce to signify damages or expenses resulting from the accidents of navigation. Average is either general or particular. General average arises when sacrifices have been advisedly made, or expenditures incurred, with a view to the preservation of the ship, cargo, and freight from the effects of some extraordinary peril; and it implies a subsequent contribution from all the parties concerned, in order to make good the loss which one or more of them may thus have sustained. Particular average signifies the damage or partial loss happening to the ship, goods, or freight, in consequence of some fortuitous or unavoidable accident; and it is borne by the individual owners of the articles damaged, or by their insurers.

It may be here remarked, that the term Average was originally used to signify what is now distinguished as General Average. The expression "Particular Average" is not strictly accurate, as it does not, in its current acceptation, imply the idea of an equalizing contribution, as originally signified by the word Average. It has, nevertheless, been generally adopted, and is now fully recognised as the distinctive expression for damage or partial loss falling on some one of the individuals interested in a sea adventure.

Petty Average consisted of certain small charges for pilotages, light-dues, &c., which were apportioned one-third

Average. to the ship and two-thirds to the cargo; but this is now superseded by the agreement that the freight payable for the cargo shall include all such expenses; and the term has, consequently, become obsolete.

Although nothing can be more simple than the fundamental principle of general average,—which is, that a loss incurred by one party for the advantage of several shall be made good in equitable proportions by all who are benefited by it,—yet the application of this principle to the varied and complicated cases which arise in the course of maritime commerce has occasioned many diversities of usage in different countries, and even in the same country at different periods. Without entering on so wide a field as the discussion of these diversities would open up, we shall endeavour to present a brief summary of the leading principles which have been established in this country, by usage or by legal decisions, in connection with the subject.

All general average losses may be divided into two principal classes:—1. Sacrifices of part of the cargo and freight, or of part of the ship, for the general benefit; 2. Extraordinary expenditures, incurred with the same object.

Under the first of these classes we shall begin by noticing the acts which involve sacrifices of part of the cargo and freight.

When a part of the cargo is thrown overboard (or jettisoned, as it is termed) to save the ship from foundering in a storm, or to float her when stranded, or to facilitate her escape from an enemy, the loss of the goods and of the freight attached to them must be made good by average contribution. In like manner, if goods be damaged in the ship by opening the hatches in order to effect a jettison, or by being brought upon deck for that purpose, the damage forms a general average charge. But if goods jettisoned have been originally stowed on deck, no contribution can be demanded for them, unless they are so carried according to the common usage and course of trade on the voyage for which they were shipped.

If, instead of being thrown overboard, the goods are put into boats or lighters, and lost or damaged before reaching the shore, such loss is regarded as a virtual jettison, and gives a claim to average contribution. The same rule applies to damage occasioned by the goods being put ashore on muddy ground, as may sometimes happen, when there is no other place where they can be landed.

But when the goods have been conveyed to a place of ordinary safety, they are no longer at the risk of the general interest; and should they be damaged by fire or other accidents, the loss must be borne by the individual proprietors, or by their insurers.

The loss of corn, salt, guano, or similar goods, arising from their being pumped up or baled out with the water in the vessel, cannot be recovered by average contribution.

If, in consequence of there being no other means of raising money at a foreign port, a part of the cargo be sold for the purpose of repairing losses or defraying expenses which are themselves of the nature of general average, the loss arising from the sale gives a claim to contribution. But if the funds are required for the purpose of repairing particular average losses on the ship, or of defraying the ordinary expenses of the navigation, the loss must be borne by the shipowner.

The damage done to the cargo by means of water thrown down the hatches to extinguish an accidental fire, or by scuttling the ship for that purpose, is excluded, by usage, from general average. This point seems to have never yet been settled by any legal decision; and the usage referred to is considered by several writers of high authority to be at variance with sound principle. It is sometimes defended on the ground that the damage in question is secondary and incidental, and not primary and intentional. But this reason seems somewhat fanciful for the purposes of equity, and is,

besides, inconsistent with the analogy of certain other cases, where an opposite principle is practically recognised; as, for instance, in the case of goods incidentally damaged in effecting a jettison of other goods.

The amount of compensation to be made for goods sacrificed by general average acts is determined by the nett market price they would have produced on arrival at the port of destination had they not been sacrificed; but under deduction of the freight attaching to them (which is made good to the shipowners), and of the charges for duties and landing expenses which are saved.

We now proceed to notice the general average acts which involve sacrifices of part of the ship or her materials.

The same principles which regulate the case of goods thrown overboard apply also to the jettison of the ship's chains, anchors, hawsers, spars, boats, or other stores. But if water-casks be stowed on deck, or if chains and hawsers are carried on deck when the vessel is not near the land, so as to render it necessary that they should be so carried, the loss arising from the jettison of these articles falls on the shipowner; and if boats are jettisoned in consequence of their having been broken adrift from their fastenings on deck by the force of the sea, they are excluded from general average, and are charged to particular average on the ship.

The damage done to the ship by cutting holes to effect a jettison of the cargo, or to pour down water to extinguish a fire, or by scuttling her for that purpose, is allowed as a general average charge. The damage arising from cutting or knocking away a portion of the ship's bulwarks in order to prevent the deck from being flooded in a storm, is compensated in the same manner.

When sails or masts are cut away in order to righten a ship which has been thrown on her beam-ends, or to prevent her from driving on a lee shore, the loss is made good by average contribution; but if the object in cutting away a sail or spar be merely to save a mast, the loss is not made good in general average.

It frequently happens that masts or yards are sprung and carried away by the force of the wind, and are left entangled in the rigging, or hanging over the ship's side in what is termed "a state of wreck;" in these circumstances it becomes necessary to cut them away, with the sails and rigging attached, and to throw the whole overboard, otherwise they would impede the navigation, and endanger the ship and cargo. On this ground it is held by some authorities that the loss caused by the act of cutting them away should be made good by average contribution. But this act is the direct consequence of the previous accident, which places these articles in a situation where it is impossible to save them without imperilling the ship, cargo, and lives. It would not be reasonable to imperil these for such a purpose; whence it follows that the displaced articles are already virtually irrecoverably lost by means of the original accident, before the loss is actually consummated by cutting them away. And as the general interest ought not to be endangered for the purpose of attempting to save these articles, so neither should it be implicated in the loss resulting from the only remaining alternative of clearing them away. This loss is accordingly excluded, by the usage of this country, from average contribution. On the same principle, no contribution can be demanded for any articles which are sacrificed as having themselves become, through previous accident, the immediate cause of danger to the whole interest.

The loss of sails or spars, in consequence of carrying a press of canvas to avoid a lee-shore, or to escape from an enemy, is not the subject of general average in this country; neither is the damage suffered by the ship from straining, under any such extraordinary press of sail.

When anchors and cables are slipped from in order to work a vessel off a lee-shore, or to avoid collision with another ship, the loss is made good by average contribution;

Average. but if the cable is slipped in order that the vessel may join convoy, or because the anchor has become hooked to some object at the bottom and cannot be raised, the loss is borne by the shipowner.

When sails, ropes, or other materials, are cut up and used at sea for the purpose of stopping leaks or to rig jammasts, or when the common benefit requires that they should be applied to some purpose for which they were not originally intended, the loss is made good in general average. The same rule applies to the case of hawsers, cables, anchors, sails, or boats, lost or damaged in attempting to force off a stranded vessel from the shore.

The damage sustained in defending a ship against a pirate or an enemy is not the subject of general average in this country; it is treated as particular average on the ship.

It has been much debated by writers on maritime law, whether the voluntary stranding of a ship, in order to prevent her from foundering, should be treated as a general or as a particular average loss. In the United States it has been settled, by judicial decision, that the loss in question constitutes a general average claim; but the opposite doctrine is acted upon in the usage of our own country, and the point has never been raised before the courts of law. It appears to us that the argument greatly preponderates against the rule adopted in the United States, and in favour of the usage established in this country. The only reason for regarding this loss as the subject of general average is, that it originates in the intentional act of running the ship aground, for the preservation, as far as possible, of the whole interest concerned. But it can seldom be known beforehand how the different interests at stake will be specially affected by the act in question;—whether, for instance, the damage to the cargo may not be more serious than the damage to the ship, or vice versa. Thus no particular part of the interest can be said to be intentionally sacrificed for the benefit of the whole; the intention, indeed, is not to sacrifice any one part, but to place the whole interest in a situation of less peril than it would otherwise have been in. What particular damages may thereafter ensue to either ship or cargo will depend, in each case, on a variety of circumstances entirely accidental in their character, and therefore in no proper sense the subject of previous intention. The same rule, therefore, which excludes from general average accidental damages in all other cases, ought to exclude them in this case also. Moreover, when the alternatives are, either that the vessel be left to founder, or that she be run ashore with a chance of preservation, there can really be no room for choice, or, at all events, the elements of will and intention are entirely subordinate in the part they must play under the pressure of the existing circumstances; and in this view the stranding is as truly inevitable as if it had been caused by the force of the winds and waves alone.

But, even were these reasons less weighty than we hold them to be, a serious practical objection might be urged against the doctrine that voluntary stranding should be a general average loss, on the ground that it would in most cases be impossible to distinguish between the damages received by the ship and cargo prior to the stranding, and those sustained after or in consequence of it. It is needless to remark, that before a ship can be in such imminent danger of foundering as to render it necessary to run her ashore, she must be presumed to have sustained a very considerable amount of damage; and the probability is, that the cargo also will have suffered to a corresponding extent. Up to this point these damages are confessedly particular average; and were it held that the damages after the stranding were the subject of general average, it would, of course, be necessary to distinguish the separate damages that belonged to each. But in every case these different damages would exist in varying proportions, yet always so incorporated together that justice could never have a more perplexing task

than that of discriminating between them. No general rule could be applied that would meet the widely different circumstances of each particular case; and the arbitrary method of adjustment that would alone be possible would doubtless give rise to endless dissatisfaction and dispute. On the ground of expediency, therefore, as well as on that of principle, the usage now established in this country ought to be maintained, notwithstanding the high authorities by whom the opposite practice has been countenanced.

The amount of general average losses on the ship is compensated by allowing to the owners the cost of repairs, or of new materials in place of those sacrificed, subject to the deduction of one-third for the difference of value between old and new; but no deduction is made from the cost of new anchors, and only one-sixth is deducted from the cost of new chain cables. If the ship be on her first voyage (which is held to include the homeward as well as the outward passage), the repairs and new materials are allowed in full.

We now proceed to notice the second principal class of general average losses, consisting of extraordinary expenditures incurred with a view to the common benefit.

When a ship is obliged to put into a port of refuge, in consequence of damage received in the course of the voyage, the usage in this country is to allow as general average all the charges connected with the entrance of the vessel into the port, and with the landing and warehousing of the cargo, when this is necessary to admit of the ship being repaired. Thus the expenses of pilotage or other assistance into the port, the harbour dues and similar charges, the costs of the protest taken by the master and crew, and of the survey held to ascertain whether the cargo requires to be discharged, together with the charges for landing the cargo and conveying it to a warehouse or other place of safety, are all made good as general average. The costs of repairing the ship are charged to general average only in so far as the repairs may refer to damages which are themselves the proper subject of general contribution. If the damages are of the nature of particular average, as is more usually the case, they are charged accordingly; or if they proceed from "wear and tear," they are stated against the shipowner.

The warehouse rent for the cargo at a port of refuge, and any expenses connected with its preservation, form special charges against that particular interest, and are borne by the proprietors of the goods, or by their insurers. When goods are insured "free from particular average, unless the ship be stranded," it is necessary, if the ship has not been stranded, to distinguish the charges for warehouse rent and fire insurance from those incurred in connection with the preservation of the goods from the effects of damage; the underwriters being liable for the former, but not for the latter.

The expenses of reshipping the cargo, and the pilotage or other charges outwards, are borne by the freight. If the entire cargo cannot be taken on board again, from the want, at the port of refuge, of the usual facilities for stowing it, the loss or expenses resulting from the exclusion of part of it are not treated, in this country, as the subject of general contribution.

The wages and provisions of the master and crew during the period of detention at a port of refuge, are not admitted as a charge against general average; it being held that the shipowner is bound to keep a competent crew on board the ship from the commencement to the end of the voyage at his own expense.

The charges for agency at a port of refuge are brought against the general average, even though they may have been originally made in the form of separate charges against the ship and cargo respectively. Commissions on money advanced, maritime interest on bottomry and respondentia, and the loss on exchanges, &c., are apportioned relatively

Average. to the gross sums expended on behalf of the several interests concerned.

The expenses incurred in getting a stranded ship off the ground, the hire of extra hands to pump a ship which has sprung a leak, and the sums awarded for salvage or for other services rendered to the ship and cargo under any extraordinary emergencies, are compensated by average contribution. But this rule applies only to the extraneous assistance that may have been obtained; the crew being bound to do their utmost in the service of the ship on all occasions, without extra remuneration for what they might consider extraordinary exertions on their part.

The costs of reclaiming the ship and cargo after having been captured, are allowed as general average charges; and although ransom to an enemy is prohibited in this country by legal enactment, it seems that this does not apply to the case of money or goods given up by way of composition to pirates for the liberation of the ship and cargo, and that this would also form a subject of average contribution.

When the ship and cargo arrive at the port of destination, it is unnecessary, in ordinary cases, to distinguish, in the adjustment of the general average, between the losses which have arisen from sacrifices, and those which have resulted from expenditures for the common benefit. But if the ship and cargo should be lost before reaching their destination, no contribution is due for the goods or ship's materials which may have been sacrificed at a former stage of the voyage, the owners of these being in no worse position than any of their coadventurers. On the other hand, it is evident that when money has been expended for the common benefit, the subsequent loss of the ship and cargo should not affect the right of the party who has made the advance to recover it in full from all the parties for whose advantage it was originally made. Hence, while sacrifices are made good only in the event of the ship and cargo being ultimately saved, expenditures must be reimbursed whether the ship and cargo be eventually saved or lost; and the contribution for these expenditures must be regulated by the values of the ship, cargo, and freight, as they stood at the time when the advances were made.

If, however, the money required for average expenditures has been raised by means of bottomry, and the ship be lost before completing the voyage, there can be no claim for reimbursement; the risk being assumed by the bottomry lender in consideration of the premium he receives on the sum advanced. It is by no means clear that the average expenditures which have been advanced without any contract of bottomry form a specific insurable interest, according to the law of this country, although in practice they are very frequently insured. When this has been done, and when the amount has been recovered on the subsequent loss of the ship, no claim can be equitably made against the individuals who would otherwise have been liable. But if the expenditures are not insured, either by a bottomry contract, or by a special policy, and if the ship and cargo be totally lost in the subsequent course of the voyage, the parties for whose benefit the expenditures were incurred must reimburse them on the principles already explained. These parties, however, have recourse on their original insurers, not only for the total loss of the interests insured, but also for the previous expenditures, although the insurers may thus be called on to pay a larger sum than the amount of the insurance.

The contribution for general average losses is regulated by the values of the respective interests for the benefit of which they were incurred. The practical rule adopted, in all ordinary cases, is to estimate the ship, cargo, and freight, at their nett values to their owners, in the state in which they arrive at the port of destination, but including in these values the sums made good for sacrifices, and to assess the contribution accordingly. The necessity for including the amount

of compensation made for sacrifices in the valuations on which the contribution is charged, arises from the principle that all the parties interested in the adventure should bear the ultimate loss in exact proportion to their respective interests, which would not be the case if the owners of the articles sacrificed were to recover their full value without being themselves assessed for the loss thereon in the same manner as their coadventurers.

The contributory value of the ship is accordingly her actual value to her owner in the state in which she arrives, whether damaged or otherwise, including the sum made good in the general average for any sacrifices which may have been made of part of the ship or her materials.

The value of the cargo for contribution is its nett market value on arrival, after deducting the charges incurred for freight, duty, and landing expenses, but without deducting the costs of insurance or commission. If goods be damaged, they contribute only according to their deteriorated value; and if special charges have been incurred on the cargo at a port of refuge (as for warehouse rent, &c.), the amount of these charges is deducted. The sum charged to general average for goods sacrificed is of course added to the valuation. All goods carried in the ship for the purposes of traffic must be included in the valuation of the cargo; but the wearing apparel, or personal effects, of the passengers and crew are exempted from contribution.

The value of the freight for contribution is the sum received by the shipowner on the completion of the voyage for the carriage of the cargo, after deducting from that sum the wages then due, the port charges at the place of destination, and the special charges against the freight which may have been incurred at a port of refuge, consisting of the costs of reshipping the cargo, and of outward pilotage, &c. The provisions for the voyage are not deducted, as these are held to have formed part of the original value of the ship. If the freight has been paid in advance, it forms part of the value of the goods, and, consequently, does not contribute as a separate interest. It has been decided, that when a vessel has been originally chartered for a double voyage, the whole freight to be earned under the charter-party must contribute at its nett value, after deducting the wages and other charges which must be incurred in earning it. The effect of this rule is to render the freight attaching to the return voyage, as well as that attaching to the voyage outwards, liable to contribute for average losses arising in the course of the outward passage; a result the equity of which is not always very apparent.

An adjustment of general average made at any foreign port where the voyage may terminate, if proved to be in conformity with the law and usage of the country to which such foreign port belongs, is binding on all the parties interested as coadventurers, although they may be subjects of this country, and although the adjustment may be made on principles different from those sanctioned by the laws or usages of Britain. The reason for this rule is, that the parties engaging in the adventure are held to assent to the known maritime usage according to which general average is adjusted on the arrival of the ship and goods at the port of destination.

The subject of general average is only incidentally connected with that of marine insurance, being itself a distinct branch of maritime law. But the subject of particular average arises directly out of the contract of insurance, and will therefore be best considered in connection with it. (See INSURANCE, MARINE.)

For further information with respect to the subject of average, the reader is referred to the famous work of M. Valin, Commentaire sur l'Ordonnance de 1681, tome ii. p. 147-198, ed. 1760; to Emerigon, Traité des Assurances, tome i. p. 598-674; Park On Insurance, chap. vii.; Marshall On Insurance, book i. chap. xii. sect. 7; Stevens's

Averroes Essay on Average; Benecke On the Principles of Indemnity in Marine Insurance; Lord Tenterden's excellent work on the Law of Shipping, part iii. chap. viii. &c.; Arnould On Marine Insurance; Baily On General Average. (J. W.—K.)