A surety, as soon as his principal makes default, has a right in equity to require the creditor to use for his benefit all his remedies against the debtor; and as a consequence, if the creditor has by any act of his, deprived the surety of the benefit of any of those remedies, the surety is discharged. The authorities for this, as far as known to me, are collected in the judgment to Bailey v. Edwards (1), and this equitable principle has, at least in the case where time has been given to the principal without the consent of the surety, been adopted to some extent at least, although whether to its full extent has been doubted: see Pooley v. Harradine (2). But it is not now material to decide that. Now the law gives the master the right to terminate the employment of a servant on his discovering that the servant is guilty of fraud. He is not bound to dismiss him, and if he elects, after knowledge of the fraud, to continue him in his service, he cannot at any subsequent time dismiss him on account of that which he has waived or condoned. This right the master may use for his own protection. If this right to terminate the employment is one of those remedies which the surety has a right to require to have exercised for the surety's protection, it seems to follow that, by waiving the forfeiture and continuing the employment without consulting the surety, the principal has discharged him. It never has been determined, as far as I can find, in any case in equity, that the surety has this right. There are dicta tending that way. In Shepherd v. Beecher (3) Lord Chancellor King says the surety "ought not to have satisfied himself with sending the letter, but should have eudeavored to have made some end with the master, and to have got up the bond"-expressions which seem to show that the Lord Chancellor thought he might have got up the bond. In Smith v. Bank of Scotland (4) Lord Redesdale is reported to have said during the argument, when considering whether the appellants had, according to the law of Scotland, a right to inspect a report from the agent of the bank to the directors, "Supposing *the report showed that Paterson" (the person for whom [681 the appellants became sureties) "was no longer trustworthy, and the bank had trusted him notwithstanding, upon decided cases the prior security would be discharged from all the consequences of subsequent transactions, as contrary to the faith of the contract." But no such decided cases are now to be found, and the dictum is not again noticed in the judgments either of Lord Eldon or Lord Redesdale. No other authority was cited during the argument, nor, as far as we are aware, was there any then in print. And at the close of the argument I was much inclined to say that no such equity was established. (1) 4 B. & S., 770 ; 34 L. J. (Q.B.), 41. (*) 2 P. Wms., at p. 289. But, singularly enough, the case of Burgess v. Ece (1) has been printed since the argument, and there Malins, V.C., says: But if there is misconduct on the part of the person whose fidelity is guaranteed, for instance, if a man guarantees that a collecting clerk shall duly account for all moneys received by him, and that a collecting clerk is found to have embezzled his employer's money, reason requires that the man who entered into the guarantee because he believed the person to be of good character, when he finds he is not so, and not to be trusted, should have the power of saying 'I now withdraw the guarantee I gave you; I give you full notice not to trust him any more.' Notwithstanding all that has been said, I am clearly of opinion that a person who has entered into such a guarantee, and who is therefore responsible for the person whose fidelity is guaranteed, has a right to withdraw from that guarantee when that person has been proved guilty of dishonesty." He afterwards proceeds: "My opinion is-and I have no hesitation in expressing it that a person who gives a guarantee would have a right to say to the person taking it, You will continue at your own peril to employ the person on whose behalf I gave the guarantee,' provided that the clerk or other person has been guilty of embezzlement or gross misconduct, or has turned out to be unworthy of the confidence reposed in him by the person giving the guarantee for him. If the employer under such circumstances refused to give the guarantee up, the person giving it would have a right to file a bill in this court, and in my 682] opinion would succeed in the contest, because *the Court would direct the bond to be delivered up to be cancelled. And I think that is only what good sense, propriety, and fair dealing between man and man would dictate." These expressions are singularly closely in point; they, though by no means irrelevent to the point then before the Vice-Chancellor, were not part of his decision. What he says is not therefore, perhaps, strictly binding upon us as a decision would be. But it seems to me consistent with justice; and without determining whether we should have ventured to lay down such an equity ourselves, I think we should follow the opinion of the Vice-Chancellor on a subject with which he is so much more conversant than we I therefore agree on this ground, and on this ground only, that judgment should be given for the defendant. are. Judgment for the defendant. Attorneys for plaintiff: Travers, Smith, & De Gex. (1) Law Rep., 13 Eq., 450, 457. In Price v. Pool, 3 Hurl, & Colt, 437, the defendants were sureties for re-pay. ment, by weekly installments, of money borrowed by P. of a loan society. One Jones v. Neptune Marine Insurance Co. of the rules of the society provided "that if any member becomes more than four weeks payment in arrear, the committee shall immediately inform the sureties of the same, and have power to institute legal proceedings against taem." P. died leaving more than four weeks payment in arrear, but no application was made to his sureties until more than two years afterwards. Held, 1872 that the rule was no part of the contract between the society and the sureties, and that the omission to give notice in pursuance of it did not afford an equitable defence to an action against the sureties. This case went upon the ground that, mere delay by the creditor in notifying the sureties of non-payment by the principal according to the terms of the con tract did not discharge them. June 10, 1872. *JONES and another v. THE NEPTUNE MARINE INSURANCE [702 COMPANY. [Law Reports, 7 Queens Bench, 702.] Marine Insurance - Construction of Policy on Freight-"From B. Island to Port of Discharge, the Insurance on said Freight beginning from the loading of said Vessel." The plaintiffs caused themselves to be insured with the defendants, “lost or not lost, in 500, upon the freight payable to them in respect of this present voyage to be performed by the vessel Napier from Baker's Island to a port of dis charge in the United Kingdom, the insurance on the said freight beginning from the loading of the said vessel. Being a reinsurance to be paid as on original policy." The plaintiff's had underwritten a policy on chartered freight of a cargo of guano, from Baker's Island, while there, and thence to a port in England. The vessel arrived at Baker's Island, and had taken in two-thirds of her cargo, a full cargo being ready, when she was wrecked. The plaintiffs, having paid upon a total loss, sought to recover it from defendants: Held, that the risk had not attached. By Blackburn J., on the ground that the clause, "the insurance on the said freight beginning from the loading of the said vessel," did not extend the insurance beyond the other part, "from Baker's Island," but only showed that defendants did not intend to be liable unless the goods were on board. By Mellor and Lush, JJ,, on the ground, that the latter words did extend the previous clause and made the risk begin earlier, but that “ from the loading” meant from the completion of the loading. or DECLARATION on a policy of insurance of the 21st of February, 1871, effected by plaintiffs' agents with defendants. The material parts of the policy were: That the agents, for themselves and all concerned, had caused themselves to be insured with defendants, "lost or not lost, in the sum of 500. upon the freight payable to him or them in respect of this present voyage to be performed between as below, by the vessel Napier from Baker's Island to a port of call and discharge in the United King dom, the insurance on the said freight beginning from the loadmg of the said vessel, and terminating when the said vessel shall be moored as above at a safe anchorage. . . . The said freight for the purposes of this insurance is hereby declared to be valued at the actual amount payable to the insured by the charterer of the vessel for the above voyage." The perils were the usual perils; and in the margin was "Being a reinsurance to pay as 3 ENG. REP.] 35 1872 Jones v. Neptune Marine Insurance Co. 703] may be paid on original *policy (1)." That certain goods at Baker's Island were loaded on board the said ship to be carried therein for freight, and other goods were there and then ready to be shipped, and would have been loaded but for the loss after mentioned, and afterwards and during the continuance of the risk the ship by perils insured against became lost and rendered incapable of conveying the said goods upon the said voyage, whereby the freight was wholly lost, and plaintiff's were obliged and did pay the 500. on the original policy: allegations of all conditions precedent. Claim 500l. Pleas: 1. That the policy was not effected as alleged. 2. That at the time of the alleged loss the ship had not been loaded within the meaning of the policy, nor had the insurance on the freight begun as alleged. Issue joined. At the trial, before Blackburn, J., at the Liverpool Winter Assizes, 1871, it was proved that a charter of the 22d of August, 1870, was entered into between Wolf & Co., owners of the ship Napier, now on her passage to Melbourne, and the American Guano Company, by which it was agreed that the vessel should proceed on a voyage from the port of Melbourne, Australia, to Baker's Island, in the Pacific Ocean, and there load a cargo of guano. The charterers agreed to supply a full cargo of guano; and the owners agreed that when the vessel was properly loaded the captain should give bills of lading stating the quantity loaded, and then the vessel should proceed on her return passage to Birkenhead; and the charterers agreed to pay freight at 70s. per ton, each ton properly discharged and delivered, one quarter in cash within five days after arrival at her port of discharge, and the balance in cash upon the proper delivery of the cargo as per charter. . . . The plaintiffs had underwritten a policy "in 500%. lost or not lost, at and from Melbourne to Baker's Island, while there, and thence to Liverpool or Birkenhead, upon any goods on board the vessel Napier," declared to be on "chartered freight valued at 6000l." The plaintiffs having underwritten this policy caused themselves to be reinsured with the defendants by the policy of 704] *the 21st of February, 1871, in the terms set out in the declaration. The ship reached Baker's Island on the 1st of April, 1871 and had taken in about two-thirds of her cargo of guano, a full cargo being ready, when she was obliged through stress of weather to leave her moorings, the anchorage being in an open roadstead; and she afterwards struck on a reef and became a (1) The policy was partly printed and partly in writing: see the judgment of Blackburn, J., post, p. 707. Jones v. Neptune Marine Insurance Co. 1872 total wreck. The plaintiffs having paid 5007. on their policy, sought to recover it from the defendants. A verdict passed for the plaintiff's for the whole amount. claimed, with leave to the defeudants to move to enter the verdict for them, or to reduce the verdict. A rule was accordingly obtained to enter a verdict for defendants, on the ground that the risk had not attached; or to reduce the verdict to 250., or such other sum as the Court shall think fit, on the ground that the defendants were only liable to a loss in proportion to the freight on cargo actually loaded. Bult, Q.C., and Trevelyan, showed cause. The risk under the defendants' policy had attached. The first clause, "500l. on freight payable on the voyage to be performed by the ship Napier from Baker's Island to a port of discharge in the United Kingdom," is only a description of the subject insured, viz., chartered freight on the above voyage; add the risk is defined by the subsequent clause, "the insurance beginning from the loading of the said vessel." Insurance, being a contract of indemnity, is always to be construed in favor of the assured, as most consonant with the intention of the parties: 1 Duer on Insurance, p. 161. And, as on an insurance on freight all that is generally necessary is that the ship should be on the voyage, and the goods ready at the port for shipping: Phillips on Insurance, ss. 944-5, the words "the insurance beginning from the loading" must be interpreted to mean, that in order that the insurance may attach the loading must have commenced; and, inasmuch as the ship was partly loaded and the rest of the cargo was ready, the plaintiffs are entitled to recover the full amount. [They referred to Foley v. United Fire Insurance Co. ('); Beckett v. West of England Marine Insurance * Co. (2); Mel- [705 lish_v. Allnutt (3); Richards v. Marine Insurance Co. (†); Hunter v. Leathley (5). [BLACKBURN, J., referred to Bell v. Hobson (6).] Manisty, Q.C., and Aspinall, Q.C. (R. G. Williams with them), in support of the rule. All the cases cited are distinguishable. The insurance is of a voyage "from Baker's Island," and not "at and from," as is usually inserted in insurances on freight; the word "at" was omitted on purpose to avoid the danger of the open roadstead at Baker's Island. Inasmuch, therefore, as the insurance is only "from" Baker's Island, the words “the insurance beginning from the loading of the vessel," which more specifically define the point of time at which the risk is to commence, must mean the completion of the loading. Moreover () Law Rep., 5 C. P., 155. (1) 25 L. T. (N.S.), 739. (1) 3 Johns. U. S. Rep., 307. (°) 19 B. & C., 858. () 16 East., 240. |