A-24857, DECEMBER 10, 1928, 8 COMP. GEN. 289

A-24857: Dec 10, 1928

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(A PHILLIPINE GOVERNMENT-OWNED CORPORATION) WERE TRANSPORTED FROM THE UNITED STATES TO THE PHILIPPINE ISLANDS ON A UNITED STATES ARMY TRANSPORT. COULD HAVE NO VALID CLAIM AGAINST THE UNITED STATES. 263 WAS PAID TO . 000 WAS PAID ON ACCOUNT TO "C. 734.02 WAS PAID TO "C. 407.22 WAS FOR ACCOUNT OF THE MANILA RAILROAD COMPANY AND THE BALANCE OF $9. 80 WAS FOR ACCOUNT OF THE GOVERNMENT OF THE PHILIPPINE ISLANDS. WHILE SAME WAS EN ROUTE FROM SAN FRANCISCO TO SIBERIA AND THE PHILIPPINE ISLANDS. 2. THE ABOVE TRANSPORT WAS OWNED AND OPERATED BY THE UNITED STATES AND WAS USED EXCLUSIVELY FOR GOVERNMENT BUSINESS. THERE WAS BEING TRANSPORTED. THE TOTAL VALUE OF THE CARGO CARRIED FOR THE GOVERNMENT OF THE PHILIPPINE ISLANDS WAS $191.

A-24857, DECEMBER 10, 1928, 8 COMP. GEN. 289

GENERAL AVERAGE - ARMY TRANSPORT SHIPMENTS - FIRE AT SEA - INSURANCE - SUBROGATION WHERE SUPPLIES FOR THE GOVERNMENT OF THE PHILIPPINE ISLANDS AND THE MANILA RAILROAD CO. (A PHILLIPINE GOVERNMENT-OWNED CORPORATION) WERE TRANSPORTED FROM THE UNITED STATES TO THE PHILIPPINE ISLANDS ON A UNITED STATES ARMY TRANSPORT, WITHOUT CHARGE AND AT THE RISK OF THE OWNERS, THE UNITED STATES INCURRED NO LIABILITY FOR A GENERAL AVERAGE CONTRIBUTION TO COVER DAMAGES TO SAID SHIPMENTS RESULTING FROM FIRES ABOARD THE VESSEL; AND THE UNDERWRITER, UPON PAYMENT OF SAID DAMAGES UNDER POLICIES OF INSURANCE CARRIED BY THE OWNERS, COULD HAVE NO VALID CLAIM AGAINST THE UNITED STATES, BY RIGHT OF SUBROGATION, FOR REIMBURSEMENT OF ANY PART OF SUCH PAYMENTS.

DECISION BY COMPTROLLER GENERAL MCCARL, DECEMBER 10, 1928:

THE ATLANTIC MUTUAL INSURANCE CO. APPLIED OCTOBER 3, 1927, FOR REVIEW OF SETTLEMENT NO. 0187408, DATED MAY 28, 1928, DISALLOWING ITS CLAIM FOR $48,099.40 ALLEGED TO BE DUE FOR CONTRIBUTION IN GENERAL AVERAGE, BY WAY OF SUBROGATION, AS REIMBURSEMENT OF INSURANCE MONEYS PAID TO THE GOVERNMENT OF THE PHILLIPINE ISLANDS AND THE MANILA RAILROAD CO. (A PHILIPPINE GOVERNMENT-OWNED CORPORATION) TO COVER FIRE LOSSES SUSTAINED ON CERTAIN OF THEIR PROPERTY WHILE BEING TRANSPORTED FROM THE UNITED STATES TO THE PHILIPPINE ISLANDS IN DECEMBER, 1918, ON THE U.S. ARMY TRANSPORT LOGAN.

IN ITS APPLICATION FOR REVIEW OF THE SAID SETTLEMENT, THE CLAIMANT STATES:

PRIOR TO THE SAILING OF THE SAID TRANSPORT FROM SAN FRANCISCO, THE ATLANTIC MUTUAL INSURANCE COMPANY HAD ISSUED POLICIES OF INSURANCE TO H. L. HERSHEY, AS PURCHASING AGENT IN THE UNITED STATES FOR THE GOVERNMENT OF THE PHILIPPINE ISLANDS, AND TO H. L. HERSHEY, AS PURCHASING AGENT OF THE MANILA RAILROAD COMPANY, RESPECTIVELY, INSURING ALL SHIPMENTS OF GOODS AGAINST MARINE PERILS, INCLUDING FIRE; THESE POLICIES, OF COURSE, AUTOMATICALLY COVERED THE SHIPMENTS IN QUESTION. THEREAFTER, THE ATLANTIC MUTUAL INSURANCE COMPANY MADE PAYMENT OF LOSSES AS CLAIMED UNDER THOSE POLICIES, ON THE SHIPMENTS IN QUESTION, AS FOLLOWS: ON SEPTEMBER 17, 1919, $3,263 WAS PAID TO ,L. H. CAMFIELD, DISBURSING OFFICER," FOR ACCOUNT OF THE GOVERNMENT OF THE PHILIPPINE ISLANDS AT WASHINGTON, D.C.; ON APRIL 16, 1920, $25,000 WAS PAID ON ACCOUNT TO "C. F. BROWN, DISBURSING OFFICER" FOR ACCOUNT OF THE GOVERNMENT OF THE PHILIPPINE ISLANDS, AND ON APRIL 12, 1921, $10,734.02 WAS PAID TO "C. F. BROWN, DISBURSING OFFICER" IN PAYMENT OF THE BALANCE OWING UNDER BOTH POLICIES FOR LOSSES BY REASON OF THE FACTS AFORESAID. ON SAID SUM OF $10,734.02, $1,407.22 WAS FOR ACCOUNT OF THE MANILA RAILROAD COMPANY AND THE BALANCE OF $9,326,80 WAS FOR ACCOUNT OF THE GOVERNMENT OF THE PHILIPPINE ISLANDS. THE AFORESAID SUMS CONSTITUTED PAYMENT IN FULL OF ALL LOSSES CLAIMED BY EACH OF SAID ASSURED UNDER SAID POLICIES.

WITH REFERENCE TO THE MATTERS INVOLVED IN THE PENDING CLAIM THE QUARTERMASTER GENERAL, WAR DEPARTMENT, UNDER DATE OF MARCH 1, 1928, SUBMITTED TO THE CHIEF OF FINANCE A REPORT AND RECOMMENDATION AS FOLLOWS:

1. THE CLAIM OF THE ATLANTIC MUTUAL INSURANCE COMPANY HAS ITS INCEPTION IN A FIRE WHICH OCCURRED ON THE U.S.A.T. "LOGAN" IN DECEMBER, 1918, WHILE SAME WAS EN ROUTE FROM SAN FRANCISCO TO SIBERIA AND THE PHILIPPINE ISLANDS.

2. THE ABOVE TRANSPORT WAS OWNED AND OPERATED BY THE UNITED STATES AND WAS USED EXCLUSIVELY FOR GOVERNMENT BUSINESS, PRIMARILY THE CARRYING OF U.S. GOVERNMENT SUPPLIES AND U.S. ARMY PERSONNEL WITH THEIR AUTHORIZED ALLOWANCE OF BAGGAGE ON CHANGE OF STATION.

3. ON DECEMBER 5, 1918, THE VESSEL SAILED FROM SAN FRANCISCO LOADED WITH CARGO CONSIGNED TO VLADIVOSTOK, SIBERIA, AND THE PHILIPPINE ISLANDS. ADDITION TO U.S. GOVERNMENT SUPPLIES, THERE WAS BEING TRANSPORTED, FREE OF CHARGE, CERTAIN RED CROSS SUPPLIES, AND CARGO BELONGING TO THE GOVERNMENT OF THE PHILIPPINE ISLANDS AND THE PHILIPPINE ISLAND GOVERNMENT-OWNED MANILA RAILROAD. THE TOTAL VALUE OF THE CARGO CARRIED FOR THE GOVERNMENT OF THE PHILIPPINE ISLANDS WAS $191,629.80. OF THIS AMOUNT $20,365.04 WAS THE PROPERTY OF THE MANILA RAILROAD COMPANY AND $83,000.00 WAS PHILIPPINE GOVERNMENT SPECIE.

4. AT 8.30 P.M., ON DECEMBER 16, 1918, WHEN THE TRANSPORT WAS ABOUT 700 MILES NORTHWEST OF HONOLULU, FIRE WAS DISCOVERED IN LOWER HOLD NO. 1, WHICH HOLD WAS LOADED FULL WITH CARGO BOUND FOR VLADIVOSTOK AND MANILA. IN ORDER TO EXTINGUISH THE FIRE IT WAS NECESSARY TO FLOOD THE HOLD BY HOSE FROM THE DECK, AND FROM THE BOTTOM THROUGH THE BILGE PIPES. STEAM WAS ALSO USED. THE CARGO IN THIS HOLD WAS BADLY DAMAGED BY FIRE AND WATER, AND PARTS OF IT HAD ALL IDENTIFYING MARKS DESTROYED. ON THE MORNING OF DECEMBER 18TH, AFTER THE FIRE HAD BEEN EXTINGUISHED, MUCH OF BURNED CARGO, WHICH WAS DAMAGED TO SUCH AN EXTENT AS TO BE CONSIDERED WORTHLESS, WAS THROWN OVERBOARD AND THE TRANSPORT PROCEEDED ON ITS WAY. ON DECEMBER 22ND FIRE BROKE OUT AGAIN AND SAME WAS NOT COMPLETELY EXTINGUISHED UNTIL DECEMBER 23RD AT WHICH TIME ADDITIONAL BURNED CARGO WAS THROWN OVERBOARD. BECAUSE OF THE FACT THAT CARGO CONSIGNED TO VLADIVOSTOK WAS FROZEN AND COVERED WITH ICE, NONE WAS DELIVERED AT THAT PORT.

5. A BOARD OF OFFICERS, APPOINTED AT SEA TO DETERMINE THE ORIGIN OF THE FIRE, FOUND THAT SAME WAS DUE TO SPONTANEOUS COMBUSTION CAUSED BY LINSEED OIL COMING IN CONTACT WITH RED CROSS PACKAGES OF COTTON BANDAGES AND COTTON MATTRESSES STOWED IN CLOSE PROXIMITY TO THE OIL AND PAINT. SECOND BOARD OF OFFICERS WAS CONVENED AFTER THE TRANSPORT ARRIVED AT DESTINATION TO DETERMINE THE CAUSE OF THE FIRE AND THE EXTENT OF DAMAGE TO THE CARGO. THIS BOARD VERIFIED THE FINDINGS OF THE PREVIOUS BOARD THAT THE FIRE WAS CAUSED BY SPONTANEOUS COMBUSTION, AND FURTHER FOUND THAT SAME WAS DUE TO THE NEGLIGENCE OF NO ONE. THE BOARD DETERMINED THAT THE VALUE AND OWNERSHIP OF THE PROPERTY DAMAGED AND DESTROYED WAS AS FOLLOWS:

CHART

LOST DAMAGED TOTAL Q.M. CORPS ------------------ $4,405.72 $4,128.78 $8,534.50 ORDNANCE -------------------- 148.80 335.81 484.61 MEDICAL CORPS --------------- --------- 1,655.85

1,655.85 SIGNAL CORPS ---------------- --------- 140.00 140.00 GOVERNMENT OF PHILIPPINE IS - --------- 28,276.78 28,276.78 PRIVATE PROPERTY -------- ---- 279.25

1,448.46 1,727.71

6. THE PRIVATE PROPERTY LISTED PERTAINED TO U.S. ARMY PERSONNEL, AND AS LOSSES SUSTAINED BY OFFICERS AND ENLISTED MEN OF THE ARMY ARE FULLY COVERED BY REGULATIONS, THESE ITEMS SHOULD NOT HAVE BEEN TAKEN INTO CONSIDERATION IN THE AVERAGE ADJUSTMENT STATEMENT.

7. NO FORMAL CLAIM AGAINST THE UNITED STATES HAS BEEN FILED BY THE GOVERNMENT OF THE PHILIPPINE ISLANDS, THE RED CROSS, OR THE MANILA RAILROAD COMPANY FOR LOSSES SUSTAINED.

8. THE CARGO OWNED BY THE GOVERNMENT OF THE PHILIPPINE ISLANDS AND THE MANILA RAILROAD COMPANY, ON WHICH THERE IS AN ALLEGED LOSS OF $39,207.73, WAS COVERED BY INSURANCE WITH THE ATLANTIC MUTUAL INSURANCE COMPANY. APPEARS THAT THE ABOVE COMPANY PAID THE GOVERNMENT OF THE PHILIPPINE ISLANDS AND THE MANILA RAILROAD COMPANY, THROUGH THEIR PURCHASING AGENT IN THE UNITED STATES, THE SUM OF $38,997.02 IN FULL SETTLEMENT OF THEIR LOSSES, AND IT NOW SEEKS TO RECOVER FROM THE UNITED STATES, THROUGH GENERAL AVERAGE ADJUSTMENT, THE SUM OF $48,099.40.

9. THE RECORDS WERE SUBMITTED TO THE JUDGE ADVOCATE OF MARITIME AFFAIRS, HOBOKEN, N.J., WHO CONVENED A BOARD OF OFFICERS TO INQUIRE INTO, FIX RESPONSIBILITY FOR, AND REPORT UPON THE FIRE. AFTER FULLY INVESTIGATING THE MATTER THIS BOARD CONCURRED IN THE FINDINGS OF THE PREVIOUS BOARDS AS TO THE ORIGIN OF THE FIRE, AND CONCLUDED THAT THE WAR DEPARTMENT WAS NOT LIABLE FOR CONTRIBUTION IN GENERAL AVERAGE, AND THAT THE ATLANTIC INSURANCE COMPANY HAD NO VALID CLAIM AGAINST THE UNITED STATES.

10. THE CASE WAS THEN REFERRED TO THE JUDGE ADVOCATE GENERAL FOR OPINION. THE JUDGE ADVOCATE GENERAL DID NOT CONCUR IN THE CONCLUSION OF THE ABOVE BOARD AND IN ACCORDANCE WITH HIS RECOMMENDATION THE SERVICES OF JOHNSON AND HIGGINS, ADJUSTERS, WERE SECURED TO PREPARE A GENERAL AVERAGE STATEMENT. THE STATEMENT OF THESE ADJUSTERS IS INCLOSED HEREWITH.

11. INASMUCH AS NONE OF THE CARGO WAS THROWN OVERBOARD UNTIL AFTER THE FIRE HAD BEEN EXTINGUISHED, IT COULD NOT HAVE BEEN SACRIFICED TO SAVE THE VESSEL OR OTHER CARGO, AND THE BURNED CARGO CERTAINLY CAN NOT BE CONSIDERED AS HAVING BEEN SACRIFICED. THE ONLY PROPERTY THAT CAN BE SAID TO HAVE BEEN SACRIFICED WAS THAT DAMAGED BY SALT WATER. THIS, IT IS SHOWN, WAS SOLD IN BULK AFTER IT HAD BEEN STORED FOR A PERIOD OF MORE THAN SEVEN MONTHS. THE PRICE RECEIVED FOR THE DAMAGED CARGO WAS ADMITTEDLY MUCH BELOW WHAT COULD HAVE BEEN RECEIVED HAD THE PROPERTY BEEN DISPOSED OF IMMEDIATELY AFTER IT ARRIVED AT DESTINATION.

12. IT IS THE OPINION OF THIS OFFICE THAT THE ATLANTIC INSURANCE COMPANY HAS NO RIGHT TO THE ALLOWANCE CLAIMED UNDER GENERAL AVERAGE, AND IT IS RECOMMENDED THAT ITS CLAIM BE DISAPPROVED.

THE GENERAL AVERAGE STATEMENT, DATED DECEMBER 31, 1926 (EIGHT YEARS AFTER THE FIRES OCCURRED), PREPARED BY JOHNSON AND HIGGINS, ADJUSTERS, REFERRED TO IN PARAGRAPH 10 OF THE ABOVE-QUOTED REPORT, SETS FORTH THEIR ADJUSTMENT OF THE LOSSES RESULTING FROM THE FIRES ON THE SAID U.S. ARMY TRANSPORT LOGAN IN DECEMBER 1918, AS FOLLOWS:

TABLE U.S. WAR DEPARTMENT, AS OWNER OF CARGO, TO PAY -------------- $19,971.81 U.S. WAR DEPARTMENT, AS OWNER OF THE TRANSPORT, TO PAY ---- - 22,213.88 AMERICAN NATIONAL RED CROSS, AS OWNER OF CARGO, TO PAY -- --- 12,174.66

------------ TOTAL PAYMENTS -------------------------------------- ------ - 54,360.35 GOVERNMENT OF PHILIPPINE ISLANDS, AS OWNER OF CARGOES, TO RECEIVE -------------------------------------------------- -- 48,099.40 COL. S. E. ALLEN, C.A. CORPS, AS OWNER OF PERSONAL PROPERTY TO RECEIVE --- ----------------------------------------------- 1,429.25 KNUTE A. JOHNSON, WARRANT OFFICER, AS OWNER OF PERSONAL PROPERTY TO RECEIVE ---------------- ------------------------- 644.76 JOHNSON AND HIGGINS, AVERAGE ADJUSTERS, TO RECEIVE FOR SERVICES AND EXPENSES ------------------------------------- ----------- 2,365.12 SETTLING AGENTS TO RECEIVE COMMISSIONS FOR COLLECTING AND SETTLING THE GENERAL AVERAGE -------------------------------- 1,821.82

------------ TOTAL RECEIPTS -------------------------------------- ------ - 54,360.35

THE CLAIMANT CONTENDS THAT AS IT PAID TO THE GOVERNMENT OF THE PHILIPPINE ISLANDS AND TO THE MANILA RAILROAD CO. (A PHILIPPINE GOVERNMENT-OWNED CORPORATION) ITS FULL LIABILITY UNDER THE POLICIES OF INSURANCE TO COVER THE LOSSES SUSTAINED BY FIRE AND WATER ON THEIR CARGOES WHILE SAME WERE BEING TRANSPORTED FROM SAN FRANCISCO TO MANILA ON THE U.S. ARMY TRANSPORT LOGAN, IN DECEMBER, 1918, IT IS SUBROGATED TO THE RIGHTS OF THE INSURED AND ENTITLED TO RECEIVE SAID $48,099.40 CONTRIBUTION IN GENERAL AVERAGE FOUND TO BE DUE THEM BY THE ADJUSTERS, AS ABOVE SET FORTH.

GENERAL AVERAGE IS A CONTRIBUTION BY THE SEVERAL INTERESTS ENGAGED IN A MARITIME ADVENTURE TO MAKE GOOD THE LOSS OF ONE OF THEM FOR VOLUNTARY SACRIFICES OF PART OF THE SHIP OR CARGO TO SAVE THE RESIDUE OF THE PROPERTY AND/OR THE LIVES OF THOSE ON BOARD FROM AN IMPENDING PERIL, OR FOR EXTRAORDINARY EXPENSES NECESSARILY INCURRED FOR THE COMMON BENEFIT AND SAFETY OF ALL THE INTERESTS IN THE ADVENTURE. THE RIGHT TO CONTRIBUTION IS BASED UPON THE PRINCIPLE THAT WHATEVER IS SACRIFICED FOR THE COMMON SAFETY OF THE ASSOCIATED INTERESTS SHALL BE MADE GOOD BY ALL THE INTERESTS WHICH WERE EXPOSED TO THE COMMON PERIL, AND WERE SAVED FROM THE COMMON DANGER BY THE SACRIFICE. THE SPIRIT AND INTENDMENT OF THE LAW OF CONTRIBUTION IN GENERAL AVERAGE IS TO PLACE THE PERSONS INTERESTED, AS NEAR AS MAY BE, IN THE SAME RELATIVE POSITION WHICH THEY OCCUPIED BEFORE THE PERIL WAS MET. THE OBLIGATION TO CONTRIBUTE IN GENERAL AVERAGE RESTS UPON THE VESSEL, THE CARGO, AND THE FREIGHT, AND THE OWNERS OF SUCH INTERESTS. (SEE 32 "CYC.' 372 ET SEQ. AND CASES THEREIN CITED.)

THE LAW OF GENERAL AVERAGE HAS NO APPLICATION TO A CASE SUCH AS THE ONE HERE UNDER CONSIDERATION, WHERE A UNITED STATES ARMY TRANSPORT, ON A VOYAGE FROM THE UNITED STATES TO THE PHILIPPINE ISLANDS, IN ADDITION TO ITS CARGO OF SUPPLIES FOR THE UNITED STATES ARMY, ALSO TRANSPORTED FREE OF CHARGE AND AT THE RISK OF THE OWNERS CERTAIN SUPPLIES FOR THE GOVERNMENT OF THE PHILIPPINE ISLANDS, THE MANILA RAILROAD CO., AND THE AMERICAN NATIONAL RED CROSS.

THE UNITED STATES ARMY TRANSPORT SERVICE CONSISTS OF MANY OCEAN GOING VESSELS, OWNED BY THE UNITED STATES, WHICH ARE MAINTAINED AND OPERATED BY THE QUARTERMASTER CORPS, WAR DEPARTMENT, FOR THE TRANSPORTATION OF UNITED STATES TROOPS, ANIMALS, AND SUPPLIES FOR THE UNITED STATES ARMY. REGULAR SCHEDULES OF SAILINGS ARE MAINTAINED TO THE DEPARTMENTS OCCUPIED BY THE ARMY OUTSIDE THE CONTINENTAL LIMITS OF THE UNITED STATES. DURING THE PERIOD THAT THE AMERICAN EXPEDITIONARY FORCES WERE IN FOREIGN COUNTRIES, DURING AND AFTER THE WORLD WAR, AVAILABLE CARGO SPACE ON ARMY TRANSPORTS NOT REQUIRED FOR SHIPMENTS OF ARMY SUPPLIES FREQUENTLY WAS ALLOTTED TO THE WAR DEPARTMENT'S BUREAU OF INSULAR AFFAIRS, WHICH BUREAU IS CHARGED WITH THE PURCHASE AND SHIPMENT OF SUPPLIES FOR THE PHILIPPINE ISLANDS AND PORTO RICO, IN ORDER TO EXPEDITE SUCH EQUIPMENT OF SUPPLIES TO THESE ISLANDS, AND TO THE AMERICAN NATIONAL RED CROSS FOR SHIPMENT OF SUPPLIES FOR USE IN ITS FOREIGN RELIEF WORK. THE ARMY TRANSPORT LOGAN, ON ITS VOYAGE FROM SAN FRANCISCO TO MANILA, IN DECEMBER, 1918, CARRIED A CARGO CONSISTING OF VARIOUS KINDS AND QUANTITIES OF SUPPLIES FOR THE QUARTERMASTER CORPS, ORDNANCE DEPARTMENT, MEDICAL CORPS, AND SIGNAL CORPS OF THE UNITED STATES ARMY; ALSO, CERTAIN PERSONAL PROPERTY FOR OFFICERS AND MEN OF THE ARMY; ALSO, CERTAIN SUPPLIES FOR THE AMERICAN NATIONAL RED CROSS; ALSO, CERTAIN SUPPLIES FOR THE GOVERNMENT OF THE PHILIPPINE ISLANDS AND THE MANILA RAILROAD CO. (A PHILIPPINE GOVERNMENT-OWNED CORPORATION). THE SUPPLIES THUS TRANSPORTED BY THE LOGAN ON SAID VOYAGE FOR THE AMERICAN NATIONAL RED CROSS, THE GOVERNMENT OF THE PHILIPPINE ISLANDS, AND THE MANILA RAILROAD CO., WERE CARRIED BY SAID UNITED STATES ARMY TRANSPORT FREE OF CHARGE AND SOLELY FOR THE CONVENIENCE AND BENEFIT OF THE SHIPPERS, AND AT THEIR RISK. SUCH RISKS ON THE CARGOES OWNED BY THE GOVERNMENT OF THE PHILIPPINE ISLANDS AND THE MANILA RAILROAD CO. WERE COVERED BY MARINE AND FIRE INSURANCE POLICIES WITH CLAIMANT INSURANCE COMPANY UNDER WHICH THE SAID INSURED ESTABLISHMENTS SUBSEQUENTLY WERE PAID $38,997.02 FOR THE FIRE LOSSES SUSTAINED, AS A RESULT OF FIRE AND WATER DAMAGES TO THEIR SAID SHIPMENTS.

IN MARINE AND FIRE INSURANCE THE RULE IS WELL SETTLED THAT BY THE PAYMENT OF A LOSS, TOTAL OR PARTIAL, UNDER A VALID POLICY THE UNDERWRITER BECOMES, BY OPERATION OF LAW AND WITHOUT AN ASSIGNMENT OR TRANSFER, SUBROGATED TO ALL THE RIGHTS OF THE INSURED IN REGARD TO THAT LOSS. FROM THE VERY NATURE OF THE CONTRACT OF INSURANCE AS A CONTRACT OF INDEMNITY THE UNDERWRITER ON PAYMENT OF THE LOSS IS ENTITLED BY WAY OF SALVAGE, TO THE BENEFIT UP TO THE AMOUNT OF ITS PAYMENTS, OF ANYTHING THAT MAY BE RECEIVED EITHER FROM THE REMNANT OF THE GOODS OR THEIR PROCEEDS, OR FROM DAMAGES WHICH MAY BE PAID BY THIRD PERSONS ON ACCOUNT OF SUCH LOSS, INCLUDING GENERAL AVERAGE CONTRIBUTIONS. THE UNDERWRITER BECOMES SUBROGATED TO ALL CAUSES OF ACTION WHICH THE INSURED MAY HAVE AGAINST ANY THIRD PERSON FOR CAUSING THE LOSS, SUCH AS THE RIGHT TO RECOVER FOR INJURIES SUSTAINED IN A COLLISION. BUT HE STANDS IN NO RELATION OF CONTRACT OR PRIVITY WITH SUCH THIRD PERSON AND CAN HAVE NO RIGHT OF RECOVERY AGAINST HIM EXCEPT SUCH AS COULD BE ENFORCED BY THE INSURED. (38 CORPUS JURIS, 1163.) THE INSURER'S RIGHT OF SUBROGATION, ARISING OUT OF THE CONTRACT OF INSURANCE AND PAYMENT OF THE LOSS, IS ONLY TO SUCH RIGHTS AS THE INSURED HAS, BY LAW OR CONTRACT, AGAINST THIRD PERSONS. (SEE PHOENIX INSURANCE COMPANY V. ERIE AND WESTERN TRANSPORTATION COMPANY, 117 U.S. 312.)

IN THE INSTANT MATTER IT DOES NOT APPEAR THAT EITHER THE GOVERNMENT OF THE PHILIPPINE ISLANDS OR THE MANILA RAILROAD CO. HAS OR HAD A CLAIM AGAINST THE UNITED STATES FOR GENERAL AVERAGE CONTRIBUTION IN CONNECTION WITH LOSSES SUSTAINED BY FIRE AND WATER DAMAGES TO THEIR CARGOES WHILE SAME WERE BEING TRANSPORTED FROM SAN FRANCISCO TO MANILA BY THE U.S. ARMY TRANSPORT LOGAN IN DECEMBER, 1918. HENCE, THE CLAIMANT, AS INSURER OF THEIR SAID CARGOES, WOULD HAVE NO CLAIM BY RIGHT OF SUBROGATION FOR SUCH GENERAL AVERAGE CONTRIBUTION.

UPON REVIEW, THEREFORE, THE SETTLEMENT NO. 0187408, DATED MAY 28, 1928, DISALLOWING CLAIMANT'S $48,099.40 CLAIM, MUST BE AND IS SUSTAINED.