Lord Wright:-

The appellants claimed in this action as assured under a floating policy of marine insurance dated 19th December 1929, upon shipments of rice imported by the appellants to their rice mills in British Columbia, as from time to time declared under the policy. The policy covered (among other risks) perils of the seas, and also, under what are often described as the general words, all other perils, losses and misfortunes that have or shall come to the hurt or damage of the subject-matter of the insurance. The goods were warranted free of particular average under 3 per cent. on each package. The seaworthiness of the ship as between the assured and the assurers was admitted. Under this policy the appellants duly declared a full cargo of 50,600 bags of rice weighing 5080 tons shipped on or about 23rd April 1936, in the motor vessel and at RangoonfortheirdockontheFraserRiver.Thebagswerevaluedinallat$191,922.Includedintheshipmentsodeclaredwere7500bagsofbrownricevaluedat$30,798marked163and102.TheshipperswereBlackwoodRalliand Segundo" at Rangoon for their dock on the Fraser River. The bags were valued in all at $191,922. Included in the shipment so declared were 7500 bags of brown rice valued at $30,798 marked 163 and 102. The shippers were Blackwood Ralli and Co. of Rangoon. The claim is made in respect of the rice declared under these two marks which are compendiously referred to as 163. No claim is made in respect of the other marks shipped, which bore respectively the marks K.G., A.L.Z. and N.L.Z. The respondents issued a certificate of insurance in respect of the whole shipment.

The and was a motor vessel of 4414 tons gross and 2668 tons net, registered at Oslo. She had five holds. The bags of the marks 163 and 102 were stowed, partly in No. 2 hold, which was forward of the engine and boiler space and partly in No. 3 hold which was aft of that space. The cargo throughout was well dunnaged and was stowed with adequate air spaces. There were also vertical wooden trunk ventilators and ordinary wooden rice ventilators in each hold. The system of ventilators throughout consisted of cowl ventilators with in addition Samson post ventilators at each hold. These latter were always open, but it was necessary that the cowl ventilators should be also open to ensure a through current of air in the holds. There is no complaint of the sufficiency of the ventilation system.

The "Segundo" arrived at Fraser River on 28th May 1936. It was then found that all the rice had heated, but by reason of the franchise of 3 per cent. in the case of particular average and also because the rice in the bags marked 163 and 102 was of finer quality, it was decided that the claim against the respondents as insurers should be limited to these marks.

A primary issue in the action was what was the condition of the rice on shipment, since it was contended that the damaged condition of the rice was not due to perils insured against but to the inherent vice of the goods when shipped. On that issue a commission to take evidence went to Rangoon where a large number of witnesses gave evidence. At the trial which took place in the Supreme Court of British Columbia before the Honourable Robertson J. and a special jury and lasted for seven days, the jury, as will appear later, found that the rice was in good and sound condition when shipped. No complaint has been made of the summing-up. There was abundant evidence to justify the jury's finding on that issue, which was accordingly concluded in the appellants' favour. The question therefore remained whether the appellants had established that the damage was due to perils insured against. The appellants' case was that the damage was due to interference with the ventilation consequent on bad weather during the voyage which caused the closing of the cowl ventilators which it was necessary to keep open to ensure through ventilation. The evidence was that rice is a commodity very liable to heat if not fully ventilated while b