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A ship is seized in a foreign port by officers of government there, sold by an illegal sentence of a court assuming authority there, and repurchased with money obtained on bottomry bond by the captain, who brings the ship home. Held, that the ship having been restored so that the owners have the right and power to take possession of her, they cannot recover on a policy as for a total loss. Wilson v. Forster (Ex. 1815), 6 Taunt. 25.
Insurance on ship for a voyage from Rio de Janeiro to Liverpool. The ship was captured by an American privateer. The crew was put on board a Portuguese vessel bound for Liverpool, and on arrival there 23d April, gave notice of the capture. The owners promptly abandoned. Subsequently the ship was recaptured, and information of this reached the owners on 15th June. On the 24th June the ship and cargo arrived in the port of Liverpool. The action was commenced on the 10th November. Held (by Lord ELLENBOROUGH, C. J., BAYLEY, J., ABBOTT, J., and HOLROYD, J.), that the assured could recover on a partial loss only. Lord ELLENBOROUGH founded his judgment on the doctrine laid down by Lord Mansfield in Hamilton v. Mendez, and the decision of Bainbridge v. Neilson. He observed that the judgment in the latter case was based on the principle established in Godsall v. Boldero, 9 East, 372, that the assured could only demand an indemnity. Brotherston v. Barber (K. B. 1816), 5 M. & S. 418.
A ship damaged in a storm is deserted by the crew under the necessity of saving their lives. The deserted ship is brought into port by salvors, and sold under decree of the Admiralty Court at Rhode Island in America. The assured, who were at New York, took no means as they might have done to prevent the sale; and there remained a considerable balance in court after payment of the salvage and costs. Held, that the desertion did not of itself constitute a total loss, and that the plaintiff, not having taken steps to prevent the sale nor having shown the necessity of it, had no right to abandon. "Thornely v. Hebson (K. B. 1819), 2 B. & Ald. 513.
Assured on goods, after hearing of the capture of the ship, and after a recapture had taken place, but before hearing of the recapture, gave notice of abandonment. Ultimately the goods were brought to the port of destination, and there warehoused by the master. Held, that the assured could not recover as on a total loss. Opinion expressed that, by English law, on the authorities of Bainbridge v. Neilson, Patterson v. Ritchie, and Brotherston v. Barber, and notwithstanding the doubts of a high authority (Lord Eldou), in Smith v. Robertson (p. 17, ante), the rule is established that abandonment is to be viewed with regard to the ultimate state of facts as appearing before the action is brought. Naylor v. Taylor (K. B. 1829), 9 B. & C. 718. See also, as an instance of a case
where the state of facts existed at the time of abandonment and at the time of action brought, and where the assured recovered as on a total loss, — although the goods probably arrived safe in the end, — the case. of Rodonachi v. Elliot, cited under No. 1, p. 19, ante.
Where the assured receives full and trustworthy information that the subject-matter is in imminent danger of becoming a total loss, he is bound, in order to enable him to recover for a constructive total loss, immediately to give notice of abandonment to the underwriters; and his omission to do so will not be excused because afterwards the subjectmatter of the insurance is justifiably sold. So held, in a case of policy on ship bound from Saigon to Hong Kong, where the ship had struck on a rock, was brought back to Saigon, reported on as a constructive total loss, and sold by order of the insurers. Kaltenbach v. Mackenzie (C. A. 1878), 3 C. P. D. 467 ; 48 L. J. C. P. 9.
AMERICAN NOTES. The assured cannot abandon upon a mere apprehension of total loss, and afterward sustain the abandonment by facts subsequently coming to his knowledge. Abandonment can only be made for a total loss, and the insured must be advised of such a loss before he can elect to abandon. Bosley v. Chesapeake Ins. Co., 3 Gill & Johnson (Maryland), 450; 22 Am. Dec. 337, citing Suydam v. Marine Ins. Co., 1 Johnson (New York), 181; 3 Am. Dec. 307. To same effect, T'easdale v. Charleston Ins. Co., 2 Brevard (So. Car.), 190; 3 Am. Dec. 705.
A constructive total loss must continue to the time of abandonment. Olivera v. Union Ins. Co., 3 Wheaton (U. S. Sup. Ct.), 183; Fulton Ins. Co. v. Goodman, 32 Alabama, 108; Cincinnati Ins. Co. v. Bakewell, 4 B. Monroe (Kentucky), 541 ; Lee v. Boardman, 3 Mass. 238; Hallett v. Peyton, 1 Caines' Cases (N. Y.), 28; Dutilh v. Gatlif, 4 Dallas (Penn.), 446.
The right to abandon as for total loss depends on the state of facts actually existing at the time of the offer to abandon, and not on the state of the information received. Marshall v. Delaware Ins. Co., 4 Cranch (U. S. Sup. Ct.), 202; Dickey v. American Ins. Co., 3 Wendell (N. Y. Ct. of Errors), 658.
The right to abandon is dependent on the probabilities at the time the right is exercised, and is not affected by the subsequent rescue of the vessel or the diminution of the supposed loss. Orient Ins. Co. v. Adams, 123 U. S. 67.
Story, J., says, in Peele v. Merchants’ Ins. Co., 3 Mason (U. S. Circ. Ct.), 37, that “ the right of abandonment is to be decided by the actual facts at the time of the abandonment, and not merely by the information of the assured,” and “no prior or subsequent events will give it any greater efficacy,” and continues : “ The rule in the English courts is, as we all know, very different. There it has been held that if an abandonment be rightfully made, it is not absolute, but may be controlled by subsequent events; so that if the loss has ceased to be total at any time before action brought, the abandonment becomes
inoperative.” Citing Bainbridge v. Neilson. “The cases in which this doctrine has been asserted do not, in my humble judgment, present any solid reasons to support it.”
Of Hamilton v. Mendez, Ch. J. Tilghman, in Dutilh v. Gatliff, 5 Dallas (Penn. Sup. Ct.), 449, said : “ There is no doubt of the soundness of the principle : I mean that a policy is a contract of indemnity. The only question is, at what period the rights of the parties are to be tested by this principle; whether at the time of abandonment or of the commencement of the action. I have considered attentively the case of Hamilton v. Mendez. It must be obvious to every one that the decision in that case was perfectly right. It was simply this : that a man shall not be permitted to abandon, and recover for a total loss, when he knew, at the time of his offer to abandon, that his property, which had been lost, had been restored, and the voyage very little injured. But in reading the opinion of Lord Mansfield, we find a want of accuracy with which that great man was seldom chargeable. Sometimes it appears as if he thought the period for fixing the rights of the insurers and insured was the commencement of the suit; sometimes, the time of abandonment; and sometimes he even seems to extend his ideas so far as the time of the verdict. But finally he explicitly declares that he decides nothing but the point before him. He seems to have felt a little sore at the improper application of some general expressions used by him in the case of Goss v. Withers. Anxious to cut off all pretence for doing the same in Hamilton v. Mendez, he has taken too much pains to avoid the possibility of misrepresentation. Hence his argument, considered in the detail, is not altogether clear and consistent. Upon the whole of this case of Hamilton v. Mendez, I consider it most safe to confine its authority to the point actually decided, which was very different from that we are now considering.” And the court held the rights fixed as of the time of abandonment.
In Maryland, &c. Ins. Co. v. Bathurst, 5 Gill & Johnson (Maryland), 230, is quoted that part of Lord Mansfield's opinion in Goss v. Withers, 2 Burr. 694, “ which declares that the insurer runs the risk of the insured, and undertakes to bear the loss actually sustained, and can be liable to no more. So that if after condemnation the owner recover the ship in her complete condition, but has paid salvage or been at any expense in getting her back, the insurer must bear the loss so actually sustained,'” and of this the court say: “This may be sound doctrine in England, where it is held that the right to recover for a total loss is not made absolute by the state of facts on which the abandonment is founded continuing to exist at the date of the abandonment, but is dependent on subsequent events. In this country a different rule prevails. The right to recover of the assurer, for a total loss, is complete if the loss which is its basis continue at the time of the abandonment, and of this consummate right or privilege the assured cannot without default be deprived but by their consent, express or implied.” “We are aware that this question has been apparently otherwise decided in some of the United States, and especially in New York.”
When the assured receives intelligence of such a loss as entitles him to abandon, he must make his election, and (if he elects to abandon) give notice to the underwriters within a reasonable time: otherwise he waives his right to abandon and can recover only as for an average loss.
Mitchell V. Edie.
1 T. R. 608; 1 R. R. 318. This was an action on a policy of insurance on goods on board the ship Lady Mansfield “from Jamaica to London.” The defendant paid into court a sum of money on account of an average loss. At the trial before Buller, J., at the last Sittings at Guildhall, the cause was ultimately referred to one of the jury to consider what was due to the plaintiffs, who found that nothing was due ; and thereupon a verdict was entered for the defendant. And now, upon a motion for a new trial, the following facts were reported; the ship was captured in the course of her voyage by an American privateer, and a few days afterwards the captor, having stripped her of her stores, and part of her rigging, and having taken out some of the hands, set her at liberty. There was a clause in the policy to exempt the underwriters from average losses under £3 per cent. And the part of her cargo taken out did not amount to that sum. In consequence of this loss of part of the crew, it became impossible for the ship to pursue her voyage, and she was obliged to bear away to Charles Town, where she arrived on the 18th of February, 1782. She was there put into the hands of one Cruden, who was a part-owner in the ship, and had likewise been engaged with one of the plaintiffs in former transactions. Cruden, in June, 1782, sold the cargo, and received the whole profits of the sale, but remitted home no part of them. In his books he had given the underwriters credit for the amount. At the time of the sale he was in bad circumstances, and afterwards became insolvent. In June, 1783, Cruden came to England, and several applications were
made to him on the part of the plaintiffs by Abel, who had concerns with the plaintiffs as well as with Cruden, and who said at the trial, that the plaintiffs had looked to Cruden for payment for two or three years; during all which time no notice of abandonment had been given by the plaintiffs to the underwriters.
The learned Judge then stated, that the first question which had been made was, whether the plaintiffs were entitled to recover as for a total loss. And as to this he was of opinion, that as there had been a capture which for a time had occasioned a total loss, the owners had the option to abandon or not as they pleased; but if they chose to abandon, they ought to have done it immediately upon receiving intelligence of the loss; and that as they had not done so, but had looked to Cruden as their agent for payment, he was of opinion that they had waived their right to abandon, and could only recover as for an average loss.
Erskine, Mingay, and Baldwin showed cause against the rule. They allowed the right which the owners had to abandon in consequence of the capture, but argued that if they chose to abandon they ought to have done it in the first instance, as soon as they had received intelligence of the loss, and should immediately afterwards have signified their intention to the underwriters. Here they had given no such notice of their intention, nor had informed the underwriters that the goods were placed in the hands of Cruden. On the contrary, the plaintiffs themselves had constantly looked to him as their agent. They had made repeated applications to him for payment; and had given him credit for the space
of three years.
Bearcroft, Cowper, and Adam, on the other side contended, that they were entitled to a total loss; but if not to a total loss, yet to a greater average loss than had been paid into court. As to the first, This is a new question of insurance law which has never yet been decided. The rule of law, as it is to be collected from all the cases, seems to be, that, while everything is done bonâ fide for the benefit of all the parties concerned, the assured are not obliged to abandon. Here the ship was condemned in consequence of a peril within the policy. It then became necessary to put the goods into the hands of some person; therefore it was not a voluntary act of the owners; and it was by mere accident that they got into the hands of Cruden; who, as far as relates to this transaction, was totally unconnected with the plaintiffs. Everything was