SECTION V.-Effect of Abandonment in transferring Rights.

ABANDONMENT of the ship transfers to the underwriters the accruing freight: and his title to that freight is good although freight has been insured by a separate policy, and is abandoned to the underwriters on freight.

So held by judgment of the Court of King's Bench (ELLENBOROUGH, C. J., ABBOTT, J., and HOLROYD, J., diss. Bayley, J.); and judgment affirmed (unanimously) in the Exchequer Chamber.

Case v. Davidson.

Davidson v. Case.

5 M. & S. 79.

Assumpsit for money had and received, and the money counts. Plea general issue. On the trial before Lord Ellenborough, C. J., at Guildhall in Trinity Term, 1815, there was a verdict for the plaintiff for £71 12s. 10d. damages, subject to the opinion of the court upon the following case:

Messrs. Brotherston and Begg were owners of the vessel called the Fanny, which was a general seeking ship, and sailed on a voyage from Rio de Janeiro to Liverpool with a cargo of goods on freight, the property of different persons. On the 27th January, 1814, Messrs. Brotherston and Begg insured the vessel on the said voyage, valued at £7000; and on the 22d April following they insured the freight of the said voyage by other policies and with other underwriters, and valued the same at £4000. The vessel with the cargo was captured in the course of the voyage by an American privateer; and thereupon Messrs. Brotherston and Begg gave notice of abandonment at the same time to the respective underwriters on ship and freight, who severally accepted the same. Afterwards the vessel was recaptured by one of his Majesty's

No. 11. - Case v. Davidson.

ships of war, was brought to London, and was by decree of the High Court of Admiralty restored to the owners with the cargo, on payment of salvage and expenses. The vessel arrived at Liverpool and delivered her cargo and earned the freight. It was agreed between the shipowners and the underwriters on ship (but not by the underwriters on freight), that the defendants should sell the ship and receive the proceeds thereof, and should also receive the freight of the cargo for the use and benefit of all persons respectively who should legally be entitled to it. The underwriters on ship and freight severally paid or satisfied the shipowners for a total loss. The underwriters on ship paid the loss on ship before the underwriters on freight paid the loss on freight. The defendants received and paid to the underwriters on ship the amount produced by the sale of the ship, which was about £33 per cent. on their subscriptions. The defendants also received the freight, which they held under the terms of the agreement, and which is £35 16s. 5d. per cent. clear on the sum insured on the ship. The underwriters on ship and also the underwriters on freight severally claimed from the defendants the freight thus received. The plaintiff is an underwriter on ship to the amount of £200, and claims to recover a proportion of the money received by the defendants for freight. The question for the opinion of the court is, whether the plaintiff is entitled to recover. If he is entitled, the verdict to stand, otherwise a nonsuit to be entered. This case was argued partly in last term, and partly on this day (May 7), by Richardson for the plaintiff, and Littledale for the defendants. For the plaintiff two points were made, first, that the abandonment of ship conveyed to the underwriter on ship the ship's future earnings; secondly, that the underwriter's title to the earnings was not affected by an abandonment to the underwriter on freight. In support of these propositions were cited the cases of Thompson v. Rowcroft, 4 East, 34; Leatham v. Terry, 3 Bos. & Pull. 479; M'Carthy v. Abel, 5 East, 388; Sharpe v. Gladstones, 7 East, 24. And Chinnery v. Blackburne, 1 H. Bl. 117, in not. ; Splidt v. Bowles, 10 East, 279; Morrison v. Parsons, 2 Taunt. 407, were referred to arguendo, as showing, that by an assignment of the ship, the freight passes to the assignee, and payment of it to him will be good; though if the ship be chartered the assignee cannot, by reason of a technical rule of law, maintain an action for the freight in his own name.

No. 11. Case v. Davidson.

For the defendants it was urged, that as by the law of England freight might be made a distinct subject of insurance from ship, the law would so mould these contracts, where they concurred, as to preserve the rights of the respective parties distinct, and apply to each what properly belonged to it. Wherefore an underwriter on ship who insures but the hull, materials, body, tackle, and apparel of the ship, shall not, by an abandonment, be entitled to the earnings; for this would be to confound the two species of abandonment, and would render an abandonment of freight of no avail. It is true, indeed, that the beneficial interest in the freight passes by assignment of the ship: the reason of which is, because upon the purchase and sale of a ship, both parties intend that not only the body of the ship but all its incidents should pass, and agree upon a price accordingly; whereas a contrary intention seems necessarily to arise where there is a separate abandonment of ship and freight. Abandonment, therefore, differs from a transfer of the ship upon a sale, and extends no farther than to the thing insured.

Lord ELLENBOROUGH, C. J. Although this question now comes distinctly in judgment before us for the first time, yet it has, I own, been long considered, in my mind, as settled, that freight follows, as an incident, the property in the ship: and therefore, as between the respective underwriters on ship and freight, an abandonment of the ship carries the freight along with it. This subject was much under discussion at the time of the Russian embargo, when the rights of the respective sets of underwriters were considered. I believe it was at that time said that an abandonment to the underwriters of ship, like the traditio rei, divested the owner of all his rights in favour of the party to whom he abandoned. The underwriter, indeed, does not become privy, by virtue of such abandonment, to any existing charter-party, nor perhaps to any contract of affreightment before made with the owner; but I think that by the abandonment, he acquires possession of the thing from the use of which freight is to be earned. It is true, that the shipowner may have entered into contracts for the insurance of freight, and that by abandonment of ship the underwriters on freight will be deprived of some rights to which they would perhaps otherwise be entitled; but this will necessarily happen, if the underwriter on ship is entitled to look, without reference to the contracts of other persons, to his own contract,

and to those consequences which result to him from abandonment. An abandonment to the underwriter on ship transfers to him not merely the hull, but the use of the ship, and the advantages resulting from the completion of the voyage. If, upon the completion of the voyage, the abandonee may withhold the goods until the freight is paid, he must have acquired an indefeasible title to it. I consider his title as derived out of the use of the ship. It is true, that by the usage of this country the shipowner may insure his freight, but that is not to interfere with the insurance on ship; the underwriter on ship is to have his rights entire, which are not to be affected by other contracts that the shipowner may think proper to engage in; and, after abandonment, the underwriter on ship is the person to be considered in possession. In the present case, the voyage has been completed, freight has been earned, and has been received by the defendants, for the use of such persons as are entitled; and the question is, who those persons are; to which I answer, the person whose ship earned the freight, and that is the abandonee. This subject has been, on several occasions, in the mind of the court, but more particularly in Sharpe v. Gladstones, and Morrison v. Parsons; and what was said in the latter case by Lawrence, J., viz., that the right to freight subsequently accruing must belong to the assignee of the ship, as incident thereto, was not new doctrine at that time, but had been intimated before by that learned judge, as his opinion; indeed, there seems to have been a concurrence of opinion in Westminster Hall upon that point. The underwriter on freight will certainly, by this doctrine, lose the specific thing abandoned to him, except where the assured is entitled to the freight; but abandonment of the freight cannot break in upon the rights of those who are entitled to the ship. And I own it seems to me, that it cannot make a difference, whether the underwriter on ship has or has not notice of the insurance on freight; for I rest on this simple ground, that the abandonee of ship has all the rights of the shipowner cast upon him, by operation of that emphatic word. in the law-merchant, "abandonment;" and being so entitled, has a right, if he uses the ship for completing her voyage, to her earnings, as against all the world. Who are the persons liable to pay the wages, I do not think is a question here; very likely the sailors might libel the ship, and the abandonee might be liable.

BAYLEY, J. I think this is a question of considerable difficulty, and it has made a different impression on my mind from that of my Lord, and I believe the rest of the court. We have considered the subject a great deal before we arrived at this stage of the case, and seeing that we are not likely to come to an unanimous agreement upon it, it is better that we should declare our opinions without farther delay. This is an action by the underwriter on ship against a person who has received and holds the freight for the use of the party entitled to it. At one period of the adventure, there was a capture, and there was a contemporaneous abandonment to the respective underwriters of ship and freight. The ship was afterwards recaptured, and completed her voyage, and ultimately earned freight; and the question is, if the underwriter on ship is entitled to have ship and freight or only the ship: and the underwriter on freight to have the freight. Now the impression of my mind is, with deference to my Lord, that an abandonment of ship, under such circumstances, from the nature of the subject-matter, implies a virtual exception of the freight. Where ship and freight are comprehended, as is most usual, in one insurance, they are insured as one entire subject; but where the insurance is separate, they ought to be considered, to the termination of the adventure, as separate subjects. Freight is compounded of several considerations; it includes the wear and tear of the ship, the provisions and wages of the crew, and a reasonable return of profit to the owner for the employment of his capital. The underwriter on ship understands that he insures only the body, tackle, and apparel of the ship. I agree, that the shipowner, in ascertaining the value to be insured, includes in his calculation not only the value of the ship, but also the expenses of the outfit; and this creates some difficulty, because when a loss happens, it is computed, I believe, upon the value at the time the ship set sail, and not at the time of the loss; and as this value is constantly diminishing as the voyage proceeds, it may be said that the freight is no more than an equivalent for this decrease in value. Nevertheless, it seems to me, that the underwriter on ship has no right to expect from an abandonment more than he has insured, that is, the hull, tackle, and apparel of the ship, in the plight in which she is at the time of abandonment. If the ship completes her voyage, it is so much saved to him. I am not sorry that the opinion of the court is against me, for I think the con

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