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The American rule is that a vessel damaged more than half her value may be abandoned as for total loss. Abbott v. Broome, 1 Caines (New York), 292; 2 Am. Dec. 187 ; Hyde v. Louisiana State Ins. Co., 2 Martin, N. 6. 410; 14 Am. Dec. 196; Taber v. China Ins. Co., 131 Mass. 248; Deblois v. Ocean Ins. Co., 16 Pickering (Mass.), 303 ; 28 Am. Dec. 245; Cohen v. Charleston F. & M. Ins. Co., Dudley Law Rep. (So. Car.), 31 Am. Dec. 549 ; Wood v. Lincoln &c., Ins. Co., 6 Mass. 479; 4 Am. Dec. 163; Bradlie v, Maryland Ins. Co., 12 Peters (U. S. Sup. Ct.), 378. So mere stranding does not justify abandonment of the ship. Bosley v. Chesapeake Ins. Co., 3 Gill & Johnson (Maryland), 450 ; 22 Am. Dec. 337. See Copelin v. Phonix Ins. Co., 46 Missouri, 211; 2 Am. Rep. 504; Howland v. Marine Ins. Co., 2 Cranch Circ. Ct. (U. S.) 474. Nor of the cargo. Hubbell v. Gt. West. Ins. Co., 74 New York, 246; Thwing v. Washington Ins. Co., 10 Gray, 457.
An instructive case of constructive total loss is Snow v. Union Mut. Mar. Ins. Co., 119 Mass. 592; 20 Am. Rep. 319 ; where it appeared that the insured vessel, being jammed fast in the ice of the Arctic Ocean, with no open water in sight, and drifting northward with the current, her officers and crew finding it impossible to extricate her left her and took to the boats, and succeeded after three days in reaching the whaling fleet fifty miles south. Ten days afterward, by a change of wind and current, the ice loosened, and the vessel was brought out by the master and crew of another vessel and held by them for salvage ; but the master of the insured vessel, whose crew had become scattered and some of whom had started homeward, was unable to obtain a sufficient crew or regain possession of the vessel so as to pursue the voyage for which she was employed and for which she was insured, and she was brought by the salvors to San Francisco, and before her arrival there was abandoned by the owners to the underwriters. Held, a constructive total loss and a valid abandonment.
In New Brunswick, it is held that where the expense of repair would exceed the value of the vessel when repaired, there is a constructive total loss, Gerow v. Providence Washington Ins. Co., 28 New Br. 435.
Where the goods saved do not amount to half the value of the goods insured, there
may abandonment as for total loss. Gardiner v. Smith, 1 Johnson's Cases (New York), 141. The notice must make this claim distinctly. McConochie v. Sun M. Ins. Co., 26 New York, 477.
So where most of the cargo was taken by pirates, and the vessel was so weakened by bad weather that the expense would exceed the benefit of the voyage. Gilfert v. Hallett, 2 Johnson's Cases (New York), 296. So where the insurers refused to accept abandonment, but subsequently recovered some of the cargo. Wallerstein v. Columbian Ins. Co., 44 New York, 204; 4 Am. Rep. 664.
But if the policy insures against "actual total loss only," there is not a total loss within the meaning of the policy if the vessel can be repaired and put afloat at any expense. Murray v. Hatch, 6 Mass. 465, followed in Carr v. Security Ins. Co., 109 New York, 504.
No. 5. — Fleming v. Smith.
SECTION II. — Where Abandonment is necessary in order to
claim Total Loss.
NOTICE of abandonment is necessary in order to convert a constructive into an absolute total loss.
Where the thing insured exists in specie, and is safe in the possession of the assured at the termination of the risk, there is no actual total loss.
A ship insured on a valued time policy, being damaged by perils insured against, is repaired by the captain by means of money borrowed on bottomry. The circumstances are duly communicated to the owners, who do not give notice of abandonment for some months, nor until some days after the ship has arrived at home, and the owners have taken possession. Ultimately, the ship was sold by the bottomry creditor for much less than the amount of the bond. Held, that there was not a total loss; and that the abandonment, so long after notice of the facts, was nugatory. Further (per Lord CAMPBELL), that the taking possession of the ship with full knowledge of the facts was an election to treat the loss as partial.
Fleming v. Smith.
I H. L. C. 513.
This was an appeal from the Court of Session in Scotland. The appellants claimed as on a total loss under a time policy on ship for twelve months, from August, 1841, valued at £6,000. The respondents, underwriters, insisted that they were only liable for a partial loss.
The ship, in the month of May, 1842, encountered tempestuous weather and was driven into the Mauritius. After survey the captain wrote to the owners stating the facts, and discussing the
question of abandonment. He subsequently wrote advising that the ship should be repaired, and proposing to raise money on bottomry. Further correspondence apprised them of the amount which would be required ; and on the 3d of December, with full knowledge of the facts, as appears from the letters quoted in the judgment of the Lord Chancellor, they write to the captain, giving him full discretion to act as he thought best. The ship arrived in London on the 27th of March, 1843, and on the 30th of that month they gave the underwriters formal notice of abandonment.
After argument, the learned lords present gave their opinions as follows:
The LORD CHANCELLOR (Lord COTTENHAM). — It appears to me that in this case there are special grounds shown upon the correspondence which are sufficient to dispose of the questions, without entering into any discussion as to many of the points which have been raised at the bar, particularly as to that question which has arisen with respect to the formal notice of abandonment, about which there is a confusion existing, arising, as I believe, more from the misuse of terms than from any real difference in the cases. But at all events, in this case it is admitted on all hands, whether the parties were bound to give a formal notice of abandonment or not, that when the facts came to their knowledge in this country, they were sufficiently informed of what had taken place to enable them, if they thought proper, to take upon themselves the chance of the benefit of retaining the ownership of the property, instead of taking the sum which was secured to them by the policy effected with the underwriters upon the vessel; and if they acted upon that opportunity of election, they surely cannot afterwards turn round and go against the underwriters as for a total loss. If there was any necessity for a formal abandonment, and with a full knowledge of the facts they did not make that formal abandonment, but took the property instead, they could not afterwards take the benefit of the policy, as if there had been a formal abandonment. If, on the other hand, there was no necessity for a formal abandonment, still, if they chose to lie by and allow things to go on as they did, they could not afterwards, upon a change of circumstances, or in consequence of a better calculation, turn round and say to the underwriters, “Now we will give you up this property, because we find we cannot turn it to the advantage which we expected.” The question really turns upon what the information
No. 5. — Fleming v. Smith.
was which was sent to them, as to the occurrences that had taken place abroad, and what their conduct was upon that information coming to them. Now the first communication they had may perhaps not have been sufficient to enable them to come to any conclusion ; they knew that misfortune had occurred to the vessel, and they knew that expenses had been incurred in respect of repairing the vessel ; but they did not know to what extent. But there is a letter which they received afterwards, which seems to me to decide the question. That letter is written by Hunter, Arbuthnot and Company, at the Mauritius, and it is dated the 16th of July, 1842, and was received in this country on the 13th November. In that letter it is stated that “Captain Elder is naturally anxious to follow his instructions, and proceed, when the ship is repaired, to Bombay; for this purpose he has advertised for the loan of about $20,000, to be secured by a bottomry bond on the ship, which would proceed to Bombay in the prosecution of the voyage. No offers, however, were made on these terms, but parties are ready to advance the money required, provided the ship proceeds to England direct from this. Captain Elder will therefore be obliged to deviate from his instructions, and we have offered him a cargo of sugar at the first season for England, at the current rate of freight, which we think better for all parties than to go to Bombay at the miserably low rate of freight ruling in India.” That letter therefore shows that the parties were under the necessity of borrowing upon the ship a sum equal to $20,000. That letter they received on the 13th of November; and by a letter of their own, dated the 3d of December, 1842, they acknowledge the receipt of the various letters containing the information as to what extent the expenses at the Mauritius would be carried. Knowing, therefore, the extent to which the expenses were likely to be carried, they write acknowledging the receipt of these letters, and then they express themselves in these terms: “We observe the general measures adopted for the representatives of the ship William Nicol, which we hope may turn out to have been the best in the unfortunate circumstances in which she was placed; but in the absence of any past experience on our part of the usages of your port in such cases, we were rather startled at the apparent necessity of a bottomry bond being had recourse to; but this may be a misapprehension on our part which the communication of particulars hereafter may clear up."
No. 5. — Fleming v. Smith.
There is no doubt that they were in possession of all the information necessary to enable them to decide as to the course they would take. In point of fact, the answer to that particular letter shows that they were in possession of the information, stating that $20,000 had been borrowed on a bottomry bond for the expense of the repairs, and were well aware that the continuance of the voyage, for any purposes of profit, must be a doubtful speculation.
When we consider that these parties on the 13th of November had possession of this information, and we find them answering in the terms I have already noticed; and afterwards, on the 7th of March, writing to Messrs. R. and J. Anderson, London, in the terms I am about to read, there can be no doubt that they possessed all the knowledge necessary for them to determine whether they would or would not abandon the vessel. They write thus: “ From the advices last received by us from the agents of the ship William Nicol, at Mauritius, it was expected that she would be ready to leave that place with a cargo of sugar for London about the 20th December; and as she may, therefore, be looked for shortly, we enclose a few lines for Captain Elder, requesting him to follow your directions as to the dock of his discharge, to which please attend, after fixing with Mr. J. D. Nicol what dock it will be most advisable to send him to for that purpose.”
Whether the fact of a total loss, as it is called, or such damage as would exceed the value of the ship to repair, was incurred, would, or would not, make the captain the agent of the underwriters, or the agent for all the parties, is a matter which I do not think it necessary at present to advert to, because it is quite clear, even if it was so, that it was quite competent for the owners to continue the employment of the captain. If they thought proper to say, "We do not treat this as a total loss; we do not treat you as the general agent in this matter, but we treat you as the person having our authority over this property ;” and if the facts had sufficiently come to their knowledge of what he was doing, and notwithstanding that, they think proper to take the property under their own direction, and to recognize his acts, can they afterwards, when a considerable time has elapsed, and the vessel has made a different voyage, and obtained different freight from what they expected, turn round and say,—“We no longer consider this property as ours, but we will go against the underwriters as for a total loss ” ? It appears to me to be not only contrary to the common