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No. 5. — Fleming v. Smith.

principles of justice, but also contrary to all the authorities which have been referred to, that they should do so. Nothing has been cited at the bar which can alter that view of the case, because when it is said that they had not the necessary information to enable them to come to the conclusion of whether they would treat it as a total loss or not, and when it is said that they were not aware of what species of vessel it would become in consequence of the repairs to be done, so as to enable them to elect, still, if they thought proper to employ the captain as their agent in causing the repairs to be done, whether he acted judiciously or not, it is for them to suffer the loss, and any want of judgment in their agent they must take the consequence of, and it is not to be visited upon the underwriters. Upon these grounds, my Lords, it appears to me that the judgment of the court below must be affirmed.

Lord BROUGHAM fully concurred, and thought that the judgment should be affirmed with costs.

Lord CAMPBELL. — I think that the judgment of the court below should be affirmed on both the grounds on which that court proceeded, namely, “in respect that the pursuers were bound and failed to abandon in due time," and also that "they treated the loss as partial.”

A constructive total loss is a good ground for abandoning, but in deciding on the circumstances which constitute a constructive total loss, which is as good a term as a contingent total loss, the reasons which govern the conduct of prudent uninsured owners must be considered. If a prudent person, uninsured, would not have repaired the vessel, but would have sold it to be broken up, that amounts to a total loss. Then the question arises, what the assured is bound to do under such circumstances, in order to entitle himself to claim as for a total loss. The ship was not submerged or destroyed; it remained in the form of a ship, capable of being repaired, and it was for the captain to determine whether it should be repaired or not. Whether it should be repaired or not depended on the price of labour, the cost of materials, the rate at which money could be borrowed, and on the probable profits to be obtained from the employment of the ship after such repairs should have been executed. Under these circumstances the question arises, whether, when the owners of a ship so insured receive intelligence that the ship is capable of being repaired, and that it is lying in port, they can claim as for a total loss, without giving notice of abandon

No. 5. — Fleming v. Smith.

ment? My opinion is that they cannot do so. According to all the old authorities, a constructive total loss can only entitle the owners to recover as for an actual total loss, by a notice of abandonment; for though, in the judgment of the assured, it may be better not to repair the vessel, the underwriters may, with different means, give directions to repair, or may direct, and are entitled to direct, how the wreck is to be disposed of. It would be an extreme hardship for them to be called on to pay as for a total loss, without having the opportunity of making the most of the ship in its disabled state. The law, therefore, requires that notice shall be given, in order to convert a constructive into an absolute total loss.

Then we come to the cases of Cambridge v. Anderdon (1 Car. & P. 213) and Roux v. Salvador (3 Bing. N. C. 266). The Court of King's Bench held, in Cambridge v. Anderdon, without overturning the old authorities, that, in the peculiar circumstances of that case, a notice of abandonment was not necessary. But why? Because, coming down the St. Lawrence, the ship met with a serious misfortune, and the captain, after having taken the best advice, thinking it not worth repairing, sold it at once, and conveyed a good title to the purchaser. The owners received intelligence of that sale at the same moment that they learned the injury which had happened to the vessel. In such circumstances there was nothing to abandon. The ship was gone; the underwriters could not have taken possession of it, for it was lawfully transferred to the purchasers.

Then comes the case of Roux v. Salvador, in which Lord Chief Justice Tindal held that notice of abandonment was necessary. There the hides were so injured that they ceased to exist as hides before reaching the port of destination ; so that though the substance of something remained, the substance of what had been insured was destroyed. But here the ship existed, was repaired, and brought home a cargo to England. When the assured heard, in November, the facts of the case, it was imperative on them, if they meant to turn a partial into a total loss, to give notice of abandonment, so that the underwriters should have the opportunity of dealing as they pleased with the property.

Was there any notice of abandonment? There was; but not till the 30th March, 1843. The ship had returned on the 27th of March, and, at that time, the assured were fully aware of all the facts of the case.

No. 5. — Fleming v. Smith. — Notes.

Under all these circumstances, I think that the first ground alone would have been sufficient for the judgment.

As to the second ground, that here the assured had elected, I think that equally conclusive against them. Not only had they not given notice to abandon, but they had taken steps by which they chose to appear as treating this property as still belonging to them. They did that which amounted to an intimation of their intention of coming upon the underwriters for a partial loss, and taking all the advantage which might arise from the employment of the ship.

It is not necessary to give any opinion as to the general power of the master under such circumstances as exist in this case; but I must hear a great deal of argument before I determine that where he acts bona fide for the advantage of the owners, he has not authority, by so doing, to bind them. In this case he thought he was doing the best for the interests of those who employed him; he thought he was doing the best for all parties concerned; but he was still the agent of the owners, and it would be dangerous to say that his authority, as their agent, might be questioned and contradicted by afterwards showing that in fact what he did would not be for their interests.

In this case his authority was adopted in this country; for in the month of November, 1842, the owners knew that he was repairing the ship, and on their account, and was to freight it from the Mauritius home, and that they were to have the profits arising from such freight. Are they to be allowed, after this, to revoke his authority? No; they have acquiesced in all that he has done as conformable to his authority, or if he did not already possess that authority, they created it by their adoption of his acts. They treated this loss as a partial loss till the 30th of March, 1843, and after that they cannot be allowed, for the first time, to adopt another line of conduct, and to treat it as a total loss.

The judgment of the Court of Sessions in favour of the respon

dents (defenders) was therefore affirmed with costs.

ENGLISH NOTES.

The principle of the ruling case is involved in the older English cases of Tunno v. Edwards (K. B. 1810), 12 East, 488, and Martin v. Crockett (K. B. 1811), 14 East, 465. The latter of these cases, where Lord ELLENBOROUGH, at the trial, directed a nonsuit, and presided in the

No. 5. — Fleming v. Smith. — Notes.

court in banc which confirmed the direction, must be read subject to the observation that Lord ELLENBOROUGH held too strict views as to the formality of a notice of abandonment. The same observation applies to his ruling in Parmeter v. Todhunter (N. P. 1808), 1 Camp.

1 511. See the judgment of the Privy Council in Currie v. Bombay, &c. Co. (the same case as that cited on p. 35, ante) 1869, L. R., 3 P. C. 72, 78; 39 L. J. P. C. 1.

The second paragraph of the rule is illustrated by the case of Parsons v. Scott (1810), 2 Taunt. 363, cited p. 33, ante. There was in that case a notice of abandonment, and it was held that, the owners being legally entitled to the possession notwithstanding an illegal claim, there was neither actual nor constructive total loss.

Insurance on freight on voyage from Pernambuco to London. On leaving Pernambuco in June, 1839, the ship struck on a rock and put back. The master repaired by money borrowed on bottomry. The repairs proved very expensive; and on 30th December the owners (plaintiffs), on hearing the extent of the expense, gave notice of abandonment both of ship and freight. The ship arrived, and the freight was duly paid to the holder of the bottomry bond. Held, that this was in law a payment to the shipowner, so that there was no actual total loss; and that the owner was bound by the election of the master to repair, and could not therefore recover as for a constructive total loss. Benson v. Chapman (H. L. 1849), 2 H. L. Cas. 696 (reversing s. c. in Court of Common Pleas, 6 Man. & Gra. 792).

See, also, as a case in which the ship was sold by agents of the owners without giving due notice of abandonment, Kaltenback v. Mackenzie (C. A. 1878), 3 C. P. D. 467; 48 L. J. C. P. 9 (cited under Nos. 8 & 9, post).

Where there has been no abandonment, and a portion of the property is ultimately restored, the loss ceases to be a total loss; and all that is restored is restored for the benefit of the assured, not of the underwriters. So where a consignment of goods insured in a valued policy had been seized at the port of destination, sold there at a profit, and part of the proceeds restored; those proceeds were treated as representing an aliquot part of the goods, and the assured, not having abandoned, was held entitled to recover from the underwriters an aliquot part of the valuation as representing the remainder (Goldsmid v. Gillies, C. P. 1813, 4 Taunt. 803, applying the principle of Tunno v. Edwards, supra).

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AMERICAN NOTES.

If the ship at the time of the offer to abandon, is in possession of the master, in good condition and at full liberty to proceed, the loss of the cargo will not authorize abandonment of the ship. Marshall v. Delaware Ins. Co.,

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4 Cranch (U. S. Sup. Ct.), 202; nor will the loss of the voyage. Alexander v. Baltimore Ins. Co., 4 Cranch (U. S. Sup. Ct.), 370.

“ Damage of a vessel to more than half her value, as a ground of abandonment and constructive total loss, seems now to be settled as the rule of American law, conformably to that of some of the maritime States of Europe, contrary to the English rule, which requires proof of damage to such an extent that the repairs of the vessel in the place where it is would be equal in amount to the value of the vessel when repaired.” Heebner v. Eagle Ins. Co., 10 Gray (Mass.), 131 ; 69 Am. Dec. 308, by Shaw, Ch. J., citing Marcardier v. Chesapeake Ins. Co., 8 Cranch (U. S. Sup. Ct.), 39. The notice in this case was of “having received information of the condemnation of the ship at Humboldt, California,” and this was held to justify a claim of total loss.

A vessel being stranded on rocks about five miles from her return port, an offer to abandon was made but refused. The vessel having been put afloat and repaired by the insurers and by them brought to the home port, within fifteen days, held, that the owners could not claim a total loss. Wood v. Lincoln, &c. Ins. Co., 6 Mass. 479; 4 Am. Dec. 163.

Notice of abandonment stated that the vessel was found “irreparable on survey.” It appearing that she was so injured that the cost of repair, after deducting one-third new for old, would exceed half her value, it was held a total loss, the word “irreparable” meaning that the damage was so large as to absolve the insured from the duty of repair. Perkins v. Augusta Ins. & B. Co., 10 Gray (Mass.), 312; 71 Am. Dec. 654.

The American cases agree that notice of abandonment is essential to convert constructive into actual total loss. Teasdale v. Charleston Ins. Co., 3 Brevard (So. Car.), 190; 3 Am. Dec. 705; Gomila v. Hibernia Ins. Co., 40 Louisiana Ann. 553; Bosley v. Chesapeake Ins. Co., 3 Gill & Johnson (Maryland), 450 ; 22 Am. Dec. 337; Thomas v. Rockland Ins. Co., 45 Maine, 116; Taber v. China Mut. Ins. Co., 131 Mass. 239; Hubbell v. Gt. West. Ins. Co., 74 New York, 246; Am. Ins. Co. v. Francia, 9 Penn. St. 390; Cossman v. West, 6 Russ. & G. (Nova Sc.), 461.

A recent case is Carr v. Security Ins. Co., 109 New York, 504. The insurance was against “ actual total loss only." The insurers refused an offer of abandonment, but took possession under a “rescue clause,” and had the vessel got off and delivered at a port named. Held, that the insurers were liable as for “actual total loss.” The court observed : “ There can be, we suppose, no doubt that there may be an actual total loss of a vessel within the true meaning of that phrase in a policy of insurance, although the vessel remains in specie, or in other words, there may be an actual total loss according to the law of marine insurance, although the vessel is in existence as such when the loss is claimed.” And the court cite the case of capture as an example.

The doctrine of Lord Ellenborough, as laid down in Parmeter v. Todhunter, 1 Campb. 511, and referred to in the leading English note under the rule now under consideration, is cited with apparent approval by Shaw, Ch. J., in Peirce v. Ocean Ins. Co., 18 Pickering (Mass.), 83; 29 Am. Dec. 567. See infra.

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