Dunning v. Merchants Mutual Marine Insurance

Dickerson, J. Assumpsit on a policy of marine insurance on — 113 — vessel and freight. The verdict was for the plaintiff, and the case is presented on exceptions and motions. The first instruction complained of is as follows: “ the plaintiff is entitled to recover, as for a total loss, if the jury are satisfied that the sale by the master was justifiable under the circumstances of the case as proved.” This was equivalent to saying to the jury that there was sufficient evidence to justify a sale by necessity, if the jury should be satisfied of its truth. Whether a sale is justifiable from necessity is a mixed question of law and fact. The facts admitted, it is a question of law; the facts controverted, it is a question of fact under the rules of law applicable thereto. Bryant v. Commonwealth Ins. Co., 13 Pick. 553. It is a well-established rule of law, that, in order to justify a sale by necessity, the damage to the vessel must be of such a nature and extent as to authorize an abandonment; and, in general, there can be no valid abandonment, unless it will cost more than one-half the value of the vessel to repair her, deducting one-third new for old. Crook v. Commonwealth Ins. Co., 21 Pick. 456. Sail v. Ocean Ins. Co., 21 Pick. 472. Greely v. Tremont Ins. Co., 9 Cush. 420. The necessity requisite to justify a sale by the master, though not necessarily actual, must be an apparent moral necessity. In the language of the court in Stephenson v. Piscataquis Ins. Co., 54 Me. 77 : “ Viewed from the master’s standpoint, the facts and circumstances must exclude every rational theory that the interests of those he represents would be subserved in any other way than by a sale; or, in other words, to refrain from selling, to a man of ordinary maritime experience and intelligence as a ship-master, must seem to be the violation of a manifest moral duty.” Prince v. Ocean Ins. Co., 40 Me. 481. These authorities are equally explicit, that good faith and necessity must concur in order to justify a sale of the vessel by the master, from necessity. Upon examining the evidence as to the damage actually done to the vessel, the estimated expense of repairing her at Nassau, made by competent persons of that place; the expense and difficulty of — 114 — taking her to a port of the United States for repairs; the low figure at which she was sold and resold at the place of repair; the cost of the temporary repairs actually made on her, and the reduced price she brought in Liverpool, we think the jury were authorized in coming to the conclusion that it would cost more than fifty per cent of the value of the vessel to put her in a suitable state of repair, deducting one-third new for old; and that, therefore, there was sufficient ground for abandoning her. If in addition to the valid cause for abandonment, thus established, we consider the master’s destitution of funds, his ignorance of the residence of the underwriters, and the unanimous judgment of the second survey in favor of an immediate sale of the vessel, we cannot but conclude that the sale by the master was justifiable. The master’s visit to the owners for instruction, his return to the vessel after he learned they had abandoned her, the several surveys called by him, and his other acts indicate, at least, a desire on his part to do his duty. Nor can this result be avoided on account of the negligence of the plaintiff in furnishing the funds necessary to repair the vessel. While, as a general rule, it is not competent for the assured to convert a partial loss into a constructive total loss, by withholding the necessary means to repair the vessel for the purpose of charging the underwriters with a larger amount than they ought to pa^ under the policy, we do not understand that this principle applies to cases like the one at bar, wherejthe damage is sufficient to justify an abandonment. 1 To hold otherwise would be to make the right of abandonment to depend, not upon the question whether the cost of repairs made exceed half the value of the vessel, but upon the pecuniary ability of the assured, coupled with his opportunity to repair her; in short the application of the -principle contended for by the defendants’ counsel to this case is in direct conflict with the long-established American rule upon this subject. The American Ins. Co. v. Ogden, 20 Wend. 286. The next question reserved in the exceptions is predicated upon the judge’s instruction to the jury “ that there was nothing in the evidence in regard to a bottomry bond on the vessel to justify them — 115 — in deciding against the plaintiff’s claim to recover.” No bond was offered in evidence. The evidence touching that matter came exclusively from the master; and if that is not too vague and shadowy to show that a bottomry bond was put upon the vessel after the insurance was effected, it utterly fails to show that any such instrument was executed by the master under any such exigency as the law requires in such cases. Substantially the same necessity must exist for hypothecating the ship that is required to justify a sale by necessity. If the master have sufficient funds of his own, or belonging to the owners, or can obtain them on the owners’ credit, he cannot bind the ship by giving a bottomry bond. He cannot give such a bond to secure bis own private debt, or to pay a debt of tbe owners; it is only to meet an existing emergency in respect to the employment of the ship that cannot otherwise be provided for, that tbe master has authority to place such an incumbrance upon lier. The case is barren of any evidence of tbe existence of such exigency, and of the lawfulness of the purpose for which the instrument in question was executed. There is also the same paucity of evidence to show that the master executed a valid mortgage or pledge upon the vessel. 1 Parsons’ Mer. Law. 412. 2 Dallas, 194, 9 Johns. 29. 1 Wheat. 96. Huzzey v. Huzzey, 2 Wash. C. C. 155-297. The presiding judge very properly instructed the jury to disregard the evidence upon this branch of the case. 3. We know of no rule of law by which the assured is precluded from recovering as for a total loss, under a policy, when the master sells the- vessel from necessity, after the owners have abandoned her. If the abandonment was valid, it constituted a constructive total loss; if it was unauthorized, it could liave no effect upon the rights of the parties. When, in such cases, there is no abandonment, tlie master acts botb for tbe assured and the underwriters; when there is an abandonment, lie acts for tlie latter only. It would do violence to tbe natural instincts of justice, as well as be a perversion of the law, to deny to the assured the right to recover as for a total loss, after abandonment, because the master, acting with — 116 — out his authority, as the agent of and for the benefit of the underwriters, sold the vessel from necessity. It remains to consider the effect of the sale upon the right of the plaintiff to recover freight. While it is true, as the learned counsel for the defendants contends, that it is only freight which the insured have been prevented from earning by perils insured against, that the insurers contracted to pay, it is also true, that if the owner or charterer is wholly prevented from earning the freight insured upon, by the ship being wrecked, or other perils insured against, it is an absolute total loss. 2 Phillips on Ins. 352. Nor in case of a constructive total loss of the ship by damages over fifty per cent of its value under the American rule, is the assured on freight obliged to waive his right to abandon the ship, and make repairs, or incur charges exceeding half its value for the purpose of prosecuting the voyage, and covering the whole freight; but he may abandon both ship and freight, and recover for a total loss against the respective underwriters on each. American Ins. Co. v. Center, 4 Wend. 45. In Herbert v. Hallett, 3 Johns. Cases, Mr. Justice Kent says : “ It appears to me that the same peril and to the same extent, ought to exist to authorize a recovery on a policy on freight, as on a policy on the ship.” Also, in Clark v. Mass. F. & M. Ins. Company, 2 Pick. 104, cited by the defendants’ counsel, the court say, that if the disaster had terminated the contracts, the owners of the vessel would have been entitled to recover his freight of the underwriters. In that case, the vessel was repaired, and the court held, that the owner of the ship should have retained the cargo, and forwarded it in the vessel, after she was repaired, and thus earned the freight, instead of surrendering it to the shipper, and calling upon the underwriters for his freight. The case of Moss v. Smith, 67 Eng. C. L. 93, also cited in defense, is inapplicable, as the English courts do not recognize the American rule in respect to the amount of damages necessary to be done to the vessel in order to entitle the owner to the right of abandonment. In the case at bar, the sale being justifiable, the plaintiff would — 117 — be enabled to recover as for a constructive total loss, though there had been no formal abandonment. Having disposed of the motion in considering the first question raised in the exceptions, we do not deem it necessary to discuss that subject any farther. Exceptions and motion overruled. Cutting, Walton, Barrows, Daneorth, and Tapley, JJ., concurred.