Dickey v. New York Insurance

Woodworth, J. This is an action on a valued policy for $10,000, on one-half the ship Frances Henrietta. On the 7th of March, 1819, the vessel put into Port Louis, in the Isle of France, in distress, where her cargo was taken out; and she was afterwards repaired, at an expense exceeding half the value. On the 28th June, the vessel having been repaired, sailed for a port in Holland, and arrived at Antwerp on the 1st of October following. On the 6th July, 1819, the plaintiff abandoned his interest to the defendants, and claims to recover for a total loss. — 242 — The first question is, whether the state-of facts as they ex, isted at the time of abandonment, or the supposed state of things at the time, must govern in deciding whether there has been a total or a partial loss. On this point it seems to me, that as well the nature of the contract, as the authority of adjudged cases, require .us to adopt the former. For the purpose of establishing a uniform rule, the assurer is liable for a technical total loss, if the repairs exceed one-half the value of the ship, and this can never be turned into a partial loss, if the insured abandons before the repairs are made.' His right is stricti juris, and may be enforced, although it may turn out that the ship was subsequently repaired, and proceeded on her voyage. The construction of the contract binds the assurer in such a case. He must then do the bes. he can with the property thrown on his hands. The mea-, sure of indemnity, thus far, is well defined and certain; but a very different case is presented, when that which at one time gave a right to abandon had ceased to exist; when the injury on which the right is founded has been repaired; and the vessel in every respect as capable of performing the-voyage as before any damage was sustained. It would be repugnant to consider the loss total, when the final event has decided that it is partial. If the peril be over, and the subject insured in safety, the assured cannot elect to abandon, because he has no right to abandon when the thing is safe. (Park, 209.) On this principle of the law of insurance, the real state of facts must be the criterion to determine to what extent the assured has a right to recover. . If the information received is to govern, this principle is subverted, and the responsibility of the underwriters greatly enlarged. In the words of Lord Ellenborough, (10 East, 341,) “it would be to make them answerable, not for the actual loss sustained by the insured, whom they have undertaken to indemnify^ against the risks stated in the policy, but for a supposed total loss, which had in fact ceased to .exist.” The question is. well settled on authority. In Church v. Bedient, (1 Caines’ Cases in Error, 21.) it was held, that on a capture, restoration and abandonment, the fact of restdration, though unknown, at the time of abandoning, takes away the right of abandon* — 243 — ment and claim for a total loss. It was there considered, that, from the mere act of abandonment, no positive right could be derived to the insured, unless it be combined with total loss. If, in the final event, it should prove an average loss, the act of abandonment Would be nugatory. This reasonable principle was sanctioned by the Supreme Court of the United States, in the case Of Rhinelander v. The Insurance Company of Pennsylvania. (4 Cranch, 29.) The question was also decided in 4 Binney, 287. The Court there held, that there is nothing in the nature of the contract, from which it may be inferred that the rights of the parties are to depend upon supposed losses. We must then look to the state of things at the time of abandonment. The Voyage was not broken up; the Vessel had been repaired, and was on her way to the port of-destination; the technical total lbss did not continue to the 6th July, 1819. The plaintiffs had been placed in the same situation, in respect to the Vessel, as they were before the injury happened. She arrived safely at Antwerp. The plaintiff’s case is one that may frequently happen, when the damage is sustained at a great distance from the assured. Months pass before information can be received. In every case where there is information of a technical total loss, it is advisable to elect to abandon, if the assured wishes to cast the property upon the ufideiwritei. It may, or may not become effebttial; büt it places the assured in a sithation to make the loss total, upon the contingency that the state of facts correspond with the information received. Why should it be otherwise 1 indemnity is the object j and that is Obtained, if the insurer pays the damages for repairs. Where the technical total loss continues, it is true, that more than an indemnity may, in many cases, be recovered. For the sake of a uniform rule, this consequence is sometimes unavoidable, in that particular instance, the general nature of the contract is made to yield to the greater benefit derived from an inflexible rule ¡ but when the case does not come strictly within it, when the vessel is in the same, or perhaps in a better state than before the injury, it would change the contract of insurance from its original object, in — 244 — demnity, to allow the insured to abandon, and m.this man ner protect himself for depreciation in the value of the vessel, or the consequences of an unfavorable market. But it is contended that the vessel was not beneficially restored, and therefore the loss continued. That will depend on the question, was there a lien on the vessel ? Undoubtedly the assured has a right to claim, that his pqssession shall be absolute and perfect. He is not bound to relinquish his claim for a total loss, if in reality there is a lien or incumbrance attached to the vessel. But the abandonment was not put on this ground; it is stated to be in consequence of the disaster, and the great injury to the voyage. In making the abandonment, the assured must assign the true causes. If he assign an insufficient cause, he is bound by it, and cannot avail himself of a subsequent event, without a new abandonment. This was so held in Suydam and Wykoff v. The Marine Insurance Company, (1 John. 181.) The master paid for the repairs at the Isle of France. In doing this, besides selling a part of the cargo, he was obliged to borrow money on respondentia, on the cargo. The vessel was not pledged for the payment. She must therefore be considered as beneficially restored; no impediment was placed in the way of prosecuting the voyage to a successful termination. The plaintiff, then, is entitled to recover for a partial loss only. In adjusting this loss, the defendants must pay the amount expended for repairing the ship, with interest, deducting one-third new for old; and also the difference between the amount of sales of a part of the cargo, at St. Louis, for the purpose of repairing the ship, and what it would have produced at the port of delivery in Europe, together with marine interest on that part which was pledged; the residue of the expenses at the Isle of France to be settled as general average, to which the vessel, freight, and cargo are to contribute; the defendants paying the ship’s proportion of general average. Sutherland, J. concurred. — 245 — Savage, Ch. J. The important question is: Had the plaintiff a right to abandon when the offer was made ? To decide this question correctly, it is necessary to inquire, First. Whether the repairs at the Isle of France exceeded a moiety of the value of the ship, so as to constitute a technical total loss ? ¡Second. Whether that loss continued total at the time when the offer to abandon was made 1 Third. Whether the plaintiff lost his right to abandon by repairing ? 1. It is perfectly well settled, that if the ship be injured by any of the perils insured against, and the repairs will cost more than half the value of the vessel, the injury amounts to a technical total loss, and the insured may abandon. (Phillips on Insurence, 401, and cases there cited.) It becomes necessary to ascertain the amount of the repairs, as it is denied that they did amount to half the value of the vessel; and I shall state what items of expense at the Isle of France, I consider as belonging to repairs. By the case of Dupny v. The United Ins. Co. (3 John. Cas. 182,) it seems that the agent’s commissions might be properly included in the estimate of repairs. But in this case the expenditure for repairs, rejecting commissions, exceed half the value. Take the following items : Copper Nails, . . . .' $861 42 do. ..... 425 25 Rope, Hemp, &c......139 17 Oil, ......S 00 Ship Chandlery and Cable, . . 1,085 23 Ship Carpenter’s Bill, . . 14,444 72 White Lead,..... 42 00 Old Junk,......10 00 Cables,...... 345 00 $17,360 79 Deduct old Copper, . . . 1,464 09 15,896 70 Deduct one-third, .... 5,298 90 Amount of repairs, . . . $10,597 80 rejecting several items properly chargeable to the ship. — 246 — The repairs, therefore, have exceeded half the value of the vessel, as valued in the policy; and it is not pretended that the value was greater at the port of necessity. 2. But it is contended, that as the vessel was actually repaired, áhd on her voyage, when the offer to abandon was made, it is like the restitution of á captured vessel* which being restored before abandonment, the right to abandon is lost. It is well settled that the right to abandon depends on the state of facts existing at the time the offer is made, and not on the information of the assured; and it is equally well set--tied, in cases of capture, that if, before abandonment, the vessel is restated, the underwriter is not liable for a total loss* unless the voyage be lost, or not worth pursuing, or the salvage exceed half the value. So far as an analogy exists, ill this case, to cases of capture, is there any thing equivalent to restoration 1 The vessel, indeed* was afloat, and in the prosecution of her voyage when the assured offered to abandon ; but Under an incumbrance exceeding half her value; ánd therefore was not restored. There can be no ddtibt* that the master had the right to sell a part of the cargo* iti case bf necessity, and to borrow money upon bottomry of respondentia; and, in this case, I understand the law to be* that the vessel was bound to indemnify the cargo against the respondentia bond. This respondentia, and the expenses paid by the sale of the cargo, constituted such an incumbrance upon the vessel, that the owner cannot be said to have his ship restored to him. Would a captured ship be considered as restored by being returned to the possession of the assured, subject to the payment of salvage, exceeding fifty per cent, of her value 1 On the other hand, it is said, that it never can be proper to convert a partial into a total loss; that all the assured can ask, is indemnity ; and all the insurers ought to pay, is the amount of the plaintiff’s loss. If, therefore, the defendants pay the plaintiff his expenses in procuring the restoration of his vessel, what more can he ask 1 Had the defendants, by an agent at Port Louis, made the necessary advances for the repairs, and the vessel had thus been restored to the plaintiff, without any sacrifice on — 247 — his part, would he then have had a right of abandonment? And if not, would the offer of the defendants, to pay all those expenses and losses, as soon as informed of them, re-nut any claim or right of the plaintiff to abandon. These questions are answered by Mr. Justice Story, who says, the offer to repair has never been relied on to defeat an indisputable vested right to abandon: but an offer to bear all expenses is a proper ingredient, in considering whether the owner has a right to abandon. (Peel v. Merck. Ins. Co. Phil, on Ins. 407.) In my judgment, the plaintiff had a right to abandon, unless, by repairing the vessel, he signified his election not to do so. 3. This point has been decided by Mr. Justice Story, in Humphrey v. Union Insurance Co. (Phil, on Ins. 401, U. S. C. C. Mass. May, 1823.) In that case, a ship from Messina to Boston, sustained sea damage which made it necessary to put into Lisbon, where she was repaired by the master, at an expense exceeding half her value; and the vessel was bottomed for the expense. The owner abandoned, on hearing of the accident, which was only a few days before the arrival of the vessel at Boston. Proceedings were instituted on the bottomry bond, and the vessel sold; but the sale did not produce enough to satisfy the bond. It was held that this was a partial loss; and that the assured, by electing to repair, had lost his right to abandon. This is a case exactly in point; and if it is received as authority, decides the one now under consideration. I" find no case, exactly in point, decided the other way, though there are both cases and principles which seem to lead to a different, conclusion. A state of things must often occur in which it becomes necessary for the master to act without consulting the owner. The accident may happen, as here, at a distance, which renders such a communication impossible. It then becomes the duty of the master to act; and in Milles v. Fletcher, (Doug. 231,) Lord Mansfield, expressed an opinion, that if the master had acted as would 'have been right, in case the vessel and cargo were his own, the underwriter must answer for the consequences. Hence, — 248 — it would seem to follow, that it depends on the propriety of tire course adopted, whether the master acted as the agent of the plaintiff or defendant; and that if it was for'the benefit of the ship and cargo to repair, then the plaintiff should not be prejudiced by the acts of the master. “ Till the assured had been informed of what has happened, and have had an opportunity of exercising their own judgment, no act done by the master shall prejudice their right of abandonment.” (Mitchell v. Edie, per Ashurst, J. 1 T. R. 613.) The master is, therefore, not to judge of the propriety of an abandonment, nor is he the agent of the assured for that purpose. The language of writers on insurance, and of Courts, in discussing the question whether the assured is entitled to abandon, seems to suppose that an abandonment may be made after the ship is repaired. In the case of wrecks or stranding, how can it be known that the expense of setting the vessel afloat will exceed half the value, until that expense has been incurred 1 In the case of repairs, generally, the estimates of the surveyors may be relied on; but even should the master Imow that the repairs will exceed half the value of the vessel, may it not still be proper for him, as the agent of all concerned, to make the repairs ? He is not bound to know whether the owner will choose to abandon. The assured is, in ho case obliged to abandon. He may do so in certain cases; and he must make his election in a reasonable time after information of the event which gives him the right; but the master is not to calcu late or speculate on what his election may be. It is the master’s duty, therefore, to make the repairs, where it would be his interest to do so, were he the owner of both ship and cargo. In the case of Dupny v. The United States Ins. Co. (3 John. Cas. 182,) the voyage was from New York to St. Sebastians, and back. The vessel was obliged by a storm to put into Kinsale, where she was repaired at an expense exceeding half her value. It does not appear expressly that she was repaired. before she was abandoned; but it may be inferred. On the other hand, it is contended, and with great force, that the abandonment should be made before repairs; that the insurers may elect whether to repair or not; that they may prefer to — 249 — sell the stranded vessel for what she will bring rather than repair, when perhaps, as in this case, the repairs may cost more than the vessel, when repaired, will be worth; and that, as the master is not the agent of the assured to determine whether to abandon or not, so neither should he be the agent of the insurers to determine whether to repair or not, in a case where the amount of repairs may be cause of abandonment. On this point, the opinion of Mr. Justice Story is entitled to great consideration; and I am content to take the rule as laid down by him, that the assured can in no case abandon after making repairs; that by electing to repair, he loses his right to abandon. This rule is supposed to be most consonant to the contract of insurance, and the principles of justice. It has been doubted by very learned jurists, whether an abandonment ought ever to have been permitted in any case. (Vid. Mitchell v. Edie, per Buller, J. 1 T. R 608, 615,616.) It is now too late to discuss that question; but in a case where the right is not supported by any express adjudication, and is denied by such respectable authority; and when we have the authority of Lord Mansfield for saying, that “in late times the privilege of abandonment has been restrained for fear of letting in frauds,” (2 Burr. 697, id. 1213.) we shall be justified in adopting the rule as laid down in Humphrey v. The Un. Ins. Co. In my opinion, therefore, the plaintiff is entitled to recover for a partial loss only. Judgment accordingly. Footnotes [(f)] pl. Condy’s Marsh. 534 b, S. C