Livermore v. Newburyport Marine Insurance

Sewall, J. (after stating the case.) The plaintiff contends-that, under these circumstances, as assignee of Edmund Bart-let’s effects, he is entitled to recover against the insurers of the schooner Five Sisters, and cargo, according to the policy declared on, their entire subscription, as for a total loss. And for this purpose, he argues that Edmund Bartlet, upon the capture of the schooner and cargo, and the interruption of the voyage insured, and by his offer, in consequence, to abandon to the insurers, had vested in them his interest in the vessel and cargo, and that the restoration thereof, and the prosecution and accomplishment of the voyage insured, must be taken to be for the benefit and account of the insurers, and at their risk. That by certain events of the voyage, and at a [ * 276 ] particular period of the risk undertaken by this * policy, there had accrued to the insured a right of abandoning the effects and voyage insured, and of entitling himself thereby to recover as for a total loss against the insurers, seems to be admitted on their part; and this dispute has been brought, in the discussion of it, to this principal question—Whether the insured, according to the facts stated, had suitably availed himself of his right of abandonment, and had exercised (that right in a manner to entitle himself, or the plaintiff as his representative, to recover as for a total loss against the insurers. The seizure and detention of the vessel and cargo, and the in tei ruption thereby of the voyage insured by this policy, according to the state of facts, was constructively a total loss, at the election of the insured. The insured was not obliged to abandon; though to be entitled to recover as for a total loss he must abandon to the insurers the effects and voyage insured. The right of recovering a total loss accrues to the insured upon one event within the perils undertaken by the policy; his election, therefore, must be decided by this event as soon as it is known. To extend his election beyond — 209 — this period woult subject the insurer to perils not undertaken by his contract. It might be concluded, therefore, upon obvious principles rf reason and justice, if it had not been decided by legal author-' ities, that the insured, in exercising this right of election upon an event which may enable him to recover as for a total loss, has no privilege of delay. The law is, however, settled upon the subject, ft is explicitly stated by Marshall as having been established; and the rule laid down by him is recognized in the case of Mitchel and Edie, and forms the principles of that decision. (a) This rule is, “ that as soon as the insured receives advice of a total loss, he must make his election * whether he will abandon or [ * 277 ] not; if he determines to abandon, he must give the underwriters notice of this within a reasonable time after the intelligence arrives; and any unnecessary delay in giving this notice will amount to a waiver of his right to abandon.” It has been urged, in the argument for the plaintiff, that the election by the insured and his right of abandonment continues so long as the loss continues total; that is, during the detention or other event, which, at the election of the insured, may be construed a total loss. And to this purpose, a passage is cited from Marshall, (b) where, under the head, “ In what cases the insured may abandon,” and in specifying the case of capture and arrest of princes, his words are—“ Capture by an enemy, or a pirate, or an arrest of princes, or even an embargo, is prima facie a total loss; and immediately upon the capture, or upon a mere arrest, or at any time while the ship continues under detention, the insured may elect to abandon." This supposed contradiction of the rule before cited is very easily reconciled with it by considering the passage last cited as relating to the right of abandoning, which in a case of capture and detention may exist only during the detention ; according to the decision in the case of Hamilton vs. Mendez, 2 Burr. 1198. But the rule respecting the manner of exercising that right is too well established to be shaken or rendered in any degree doubtful by the mere statement of an author, without any adjudged case to support it, and which is certainly capable of a sense inapplicable to the present question. Taking the rule applicable to this case to be as before cited, and according to the decision in the case of Mitchel and Edie, it remains to compare *with this rule the facts [ * 278 ] of the case before us, in the statement agreed by the — 210 — parties. In this inquiry the material facts are—On the 23d of August, 1801, the schooner Five Sisters, and cargo, were captured. Oct. 17th, Edmund Bartlet, the insured, received information of his loss by the letter of the captain, dated August 30th. On the 16th of November, intelligence was received at Newburyport of the peace concluded between Great Britain and France. On the 20th of November, Edmund Bartlet first made his election, and offered to abandon. One can hardly imagine a concurrence of facts where the waiver of the right to abandon, and the right of the insured to reject an abandonment, can be more perfectly established than in this instance. The delay of the insured in point of time was unreasonable, and a waiver of his right; the change of circumstances intervening after his knowledge of the event which, entitled him to abandon, and before his undertaking to exercise that right, gave the insurer a just right to reject the abandonment. The truth is, that Mr. Bartlet carried his speculation too far; and the event in this instance discovers, very strikingly, the justice and equity of the rule by which an attempt of this kind may be resisted. It has been further urged in this case, that the insurers were answerable for a total loss; because the voyage insured became, after the detention suffered, not worth pursuing. To this argument, however ingeniously stated, there is a very obvious and satisfactory reply. This was not an insurance of profits ; the insurers had not engaged that the insured should have a profitable voyage, or that the vessel should arrive seasonably. The fall of the market might have been thrown upon the insurers by an abandonment, but the insured chose to keep to himself the chance of the market, while [ * 279 ] a hope could be retained respecting it. The * chances of gain and loss must be kept together; and the rule I have cited certainly defeats this attempt of separating them" to the injury of the insurer. I have not adverted to several of the facts stated, which seem applicable to the question whether an abandonment had been made in this case; being clear in the opinion that, under the circumstances which I have noticed, the insured had no right to abandon, and that the insurers are answerable only for a par tial loss. Sedgwick, J. The question submitted to the determination of the Court, is, whether, upon the state of facts, the plaintiff is en titled to recover as for a total loss, or for a partial loss only. Total oss is of two kinds. First, it signifies the total destruction of the thing insured. And, secondly, such damage to the thing insured — 211 — though it may specifically remain, as renders it of little or no value to the owner. The cases stated in Marshall, 414, 433, are instances of what amounts to a total loss in the legal sense of the words; in all which tl e insured has a right, under the particular circumstances, to abandon and proceed against the insurer as for a total loss. In the case before us, the insured, undoubtedly, once had the right of abandoning and claiming damages from the insurers for a total loss And the only point in the case upon which I gave an opinion is, whether the insured has not waived his right of abandonment by his delay; by his not giving notice of his election and making the offer to abandon within a reasonable time after he had information of the capture and detention of his vessel. Notice must be given in all cases where it may be a benefit, or the want of it detrimental to the insurer. And the rule, as laid down by Marshall, (p. 508,) is, “ that as soon as the insured receives notice of a total loss, he must make his election whether he will * abandon [ * 280 ] or not. If he determines to abandon, he must give the underwriters notice of this within a reasonable time after the intelligence arrives; and any unnecessary delay in giving this notice will amount to a waiver of his right to abandon” This rule has not only been long established by legal decisions, but is manifestly just and equitable in itself; and the reason why the insured must make his election speedily, whether he will abandon or not, is, that the under writers may be put in a situation to do what is necessary for the preservation of the property. If this be so, and if it be true that, in the case before the Court, important knowledge was withheld, unreasonably withheld, then it is decisive of the merits. Was reasonable notice given? Was the knowledge important which was delayed to be communicated ? On the 17th of October, the insured received notice of the capture and detention of the vessel and cargo ; he makes no communication of the fact to the insurers until the 20th of November. No excuse is given for this delaj, but that it might possibly be of more advantage to the underwriters; this was speculating on his own interest instead of acting for thei" benefit. Had notice been seasonably given, the underwriters might have appointed an agent to take care of the property for them. This they would have been entitled to do; and to give them the utmost advantage which might result from such appointment, the rule has been wisely established that they should have speedy notice that the property has become their own. As the insured in this case did not exercise his right of abandonment by giving notice, within such time as he might, without any inconvenience to himself, have given it, —for it might have been given immediately after he received in for — 212 — mation of the capture,—and as no reason is assigned for this delay, 1 am clearly of opinion that the notice cannot be consider- [ * 281 ] ed * as given within a reasonable time; but that there was an unnecessary delay, which amounted to a waiver of his right to abandon ; that, therefore, the insurers had a right to resist the offer, and consequently that the plaintiff is entitled to recover for a partial loss only. Dana, C. J. The question is, whether the plaintiff is entitled to recover for a total or only for a partial loss. When the insured had information of the capture and detention of the vessel and cargo, he had undoubtedly a right to abandon to the insurers, and call upon them as for a total loss; and the real question is, whether the insured, by his subsequent conduct, has not waived his right of abandonment. How then are the facts ? The insured has notice of the capture; this knowledge he retains for thirty days, makes no communication to the insurers of the fact; then comes the very unexpected intelligence of a peace having been concluded between Great Britain and France, and he immediately gives notice to the insurers of the capture, and makes his offer to abandon. Why was this neglected so long? Probably because from the contents of the letter from the captain giving notice of the capture and detention of the vessel and cargo, he expected that they would soon be released, and that he should make a profitable voyage. This expectation being defeated by the news of a peace, he turns about and makes his claim upon the insurers for a total loss. It has been said that the right of the insured to abandon remains while the loss continues total: this is generally true, but the rule is subject to some restriction ; it supposes that no alteration has taken place in the circumstances of the case; but the principle of all the authorities, upon the subject of abandonment, is, that the insured shall, within a reasonable time, communicate to the insurers any knowl- [ * 282 ] edge which he has relative to the situation and * circumstances of the property insured. This was not done in the present case; and it is upon this ground only that the Court give their opinion, viz., that the insured did not within a reasonable time give notice, and offer to abandon, and that by his neglect he waived the right of abandonment. My own opinion is, that the question whether the loss be partial or total may always be determined by the state of the case at the time of the commencement of the action. Marshall, 494. At the time of the commencement of the present action, the loss was not total; because, previous to that time, the vessel and cargo had been restored; but, without recurring to that, it is sufficient that the Court are all of opinion — 213 — that in this case the offer to abandon was not made within a reasonable time after notice of the capture, and, therefore, that the plaintiff is entitled to recover only for a partial loss. Parsons for the plaintiff. Dexter and Jackson for the defendants. (1) Footnotes [(a)] а) Marshall m Insurance. 508, 509.—1 Term Rev. 608. [(b)] Page 483 [(1)] Vide post, vol. ii. p. 232, S. C