Orrok v. Commonwealth Insurance

Putnam J. delivered the opinion of the Court., This was assumpsit upon a policy of insurance on the brig Rolla. The plaintiffs claimed to recover on the ground, that there was a technical total loss, arising from a sale of necessity. They do not contend before the whole Court, as they did at the trial, that there was a reasonable abandonment. They can recover only for a partial loss, unless there was a necessity to make the sale of the vessel, in which case an-abandonment is not required. The verdict was for a partial loss only; and he plaintiffs move for a new trial for various reasons, which will be now briefly considered. — 465 — And first, they insist that they ought to have been permitted to read that part of the depositions of David Bartlett and John Lengo which stated the sayings and opinion of one Madueno, who was one of the surveyors associated with Bartlett and Lengo, notwithstanding they had the deposition of Madueno taken for this cause, which they might have used if they had pleased. They contended that they were not obliged to use the deposition of Madueno," and that his declarations made to Bartlett and Lengo, were to be considered as res gestae, as a matter of advice given to the plaintiffs, on the occasion when he was called to act as a surveyor. But we cannot see the matter in this light. It would be just as competent to have had the sayings and opinions of the other surveyors proved by some person who heard them, instead of being proved by the surveyors themselves ; and if such a course were allowable, the whole survey might be proved by hearsay, instead of being proved by the oaths of the surveyors. We think, that it was not competent for Bartlett and Lengo to state the sayings and opinion of Madueno. But if this point were less clear than it is, we do not think the plaintiffs could maintain their objection, inasmuch as they afterwards produced the deposition of Madueno. They are not to have the benefit of the deposition with the jury, and the benefit of Bartlett and Lengo’s statement of Madueno’s declarations and opinions, as matter of law, also. The introducing the better evidence of Madueno himself, was a virtual waiver of the evidence of his declarations. We think the ruling of the judge who tried the cause was correct upon this matter. At the trial, the plaintiffs’ counsel, on cross-examination of a witness, proposed this question: “As this vessel and the injury to her have been described, would she, after being repaired, be of less value than before the injury happened ? ” The plaintiffs offered to give evidence, that such was the fact; but the judge rejected it as inadmissible. The rule for which the plaintiffs contended would be uncertain, arbitrary, visionary, and impracticable ; enlarging or contracting, just as there might or might not be evidence enough without it to induce the jury to charge the underwriters. It is analogous to the claim of a general strain, which has been some466 limes put forth to make out a case against insurers. The court of Connecticut, in the case of Sage v. Middletown Ins. Co. 1 Connect. R. 239, very justly say, that such a rule of evidence “ would open the door to infinite fraud, imposition and uncertainty, and put an end to all that is valuable in insurance.” We have seen some practice under the assumption of this principle, in the case of Peele v. Suffolk Ins. Co. 7 Pick. 254 Tt was necessary, in that case, that the expenses of the repairs should exceed $6000. I have now before me the items returned by the jury for that purpose ; and the last is “ damage of leak and straining of vessel, not otherwise provided for, $1500.” So, making up an amount of $6191 "35. It was in giving the opinion in that case, that Chief Justice Parker observed, that there had been “ a straining of the cause as well as of the vessel, in order to charge the underwriter.” And such, we fear, would be the practical operation of the rule contended for by the plaintiffs in the case at bar. However substantially the ship may have been repaired within the fifty per cent, the imaginary deterioration would be reason enough to throw the whole loss upon the underwriters. We think that the ruling of the judge was right upon this point. Whether the damage was of such a nature as to warrant an abandonment, was a question contested by the parties at the trial; and the judge ruled, and, as we think, correctly, that if the loss was not of such nature and extent as to warrant an abandonment, it was not such a case of necessity as would warrant a sale by the master. The plaintiffs also contended, that if the master could not make complete repairs at Malaga for less than one half of the value of the vessel, but could have made partial repairs at Malaga, and then have carried his vessel to Gibraltar, and there have made complete repairs, and the whole expense would not have exceeded the one half of such t alue, the master was not bound to have made such partial repairs at Malaga, and to have gone to Gibraltar for complete repairs. The judge was of a different opinion, and instructed the jury accordingly. And the counsel for the plaintiffs very properly now abandon thal point. Vid. Hall v. Franklin Ins. Co. 9 Pick. 466, 483 — 467 — It was contended for the plaintiffs, that the valuation in the policy was not conclusive, but that they had a right to show, that the vessel was of less value, and especially, that she was of less value at Malaga, the port of necessity. We think that the ruling of the judge was correct upon that point. If there had been a total loss in fact, the value in the policy would be the sum which the underwriter must pay, notwithstanding the vessel might have greatly deteriorated after the commencement of the voyage and before the loss. And why the agreement of the parties should be held good in the case of an absolute, and void in the case of a technical total loss, we have not been able to see. The point was decided in Deblois v. Ocean Ins. Co. 16 Pick. 303, which case we have revised and confirmed. It was contended by the plaintiffs’ counsel, that if the valuation in the policy was conclusive, still the premium should be excluded, and that the excess of one half, to authorize an abandonment, was of the one half exclusive of the premium ; that as this valuation was $ 8000, including premium of seven per cent, it was the excess of one half of $7440, which was requisite to constitute a technical total loss. Now we think this point is very clearly settled by the following clause in the policy : “ It is agreed that the insured shall not have the right to abandon the vessel for the amount of damage merely, unless the amount which the insurer would be liable to pay under an adjustment as of a partial loss, shall exceed half the amount insured.” The clause was introduced after the long litigation in the case of Peele v. Suffolk Insurance Company, 7 Pick. 254, and was intended, without doubt, to provide by agreement for the construction whicn the underwriters contended to be right, in thote cases relating to the Argonaut. They intended, that the value in the policy should be the rule upon which the calculation should be made ; and they intended, that one third new for old should be deducted, and that if the loss exceeded one half of the value in the policy, or (as it is expressed) of the amount insured, then it should be a constructive total loss. Now the amount insured on the ship, by this policy, is $8000 ; and it is said expressly, that that sum includes the premium. How then can we undertake to exclude it by construction, and say that $7440 is the amount of the sum insured ? The — 468 — premium made a part of the value insured ; it was an insurable interest, as much as was the ship it'self; and the calculation must be made accordingly. But it is contended, that in calculating whether or not the loss of 5 per cent has happened on the ship the premium is to be excluded, and that the same rule should be adopted in ascertaining the loss of 50 per cent as of 5 per cent. Brooks v. Oriental Insurance Company, 7 Pick. 259. The rule excluding the premium from the aggregate value, in the calculation of the per centage of damage to articles enumerated in the memorandum clause, was adopted from what was understood by the Court to be the prevailing usage in adjustments of partial losses under that clause. Independently of the usage, the premium might well be considered as included in the aggregate value. 1 Phillips on Ins. 311 ; 2 Phillips on Ins. 213. But the meaning of the clause in the policy concerning the right to abandon on account of damage exceeding 50 per cent of the amount insured, is too plain for construction or explanation. The premium is expressly made to be part of the amount insured, and the damage to be paid must exceed half that amount, calculating the same “ as under an adjustment of a partial loss that is, by deducting one third new for old, from the expenses of the repairs. That deduction was certainly the ancient mode adopted in England. Weskett, tit. Average, § 15, speaks of it as a general custom. The rule has however been modified in that country. It is not applied there, when the damage happens upon the first voyage ; upon the ground, that the reason of the rule in that case fails, for that a new and good vessel cannot be made better by new repairs, than she is presumed to have been before she received the damage. Fenwick v. Robinson, 3 Carr. & Payne, 323. We have held to the old rule, however, in Sewall v. United States Ins. Co. 11 Pick. 96, which was a policy upon a new ship. And such is the rule m New York Dunham v. Commercial Ins. Co. 11 Johns. R. 315. Vid.: 3 Kent’s Comm. (3d ed.) 339, note. And it seems to us, that the rule should have a general application to all vessels, so that on the whole there would be a just, practical result. — 469 — It has been contended for the plaintiffs, that the marine nterest which was necessarily paid, should be allowed towards the partial loss without any deduction of one third. But it seems to us, that where there was a necessity to raise money at marine interest, it must be considered as a measure which increased the expenses incurred. The repairs cost just so much more on that account; and from the whole amount of their cost, the deduction of one third should be made. And upon the same principle it is, that the commissions which are paid, and the exchange on which funds are raised, are to be taken into the account and borne by the party liable to make the repairs. Vid. Benecke on Ins. (Phillips’s ed.) 169 ; Humphrey v. Union Ins. Co. 2 Phillips on Insurance, 245. And it was argued for the plaintiffs, that in calculating the fifty per cent the vessel’s proportion of all the items of general average, was to be included, and if not all, certainly the expense of getting the vessel into Malaga and of the first survey and expenses incident thereto, and of unloading the cargo, and the hire of the vessel into which it was put, and of pilotage and lighterage, boat hire, wages, provisions, and consul’s fees. Now it is not contended but that all those items (excepting the first, perhaps, viz. the expenses of getting the vessel from where she received the damage to Malaga) are proper charges to be brought into general average ; and the question is, if any of them should be taken to make up the particular average. It was said, that the expense of getting the vessel from the place where she was injured to Malaga, including especially the wages of eight extra seamen at Roquetas, came within Sewall v. United States Ins. Co. 11 Pick. 92. In the case cited, it was stated by the Chief Justice, that the expense of raising a ship which had sunk, was to be a direct charge to the owner, and that as the vessel and cargo happened to be so situated that the) could be saved together, the expense was very properly and equitably apportioned upon their relative owners. That w'as said not to be technically a general average, but in nature of a general average. I instructed the jury in regard to that point as the plaintiffs’ counsel requested. But speaking for myself, upon more reflection, I am disposed to think, that the employment of the eight seamen to assist in pumping and nav; — 470 — gating the vessel from the place where she was injured to Malaga, should have been considered to have been strictly a charge to the general average. I cannot now see any reason for making a difference between the expense of those extra seamen, and the wages of the crew and various other expenses incurred for the common good. Vid. Potter v. Ocean Ins. Co. before Story J., Circuit Court of U. S. Oct. T. 1837 ; Stevens St Benecke (Phillips’s ed.) 76 ; The Copenhagen, 1 Rob. Adm. R. 289 ; Birkley v. Presgrave, 1 East, 227 ; Padelford v. Boardman, 4 Mass. R. 548. But, as was befoie intimated, the plaintiffs have no reason to complain of the charge upon that point. And in regard to the other items which are technically general average charges, it is entirely clear, that they are not to be taken, to make up the particular average account. They were incurred to place the ship &c. in a condition to be surveyed and examined. Those expenses must be paid, whether the repairs should be made or not ; and they have no tendency to show how much it will cost the owner of the ship to repair it. The particular average loss (as is well known) is to be borne by the owner of the ship ; the general, is to be sustained by the ship, cargo and freight. Now by a clause in this policy it is provided, that the company shall not be answerable for wages or provisions, except in general average. Padelford v. Boardman, 4 Mass. R. 548. And we think it to be very clear, that the parties did not intend to blend the particular and the general average, and to allow any item of the latter to be added to the former. They meant, no doubt, very accurately to define, if not to narrow, the right of the insured to abandon for damage as a technical total loss ; a right founded on an arbitrary rule, which we think an entire departure from the great principle of indemnity upon which the contract of insurance should rest. The Court are of opinion, that the plaintiffs have no reason to complain of the instruction upon this point. The plaintiffs contended, that if the voyage was broken up by the injury to the vessel, it was a good cause of abandonment. If that should be admitted, there were two answers : 1. That there was no evidence that the voyage was destroyed ■ and 2. Thau there was no abandonment made in season. As — 471 — io the first, the cargo consisted of wines and other articles which were not perishable; and the ship was repaired in about ten days, so well as to make a voyage across the Atlantic. The report finds, that, during the trial, it was agreed by the parties that the jury might find for a total or a partial loss generally, and that the Court should appoint assessors : and it was suggested by the plaintiffs’ counsel, after the jury had retired, that the jury had not been informed of the fact last stated, and that, if they were instructed upon that point, it might save them the labor of assessing the damages. This seeming to be very reasonable and expedient, I then proposed to give them the additional instructions mentioned in the report, and read the same in open court to the counsel of the parties, who were present; and to part of those instructions, the counsel for the plaintiffs objected then and now. The jury were desired to find the items of damage which in their opinion exceeded one half of the amount insured, if such should be their opinion. And we do not think there was any thing wrong or rregular in that instruction. In civil proceedings, the law and the fact should be kept as distinct as possible, to the end, that the law may be practically what it professes to be, a uniform rule of action. Such inquiries are very frequently made ; and the answers of the jury, often prevent the necessity of further expense and litigation. The verdict disposed of the question of due diligence, which the Court thought should have been used to ascertain the fact, whether, or not, funds could have been obtained. The only other question remaining is, whether the juror who was returned by the sheriff as a talesman, could be considered as competent, inasmuch as the sheriff was one of the stockholders of the insurance company, the defendants. And without taking into consideration, whether any importance ought to have been given to that circumstance, we think that the knowledge which the junior counsel for the plaintiffs had of the fact, soon after the trial commenced (which knowledge was admitted), and, also, his proceeding with the trial for some time after-wards, without objection, should be considered as a waiver of the objection raised by the senior counsel to the c tmpelency of the juror. — 472 — Upon the whole matter we are all of opinion, that the judgment should be rendered for the plaintiffs, for a partial loss. The Court will appoint an assessor to ascertain the damage, unless the parties shall agree upon one, in which case the Court will adopt their nomination.