Merchants Mutual Ins. v. Butler

Bartol, J\, delivered the opinion of this Court: This action was. instituted by the appellee on a policy of insurance, underwritten on the 15th day of May 1855, by the appellant, upon freight to the amount of $5000, of the ship Vandalia, on her then voyage. By the charter-party, made at Montevideo on the the 11th day of December 1854, by Zumeran and Co., the^gents of the Peruvian Government, the voyage was to begin at the port of Callao in Peru; whence the ship was to proceed to the Chincha Islands, and there taking in a full and complete cargo of guano, was to proceed to Callao for a final clearance, and thence to a port in Europe, or in this country. The freight — 53 — stipulated to bo paid, was J?5 per ton. The guano was the property of the Peruvian Government, for whose account the vessel was chartered. The vessel left Callao in April 1855, for the Chincha Island, and obtained her cargo, and proceeded thence to Callao, where she arrived on the 25th June 1855. She left Callao for her port of destination, Gibraltar, on the 8th of July, hut returned to Callao on the 11th of July, in consequence of having sprung a leak. At Callao the cargo was unladen, and a survey made of the vessel, showing that the repairs necessary, would cost more than the value of the ship. The captain failing- to obtain money on bottomry to make the repairs, the ship was sold. When the cargo was unladen, the Peruvian Government took it out of the captain's control and shipped it by other vessels. The plaintiff claimed in this suit as for a total loss of the freight. By agreement of counsel, all errors of pleading were waived. At the trial the defendant asked six prayers, of which the first, fourth, fifth and sixth wore granted; hut the second and third prayers being refused, the defendant excepted. The defendant also excepted to the instruction given by the Court to the jury. The second and third prayers of the" defendant, presented two grounds of defence to the action, which have been relied on in the argument of this appeal: 1st. That the plaintiff is not entitled to recover if the jury should find that the Vandalia was rendered unseaworthy, before sailing from the Chincha Islands, by filio unreasonably overloading of the vessel by the master. 2nd, That the plaintiff cannot recover if the cargo belonged to the Peruvian Government, and the charter was made on its behalf, and if on finding, the vessel unable to proceed on her voyage from damage by perils insured against, tlie master could have procured another vessel by which to send forward the cargo to its destined port, at a lower freight than that specified in the charter, and was — 54 — willing to do so, but tbe Peruvian Government prevented him from doing so, and took possession of the cargo, and without his assent, and against his will, shipped it wholly or in part. With regard to the first ground of defence, an examination of the authorities has satisfied us, that the underwriters cannot claim exemption from liability, even if the jury should find that the ship had been unreasonably overloaded on leaving the Chincha Islands. The rule on this subject is thus stated by Phillips, in his work on Insurance, vol. 1, 415, (4th Edition,) sub-section After referring to a number of decisions the author says: “I conclude, however, the better doctrine is, that where the vessel is seaworthy in the outset, loss by perils insured against, consequent upon subsequent unseaworthiness, occasioned by the negligence or mistakes of the master and crew, without fraud, is at the risk of the underwriters.” In Parson’s Treatise on Maritime Law, vol. 2, p. 212, note 1, will be found collected a great number of cases, in which this question has been considered, and the result deduced from the authorities is thus succinctly stated: “It is now, however, settled, both in England and in this country, that if the loss is caused by a peril'insured against, the underwriters are liable, although the remote cause be the negligence of the master and crew, and that whether barratry be insured against or not.” It is unnecessary to make particular reference to the cases in which this rule has beeu recognized; among them is the case of The Georgia Ins. & Trust Co., vs. Dawson, 2 Gill, 365. In our opinion this rule of law is conclusive of the point now under consideration. The policy in this case, as we have seen, attached upon the first sailing of the Vandalia from Callao, and although afterwards she may have been rendered unseaworthy by being overloaded at the Chincha Islands, the defendants are not, for that reason, discharged from liability on their contract, for a loss which afterwards happenedfrom the dangers of the seas, even if the alleged over — 55 — loading could he considered as a remote cause of the loss. We are unahle to distinguish the case from the well settled rule, “causa próxima non remota spcciaturThis would he our conclusion upon this part of the case; even if the prayer required the jury to find that the overloading contributed to the damage and loss. But the point, as presented by the prayer, is, that the alleged overloading was a breach of the implied warranty of seaworthiness, which avoided the policy. According to the authorities, no such consequence follows where the alleged unseaworthiness has supervened during the progress of the voyage, and after the policy had already attached. 2. The questions involved in deciding upon the second ground of defence, are of much importance, and, as presented in this case, are somewhat novel, and by no moans of easy solution. Wo have not found any adjudicated case strictly analogous to the present, or which furnishes a control in g precedent for our guide in its determination. In this case the shipper, owning the cargo, and on whose account the vessel was chartered, is a sovereign government, entitled to exercise full and complete jurisdiction and authority within its own territory. When, therefore, the cargo was unladen at Callao, it was not in the power of the captain to retain the cargo, for the purpose of forwarding it by another vessel, against the will and in opposition to the authority of the Peruvian G-overnment. But notwithstanding this, we are of opinion that the case must he governed by the same rules that would control it if the charterers were private citizens, whose contracts might he enforced in Courts of Justice. In passing upon contracts to which sovereigns are par* ties, Courts of Justice deal with them in the same manner as with contracts of private persons, and ‘ ‘will not assume that a sovereign power will refuse to do what any private person would be obliged to do.” Tiernan vs. Rescaniere, 10 G. & J., 225. Keeping this principle in view, we proceed to pass upon — 56 — the main question presented by tlie defendant’s third prayer. It is contended that it was the duty and the right of the captain to forward the cargo by another vessel, and thus earn the freight, and if prevented from so doing by the Peruvian Government, (the charterer in this case,) then he was entitled to demand the whole freight; that it had been earned, and if lost, that the loss occurred by the wrongful act of the charterer, or by the neglect of the captain, in failing to demand the freight, and not by a peril insured against; and, therefore, the underwriters are not answerable on the policy for any part of the loss. It seems to be well settled, that if the vessel becomes , damaged during the voyage, and puts into a port of distress, and is capable of being repaired so as to complete the voyage, no matter what delay or detention may occur, the shipper has no right to intervene and demand the goods at such intermediate port, without paying the full freight for the voyage. In such case, if the captain improperly surrenders the goods to the shipper, without demanding full freight, and it is thereby lost, the insurer of freight will not be answerable for the loss. This principle was distinctly decided in 1 Story Rep., 342, Jordan vs. Warren Ins. Co., and by the Supreme Court of the United States, in Hugg vs. Augusta Ins. & Banking Co., 7 Howard, 595; see also, 2 Phillips on Ins., secs. 1633, 1641, and the cases cited. Such is the well settled law when the vessel is capable of being repaired, and of resuming and completing the voyage. This is not, however, the case before us. Here the vessel could not be repaired, except at such cost as the captain or owner was not bound to incur, and was, therefore, incapable of completing the voyage, and performing the contract. She Was rightfully sold by the captain, and thus the voyage was broken up. What then were the rights of the parties in such circumstances ? It is said that the captain might have procured another vessel, and that it was his absolute right and duty to do — 57 — so, and to forward the cargo; and that the shipper had no right to interfere with him in that particular, and the consequence of such interference and demanding the cargo, was the samo as if the ship had been r¿pairable and capable of performing the voyage. We do not concur in this view. In 2 Phillips, sec. 1634, it is said: “Where the ship is wrecked or disabled, and the shipper himself, or by his agent, prefers to take his goods at an intermediate port, rather than to have them forwarded to the port of destination, and fchd ship owner, himself, or by his agent, chooses to deliver the goods to the shipper rather than to reship them for the port of destination; this is a case of freight pro rata, earned, and accordingly a cáse of partial loss of freight;” áud in sec. 1635, it is áaid, in such case “the master may retain the cargo to forward it by another suitable ship in due time, unless the shipper will pay him the amount of salvage that he might thus realize on freight for the original ship.” And in sec. 1639, the law is stated íú be, that “If (in such cáse) the master unjustifiably neglects to procure another (ship) to carry it on and earn freight, the loss on freight will be only the amount which must' have been paid to such other ship.” It will b‘e found by an examination of the cases cited by Phillips, that the conclusions slated by bim are supported by authority; as the'y are certainly consistent with principles of equity and justice. The only reason why the ship' owner, or his agent the master, has a right to retain the cargo and forward it hy another vessel, is to enable liim “to realise the proportion of freight according to the part of the,voyage performed hy the original ship.” And precisely the same result is accomplished, if in the case where the original ship to which both the charter party and the policy of insurance relate, has been lost or disabled from performing tlio voyage, tbe right of the shipper to demand the goods at an intermediate port, be acknowledged; subject, however, to the right of the ship owner to demand a proportionate part of the freight, according to the portion — 58 — of'tlie voyage which has been performed; see 2 Phillips, sec. 1366. (Decided May 22nd, 1863.) This author after citing the case of Bradhurst vs. Columbia Ins. Co., 9 Johnson’s R., remarks in note 1, to sec. 1639: “That decision is not in accordance with the doctrine stated in the text; but the attention of the Court was probably not directed to the question whether the case was one of partial loss." We think that in this case the counsel for the appellant are in error in sftpposing, that the demand of the cargo* at Callao by. the charterer made it answerable for the full freight, and relieved the underwriters from liability on the policy. If answerable at all, the charterer was bound only for freight pro rata intineris, and the underwriter would remain answerable for a partial loss. To show that in such a case as this, a technical abandonment is not necessary, see 6 Taunt., 68, and 8 Taunt., 755. From the views which have been expressed, it follows-that there was no error in refusing the defendant’s second and third prayers, asking instructions to the jury denying the right of the plaintiff to recover any thing; and, it also follows, that the objections made by the appellants to the Court’s instruction given to the jury, cannot be sustained* Judgment affirmed.