Morean v. United States Insurance

Washington, J,, delivered the opinion of the .court, and, after stating^ the facts, proceeded as follows:.. ■ All considerations connected with, the loss of the cargó, in respect to quantity qr value, ihay, at once, be dismissed from the case. As to memorandum articles, The insurer agrees to pay, for a total loss only, the in- ' sured taking upon himself all partial losses without exception.. If the property arrive at the port of.'discharge, 'reduced in quantity dr value, to any amount, the loss cannot be said to be total in reality, and the insured cannot treat it. as a. total, and demand an indemnity for a partial loss. There is no instance where .the insured can demand as for a toit'l loss that he might not have declined an abandonment,' and demand a partial loss. But if the property insured be included within the memorandum, he cannot, under any circumstances,' call upon the insurer for a partial loss, and, consequently, he cannot' elect to turn it into a total loss. These' principles are clearly established by the case of Mason v. Skurray, d Neilson *225 y’. The Columbian Insurance Company, e Cocking v. Frazer, f M‘Andrews v. Vaughan/Dyson v. Row-croft, and Magrath and Huggins v. Church. i The only question that can possibly arise, in relation to memorandum articles, is, whether the Joss was total or not; and this can never happen where the cargo, or a part of it, has been sent on by the insured, and reaches the original port of its destination; Being there specifically, the insurer has complied with his engagements; every thing like a promise of indemnity against loss or damage to the cargo being excluded from'the policy. If'the question turn upon the totality of the loss; unconnected with the subject, of loss by deterioration of the cargo in yalue, or. reduction in quantity, there is no difference between memorandum and other articles.! If the loss be total in reality, or is such as the insured is permitted to treat as such, he is entitled to aoandon and recover as for a total loss in the case of memorandum articles, but always with this exception, that he is not permitted to turn a partial, into a total loss. Keeping this distinction in view, the loss of the voyage by capture, shipwreck, or otherwise, may. be'treated as á total loss. This is the doctrine in the case of Dyson v. Rowcroft, in which the right to abandon was placed, not-upon the ground of deterioration of the cargo, but upon the justifiable necessity which resulted from it of throwing the cargo overboard? *226 tliis was, In effect, ilie same tiling as if it had, in a storm, been swept from the deck. Such, too, was the case of Manning v. Newnham. j In Cocking v. Frazer no such necessity existed, and the breaking up of the voyage was attempted to be justified by the damaged- state of the cargo, which, per sc, did not justify the.insured in putting an end to the voyage, and thus to turn a partial loss, for which the insurer was not liable, into a total loss. Magrath and Huggins v. Church establishes the same doctrine. Now, what is the present case ?' The ship being thrown on shore, within a mile or two from her port of destination, the agent of the insured employs persons to unlade as much of the cargo as could be saved, and nearly one half was, by his exertions, landed, dried, find sent to the market at Lisbon, and sold by the consignees at about one quarter the price of sound corn, leaving a very inconsiderable sum for the owner, after paying the expenses. Is not this precisely the case of Neilson v. The Columbian Insurance Company, and Anderson v. the same, k with this difference only, .that in the first'case the insured declined sending on the corn,- when ho might have done so, and, consequently,' he was not permitted to turn a partial into' a total loss by his own neglect; and, in ,the latter case, part of the cargo having been rescued from the wreck, before the offer to abandon was made, the insured could not claim as for a total loss, either on account of the injury which *227 the corn had sustained, or of his own act in not sending it forward to its port of destination. In the case now before the, court, the cargo which was saved was sent forward, and sold at the port of its destination. In addition to the cases above referred to, the cases of Biays v. the Chesapeake Insurance Company, l *228 and Marcardier v. the same, m in this court, arc strongly applicable to the present, and seem, in a *229 great measure, to settle it. But it is contended, by the counsel for the plaintiff, that if the loss be such *230 as that the insured might at one time have treated it as total, it continues to be so, unless at the time *231 when, the offer to abandon is made clpar of thé effects of the peril, and jn a condition to prosecute the voyage, it is restored to his possession. Now, this is certainly not the condition of property, which, at the time of the offer to abandon, is in the possession of a recaptor, who has. a right to retain it until he is paid his salvage. But, in the present case, the corn never was out of the possession of the agents of the insured, w'ho exercised,every act of ownership over it, subject, nevertheless, to the taws f¡.nd customs of the country to which it was sent, with which the insurer and insured are supposed to have been acquainted at the time they entered into this contract, and to which they impliedly agreed to submit. The cargo.which was landed, riot only continued in the possession, and under the direction, of the agents of the insured, but it was relieved from the effects-of the •peril, as between the.insurer and insured, and it was not only in a condition to prosecute the voyage, but it did in reality complete it. Upon the whole, it is the opinion of the court that this is not such a,loss as the defendants engaged to indemnify, against, and that judgment should be given in their favour. Judgment affirmed. n Footnotes [g] At. N. P. 1793. Ib. [h] 3 Bos. & Pul. 474. [d] At. N. P. 1780. Park. 116. Marshall, Condy’s ed. 223. [e] 3 Caines' Rep. 108. [f] Park, 114. Marshall, 227., Condy’s ed. [i] 1 CainesRep. 196. [j] Park, 169. [k] 3 Caines’ Rep. 108. [l] February Term, 1813. This was an insurance ón hides, “ warranted by the assured free from average, unless general.”. The declaration was for a total loss by perils of the seas; i but it appeared in evidence that 3,288 hides (the ■whole number insured being 14,565) were put on board of a lighter, to be transported from the vessel to theirplace of destination ; that the lighter, on the passage to the shore, was sunk, by which accident 789 of the hides, of the value of 4,000 dollars, were totally lost, and the residue,to the number of 2,491,were fished up and saved at the expense of 8,000 dollars, which were paid by the. insured. The hides, thus s.av.ed, were delivered to his agent, and sold on his account. The whole sum insured on the cargo was 25,000 dollars. In delivering the opinion of the court,it was remarked by Ijivisgston, J., that whatever might have been the motive to the introduction ofthis clause in policies of insurance, which was done as early as-.thewear 1749, and, most probably,-.with the intention of protecting insurers against, losses arising solely from a deterioration bf the article by its.own' perishable quality, or whatever ambiguity might once have existed, from the. term average being used in different senses, that is, as signifying a contribution to a general loss, and also a particular or partial injury- falling on the subject insured, it was well understood at the. pre. sent day,, with respect to such articles, that underwriters are free from all partial losses, of every kind, which do not arise from a contribution towards a general average. It only remained, then, to examine, (and so the question had been properly treated at the bar) whether the hides which were-sunk, and not reclaimed, constituted a total or partial loss, within the meaning of this policy'. It had been considered as total by the counsel for the insured, but. the court could not perceive any ground for treating it in that wav. *228 Inasmuch- ás out of many thousand hides which were on board, not quite 800 were lost, making in point of value somewhat less than one sixth part of the sum insured. If there were no memorandum in the way, and the plaintiff had gone on to recover, as in that case he might have done, it was perceived at once that he must have had judgment only for a partial loss, which would have been equivalent to the injury actually sustained. But, without having recourse to any reasoning on the subject, the proposition appeared too self evident not to command universal assent, that when only a part of a cargo, consisting all of the same kind of articles, is lost in any way Whatever, hnd the residue (which in this case amounted to much the greatest part) arrives in safety at' its port of destination, the loss cannot but be partial, and that it must forever be so as long as a part continues- to b,e iess than the whole. This, then, being a par•'ticul.ar loss only, and not resulting from a general average, the court was of opinion that the defendants were not liable for it. [m] February Term, 1814. This .was an action on a policy of insurance for 31,000 dollars, upon any kind of lawful goods on beard the brig Betsey, on a voyage from New-York to Nantz. The cargo-was of the invoice value of 29,-880 dollars, of which 7,439 dollars were in memorandum articles. The brig sailed on the voyage, but was compelled, by stress of weather, and other accidents, to bear away for the West Indies, and arrived at Antigua, where the master applied to the court of vice-admiralty for a survey;’ upon which the cargo was landed, and Ordered by the court to be sold for the benefit of the concerned.'. Under this sale the net proceeds .of the cargo amounted to 13,767 dollars, and of the memorandum articles to 6,863 dollars. The vessel was repaired within a reasonable time, and capable of performing the voyage with the orig-inal cargo, but the master abandoned tbe voyage at Antigua. Of the cargo, 99 bags of coffee were spoiled and thrown overboard, and the residue greatly damaged by the perils of the seas; and the whole cargo, including the memorandum articles, sustained a damage during the voyage, exceeding a moiety of its original value. Within a reasonable time after receiving informa, tion of the loss, the plaintiff abandoned the sjhole cargo to the underwriters. The plaintiff contend *229 ed that lie was entitled tó recover as for a total loss of the cargo insured, including the memorandum articles. Story. J., who delivered the opinion of the court, stated, that a technical total loss might arise from the mere deterioration of the cargo, by any of the perils insured against, if the deterioration be ascertained at an intermediate port of necessity short of the port of destination. In such case, although the ship be in a capacity to perform the voyage, yet, if the voyage be not worth pursuing, -or the thing insured-be so damaged and spoiled as to be of little or no value, the insured has a right to abandon the projected adventure, and.throw upon the underwriter the unprofitable and disastrous subject of insurance. It had, therefore, been held, that if a cargo be damaged in the course of the voyage, and it appear that what has been saved is less in var lue than the amount of the freight, it is a clear case of a total loss, It did not, however, appear, that the exact quantum of damage which shall Authorize an abandonment as for a total loss, had ever become the-direct subject of adjudication in the English courts, The celebrated Le Guidon, c. 7. art. 1., considers that a damage exceeding the moiety of the valué of the thing insured, is sufficient to authorize an abandonment. This rule had received some countenance, from more recent, elementary writers ; and from its public convenience and certainty, had been adopted as the governing principle in some of the most respectable commercial-states in,the union, and was now so generally established as'not easily to be shaken. 1 Johns. Cas. 141. 1 Johns. Rep. 335. 406. Marshall on Insurance, 562. note 92. Condy’s edit. Park, 194. 6th edit. But this rule,has been deemed not to extend to a cargo consisting wholly of memorandum articles. The legal effect of the memorandum is to protect the underwriters from all partial losses; and, if a loss by deterioration, exceeding a moiety in value, would authorize an abandonment, the great object of the stipulation would be completely evaded. It seems, therefore, to' be the settled doctrine, that nothing short of a total extinction, either physical or in value, of memorandum artides, at an intermediate port, would entitle the insured to turn the case into a total loss, where the voyage is capable of being performed. And, perhaps, even as toan extinction in. value, where the commodity specifically remains, it might yet be deemed not quite settled, whéther, under *230 the like circumstances, it would authorize an abandonment for a total loss. The case before the court was of a mixed character. It embraced articles of both descriptions ; some within, and some Without, the purview of the memorandum. If, in such a case, a deterioration exceeding a moiety in value, ' be a .proper case of technical total loss, it will follow,. that, ip many cases, the underwriter will indirectly be rendered responsible for partial losses on the memorandum articles. Suppose, in such a case, .the damage to the memorandum articles were 40 per cent., and to the other articles ,10 per cent., in the whole amounting to half the value'of the cargo, the underwriter would be responsible for a technical.total loss, and thereby made to bear the whole damage, from which the .memorandum meant to exempt him. Indeed, cases might arise in which the damage might exclusively fall on memorandum articles; and, if it exceeded the moiety in value of the whole cargo, might load him with the burthen of a partial loss, in manifest contravention of the intention of the parties. A construction leading to such a consequence could not be admitted unless it be unavoidable ; and the court were entirely satisfied that such a construction ought not to prevail. The underwriter is, in all cases of deterioration, entitled.to an exemp- • tion from partial losses on the memorandum articles; and, in order to effectuate this right, it was necessary, where a technical total loss is sought to be maintained, upon the mere ground of deterioration of tho cargo, at an intermediate, port, to a moiety of its value, to exclude from that estimate all deterioration of the memorandum articles. UpoDihis principle, in a cargo of a mixed character, np .abandonment for mere deterioration in' value, during the voyage, could be valid, unless the damage on the non-memorandum articles exceeded a moiety of the whole cargo, including; the memorandum articles" The case was considered, as to the underwriter, the same as thoughthe memorandum articles should exist in their original sound state, In ' this way, full effect was given to the contract of the parties. ,The underwriter would never be made responsible for partial losses on memorandum articles, however great; and the technical total losses for which alone he could bo liable, were suchas stood unaffected by the. perishable nature of the commodity which he insures. Admitting, therefore, the rule to be correct, that lh® part}' has a . *231 right to abandon when the depreciation exceeds a moiety of the valae, the plaintiff had not brought himself within that rule, as applied ío a cargo of a mixed nature, and' there was, consequently, no total loss proved by the perils of the seas. [n] We are informed by Targa. c. 52. n. 18. p. 230, and Casarc gis, Disc. 47., that in the práctico of Italy, in order to avoid the difficuliy of settling averages on' perishable articles', the clause ex-chuso geiio et avaria, as it was called, was introduced. The *232 French law requires goods, which, by their nature, are subject to particular detriment or diminution, such as grain, salt, or merchandise subject to leakage, to be specified in the policy, .otherwise the insurer is not liable for the damages or losses which may happen to, these articles, unless the insured was ignorant of the nature oi the’ cargo at the time the contract was made. Ordonnance.de la Marine, 1. 3. tit. 6. des Assurances, art. 31. Code de Commerce, 1. 2. tit. 10. art. 355. In the .different ports of ‘ France, before the revolution, various clauses were iuserted in-the policy, excluding responsibility for losses not exceeding a certain - per centage on such articles. At Marseilles the insurers exempted themselves from average losses, on certain voyages, by a clause which tyas construed to, extend both to 'general and particular' average, on vessel or cargo; Under this clause franc d'avarie, the insurer was held answerable only for an entire loss of the subject insured. It was, however, deter- . mined not to extend to any case of technical total loss, which by the French láw authorizes the insured. to abandon, such as capture, stranding, shipwreck, &c. 1 Emerigon, Tra ité des Assurances, c. 12. s. 45, 46. Pothier d’Assurance, No. 166. Valin sur l' Ordonnance, 1. 3. tit. 6., Des Assurances, art. 47. The origin of the English memorandum is referred by Sergeant Dunning, in the case of Wilson et al. v. Smith, 3 Burr. 1551, to its “ being better calculated to deliver the insurers from small averages, than adapting the premium to the nature of the commodity, as it might happen to be more or less liable (to perish or suffer ; which method, would have made the policy too complicated, and which the Dutch had at first tried, but afterwards altered.” The English formula is as follows : “ N. B. Corn, &c., are warranted free from average, &c., unless general, or the ship be stranded.” The last words, or the ship he stranded, have been omitted for several years in the forms of policies adopted by the English insurance companies, viz.’ the London Boyal Assurance, and the Royal Exchange Assurance. 2 Selwyn’s N . P. 949. They are not inserted in the policies used in the United States.