Rhinelander v. Insurance Company of Pennsylvania - 8 U.S. 29 (1807)
U.S. Supreme Court
Rhinelander v. Insurance Company of Pennsylvania, 8 U.S. 4 Cranch 29 29 (1807)
Rhinelander v. Insurance Company of Pennsylvania
8 U.S. (4 Cranch) 29
A capture of a neutral vessel as prize by a belligerent armed vessel is a total loss under a policy of insurance, and the assured is entitled thereon to abandon.
A capture by one belligerent from another constitutes, in the technical sense of the word, a total loss, and gives an immediate right to the assured to abandon to the insurers, although the vessel may be afterwards recaptured or restored.
An embargo or detention by a foreign friendly power, constitutes a total loss, and warrants an immediate abandonment.
The contract of insurance is a contract of indemnity, and therefore the assured can "only recover according to the damage he has sustained."
The state of the loss at the time of the offer to abandon, fixes the right of the assured and of the assurers.
To constitute a right to abandon, there must have existed a total loss, occasioned by one of the perils insured against, but this total loss may be real or legal. When the loss is real, a controversy can only respect the fact; but the circumstances that constitute a legal or technical loss yet remain, in many cases, open for consideration.
There are situations in which the delay of a voyage, the deprivation of the right to conduct it, produce inconveniences to the assured, for the calculation of which the law affords and can afford no standard. In such cases there is, for the time, a total loss, and in this state of things, the insured may abandon to the underwriter, who stands in his place, and to whom justice is done by enabling him to receive all that the insured might receive. A capture by an enemy and an embargo by a foreign power are admitted to be within this rule, and a complete arrest by a belligerent and not an enemy seems in reason to be equally within it.
This was a case certified from the Circuit Court for the District of Pennsylvania in which the opinions of the judges of that court were opposed to each other upon the question whether the plaintiff was entitled to recover upon a case stated, the material facts of which were as follows:
The defendants insured $12,500 on the freight of the plaintiff's American ship The Manhattan, which had been chartered by Minturn & Champlin for a voyage from New York to Batavia, and back to New York. The freight was valued in the policy at $50,000. The charter party contained a covenant that if any dispute should arise between the plaintiff and Minturn & Champlin respecting the freight, the cargo should not be detained by the plaintiff, provided they
should give good security to abide by the award of arbitrators, who were to be appointed to settle such dispute. On her homeward voyage on 10 February, 1805, the ship was taken and detained on the high seas by a British armed vessel, and the second mate and 21 of the seamen taken out, and two British officers and 15 seamen put on board, with orders to take her into a British port. The second mate was put on board another vessel, and arrived in New York on 26 February, when he gave the above information to the plaintiff, who, on 28 February, communicated it by his letter of abandonment of that date, to the defendants.
The Manhattan, with her cargo, was carried into Bermuda on 12 February, and libeled as prize of war. On 20 April, 1805, both vessel and cargo were acquitted. From this sentence, so far as it respected the cargo only, an appeal was prayed, which does not appear to have been decided, but on 8 May, the cargo was delivered to its owners, on their giving security, and on 8 July, the vessel and cargo arrived in New York; but before their arrival, the defendants having refused to give counter security, so as to relieve the owners of the cargo from the effect of the security which they had given upon getting possession of their goods, the plaintiff, on 6 June, 1805, after the vessel was liberated, brought the present suit. Upon the arrival of the vessel and cargo, Minturn & Champlin gave security to abide the award of the arbitrators concerning the freight, according to the covenant in the charter party, and obtained possession of the cargo.