Insurance. By the well settled principles of law, in the United
States, the state of the facts, and not the state of the
information at the time of the abandonment, constitutes the
criterion by which is to be ascertained whether a total loss has
occurred or not for which an abandonment can be made. If the
abandonment when made is good, the rights of the parties are
definitively fixed, and do not become changed by any subsequent
events. If, on the other hand, the abandonment when made is not
good, subsequent circumstances will not affect it so as
retroactively to impart to it a validity which it had not at its
origin.
In cases where the abandonment was founded upon a supposed
technical total loss by a damage or injury exceeding one-half of
the value of the vessel, although the fact of such damage or injury
must exist at the time, yet it is necessarily open to proof to be
derived from subsequent events. Thus, if the repairs, when
subsequently made, clearly exceed the half value, it is plain that
this affords one of the best proofs of the actual damage or injury.
On the other hand, if the subsequent repairs are far below the half
value, this, so far as it goes, affords an inference the other way.
In many cases of stranding, the state of the vessel may be such,
from the immanency of the peril and the apparent cost of
expenditures requisite to deliver her from it, as to justify an
abandonment, although by some fortunate occurrence she may be
delivered from her peril without an actual expenditure of one-half
of her value after she is in safety. Where, in the circumstances in
which the vessel then may have been, in the highest degree of
probability the expenditures to repair her would exceed half her
value, and if her distress and peril be such as would induce a
considerate owner, uninsured and upon the spot, to withhold every
attempt to get the vessel off because of such apparently great
expenditures, the abandonment would doubtless be good.
In respect to the mode of ascertaining the value of the ship,
and, of course, whether she is injured to the amount of half her
value, it has on the fullest consideration been held by this Court
that the true basis of the valuation is the value of the ship at
the time of the disaster, and that if after the damage is or might
be repaired the ship is not or would not be worth at the place of
repairs double the cost of repairs, it is to be treated as a
technical total loss.
The valuation in the policy or the value at the home port or in
the general market of other ports constitutes no ingredient in
ascertaining whether the injury by the disaster is more than
one-half of the value of the vessel or not. For the like reason,
the ordinary deduction in case of a partial loss of "one-third new
for old" from the repairs is equally inapplicable to cases of a
technical total loss by an injury exceeding one-half of the value
of the vessel.
The mere retardation of the voyage by any of the perils insured
against not amounting to or producing a total incapacity of the
ship eventually to perform the voyage cannot, upon principles well
established, be admitted to constitute a technical total loss which
will authorize all abandonment. A retardation for the purpose of
repairing damage from the perils insured against, that damage not
exceeding one moiety of the value of the ship, falls directly
within this doctrine. Under
Page 37 U. S. 379
such circumstances, if the ship can be repaired and is repaired
and is thus capable of performing the voyage, there is no ground of
abandonment founded upon the consideration that the voyage may not
be worth pursuing, for the interest of the ship owner or that the
cargo has been injured so that it is not worth transporting further
on tile voyage, for the loss of the cargo for the voyage has
nothing to do with the insurance upon the ship for the voyage.
An insurance on time differs as to this point in no essential
manner from one upon a particular voyage, except in this, that in
the latter case the insurance is upon a specific voyage described
in the policy, whereas a policy on time insures no specific voyage,
but it covers any voyage or voyages whatsoever undertaken within
and not exceeding in point of duration the limited period for which
the insurance is made. But it does not contain an undertaking that
any particular voyage shall be performed within a particular
period. It warrants nothing as to any prolongation or retardation
of the voyage, but only that the ship shall be capable of
performing the voyage undertaken notwithstanding any loss or injury
which may accrue to her during the time for which she is insured,
and of repairing it if interrupted.
There is no principle of law which makes the underwriters liable
in the case of a merely partial loss of the ship if money is taken
up in bottomry for the necessary repairs and expenditures and which
makes it the duty of the underwriters to deliver the ship from the
bottomry bond to the extent of their liability for the
expenditures, and that if they do not, and if the vessel is sold
under the bottomry bond, they are liable not only for the partial
loss, but for all other losses to the owner for their neglect.
The underwriters engage to pay the amount of the expenditures
and losses directly flowing from the perils insured against, but
not any remote or contingent losses to the owner from their neglect
to pay the same.
The underwriters are not bound to supply funds in a foreign port
for the repairs of any damage to the ship occasioned by a peril
insured against. They undertake only to pay the amount after due
notice and proof of the loss and within a prescribed time.
If, to meet the expenditures for repairs, the master is
compelled to take up money on bottomry, and thereby an additional
premium becomes payable, that constitutes a part of the loss for
which the underwriters are liable. But in cases of partial loss,
the money is not taken up on account of the underwriters, but of
the owner, and they become liable for the loss whether the bottomry
bond ever becomes due and payable or not.
In the case of a partial loss, where money is taken up on
bottomry bond to defray the expenditures of repairs, the
underwriters have nothing to do with the bottomry bond, but are
simply bound to pay the partial loss, including their share of the
extra expenses of obtaining the money in that mode, as a part of
the loss.
The case as stated in the opinion of the Court was as
follows:
The original action was upon a policy of insurance dated 22
November, 1832, whereby the defendants, the Maryland Insurance
Company, caused the plaintiffs, by their agents, William
Page 37 U. S. 380
Howell & Son, to be insured, lost or not lost, ten thousand
dollars, at a premium of four percent, on the brig
Gracchus, Snow, master (valued at that sum), at and from
Baltimore, for six calendar months, commencing that day at noon,
and if she be on a passage at the expiration of the time, the risk
to continue at the same rate of premium until her arrival at the
port of destination. The declaration alleged a total loss by the
casting ashore and stranding of the brig on 23 March, 1833, in the
River Mississippi. Upon the trial of the cause, it appeared in
evidence that the brig sailed from Baltimore on a voyage to New
Orleans, and safely arrived there and took on board part of cargo
(pork and sugar) at that port, on a voyage for Baltimore, and about
the middle of 23 March, 1833, sailed from New Orleans, intending to
proceed to Sheppard's Plantation, on the River Mississippi, about
thirty-three miles below New Orleans, to take in the residue of her
cargo for the same voyage. At the English Turn, about twenty-two
miles from New Orleans, the brig attempted to come to anchor, and
in so doing lost the small bower anchor, and then dropped the best
bower anchor, which brought her up. The next morning, while the
brig was proceeding on her voyage, she struck on a log, broke the
rudder pintles, when she fell off and went on shore. A signal was
then made for a steamboat in sight, which came to the assistance of
the brig, and in attempting to haul her off, the hauser parted. It
was then found that the brig was making water very fast; help was
obtained from a neighboring plantation. They commenced pumping and
discharging the cargo on board of the steamboat, and after
discharging all the pork and a part of the sugar, they succeeded in
freeing the ship on the afternoon of the same day. She was then got
off, and proceeded to New Orleans, where she arrived the same
night, she continuing to leak, and both pumps being kept going all
the time. The next day the master understood that the steamboat
claimed a salvage of fifty percent, and intended to libel for it.
On the 27th of the same month, the brig was taken across the river
for repairs. On the same day, the brig was libeled for the salvage
in the District Court of Louisiana.
On 25 March, Snow, the master, wrote a letter to one of the
owners containing an account of the loss and state of the brig, and
also of the claim by the salvors of fifty percent, which the
underwriters on the cargo and himself had objected to, adding
that
Page 37 U. S. 381
they should hold the steamboat liable for any damage that might
be incurred on account of the detention.
The following is a copy of the letter.
"New Orleans, 25 March 1833"
"ISAAC BRADLIE, Esq., Seaford, Delaware."
"Dear Sir: I left here on the 23d inst., to go thirty-six miles
below, to complete loading the brig with sugars for Baltimore; on
the evening of the same day in coming to in the English Turn, in a
heavy blow from the S.E., parted the small bower cable, and lost
the anchor. I then let go the best bower, which brought her up,
where we lay during the night; in the morning of the 24th, got
under way and proceeded down the river; at 7 A.M., struck on a log,
broke the rudder pintles, the brig fell off and went on shore. I
then made a signal for a steamboat which was in sight; she came to
our assistance and attempted to pull us off, but the hauser parted;
we then found that the brig was making water very fast, and that
she would soon fill; got thirty odd negroes from a plantation, and
commenced pumping, and discharging the cargo on board of the
steamboat; after discharging all of the pork and the greater part
of the sugar, we succeeded in freeing of her, at 5 P.M.; we then
got her off and proceeded up to town, where we arrived at 11 P.M.
The owners of the steamboat claim a salvage of fifty percent on
vessel and cargo, which the underwriters of the cargo, with myself,
have objected to. We have not been able to discharge the balance of
the cargo today; what the consequence will be I cannot say. We hold
the owners of the steamboat liable for any damage that may occur on
account of the detention; the brig continues to leak so as to keep
both pumps going almost constantly. About one-half of the sugar is
damaged. I have noted a protest and had a survey, and shall proceed
to have everything done in the most careful manner, as the survey
may direct, for the interest of all concerned; as soon as I am able
to inform you of what will be done, I will do so by the first
opportunity."
On 22 April, Messrs. Howell & Son addressed a letter to the
company, submitting the letter of 25 March to the company, and say
therein,
"In consequence of the damage, together with the detention that
must grow out of a law suit (in which it appears that the vessel is
involved), the voyage being broken up, we
Page 37 U. S. 382
do hereby abandon to you the brig
Gracchus, as insured
in your office per policy No. 13,703, and claim for a total
loss."
On the same day, the company returned an answer, saying,
"We cannot accept the abandonment tendered in your letter of
this date, but expect you to do what is necessary in the case for
the safety and relief of the vessel."
On the 9th of the ensuing May, the district court decreed one
quarter of the value of the vessel and cargo (estimated at seven
thousand dollars) as salvage, the brig being valued at twenty-five
hundred dollars. On the 14th of the same month, the master got
possession again of the brig, the salvage having been paid. On 3
June, 1833, the brig was repaired and ready for a freight, and
early in July she sailed for Baltimore with a partial cargo on
board on freight, and duly arrived there in the latter part of the
same month. The repairs at New Orleans amounted to the sum of one
thousand six hundred and ninety dollars and fifteen cents; in the
share of the brig, at the general average or salvage, to the sum of
one thousand two hundred and forty-five dollars and seven cents; in
the whole amounting to two thousand nine hundred and thirty-five
dollars and twenty-two cents. To meet this sum, and some other
expenses, the master obtained an advance from Messrs. Harrison,
Brown & Co., of New Orleans, of three thousand seven hundred
and fifteen dollars and forty-one cents, and gave them as security
therefor, a bottomry bond on the
Gracchus for the
principal sum and five percent maritime premium, payable on the
safe arrival of the brig at Baltimore.
On this bottomry bond the brig was libeled in Baltimore, and no
claim being interposed by any person, she was, by a decree of the
District Court of Maryland, on 5 September, 1833, ordered to be
sold to satisfy the bottomry bond, and she was accordingly sold by
the marshal about the 20th of the same month to John B. Howell for
four thousand seven hundred and fifty dollars, who, on the 24th of
the same month, paid to the attorney of the libellant the full
amount due under the decree of the court. On the same day, the
president of the company addressed a letter to Messrs. Howell &
Son in which they say
"We have examined the statements of general and particular
average, and the accounts relating thereto which you handed us some
days ago respecting the expenses incurred on the brig
Gracchus at New Orleans. Although some of the charges are
of a description for which the company is not liable
Page 37 U. S. 383
by the terms of their policy, yet wishing to act liberally in
the case, we have agreed to admit every item in the accounts, and
the different amounts will be as follows."
Here follows a statement deducting from the repairs one-third
new for old, and admitting the sum of two thousand four hundred and
nine dollars and eleven cents to be due to the plaintiffs, and
enclosing the premium note and a check for the amount. The letter
then adds,
"If you find any other charge, &c., has been paid at New
Orleans, in order to raise the funds on bottomry, we will pay our
full proportion of the same upon being made acquainted with the
amount."
On the same day, Messrs. Howell & Son returned an answer,
refusing to receive the premium note and check, adding, "We should
do them (the owners) great injustice to make such a settlement. Our
opinion is that, in law and equity, they have a claim for a total
loss."
These are the principal facts material to be mentioned, though
much other evidence was introduced into the cause upon collateral
points, by the parties.
The counsel for the defendants, after the evidence on each side
was closed, moved the court to instruct the jury as follows:
"Defendants' 1st Prayer. -- The defendants, by their counsel,
pray the court to instruct the jury that the notice of abandonment
of 22 April, 1833, and the accompanying letter from captain Snow of
25 March, as given in evidence by the plaintiffs, do not show or
disclose facts which in law justifies the offer to abandon then
made, and therefore that in the absence of all evidence that said
abandonment was accepted by the defendants, the plaintiffs are
entitled to recover only for a partial loss."
"2. That if the said notice of abandonment was sufficient, still
the jury ought to find a verdict for a partial loss only, unless
they shall believe from the evidence that the
Gracchus
suffered damage from the accident that befell her on 24 March,
1833, to more than one-half the sum at which she was valued in the
policy, and that in estimating said damage, the jury ought to take
the cost of her repairs only, deducting one-third therefrom, as in
the case of adjusting a partial loss."
"3. That if the said abandonment was sufficient, as is assumed
in the preceding prayer, still the jury ought to find a verdict for
a partial loss only unless they shall believe upon the evidence
that the damage so sustained by said brig exceeded in amount
one-half the sum at which she was valued in the policy, and that in
estimating the
Page 37 U. S. 384
cost of her repairs for the purpose of ascertaining the amount
of such damage, the jury is bound to deduct one-third therefrom, as
in the case of a partial loss."
"4. That if said abandonment was sufficient, still the jury
ought to find a partial loss only unless it shall believe that the
damage as aforesaid was more than one-half the value of the said
brig at the time the accident happened, according to the proof of
such value as given in evidence, and that in estimating the amount
of such damage, the jury is to take the amounts of the general and
particular averages as adjusted at New Orleans, deducting one-third
from the actual cost of repairs."
But the court refused to give the instructions prayed for, and
gave to the jury the following instruction:
"If the jury finds from the evidence that the
Gracchus
was so damaged by the disaster mentioned in the letter of captain
Snow of March 25, 1833, that she could not be got off and repaired
without an expenditure of money to an amount exceeding half her
value at the port of New Orleans after such repairs were made, then
the plaintiffs are entitled to recover for a total loss under the
abandonment made on 22 April, 1833, and in ascertaining the amount
of such expenditure, the jury must include the sum for which the
brig was liable to the salvors, according to the decree of the
District Court of Louisiana stated in the evidence; but if the jury
find that the vessel could have been got off and repaired without
an expenditure of money to the amount of more than half her value,
then, upon the evidence offered, the plaintiffs are not entitled to
recover for a total loss on the ground that the voyage was retarded
or lost, nor on account of the arrest and detention of the vessel
by the admiralty process issued at the instance of the
salvors."
The defendants excepted to the refusal of the court to give the
instructions prayed and also to the opinion actually given by the
court in its instructions to the jury. The plaintiffs also excepted
to the same opinion given by the court.
The plaintiffs also prayed
"the court to direct the jury, that in this cause, the insured,
by their letter of 22 April, authorized and required the proper
expenditures to be made upon the vessel, for which said
underwriters are liable under their policy, that no funds being
supplied by them in New Orleans to meet this loss, and the salvage
and repairs having been paid for by money raised upon respondentia
upon the vessel, if the jury shall find that said vessel, under the
lien of this bond, came to Baltimore, and the defendants
Page 37 U. S. 385
were then apprised of the existence of such respondentia, and
were also informed of the existence of the proceedings thereupon
against said vessel, and they neglected to pay so much thereof as
they ought to have paid to relieve said vessel, and omitted to
place her in the hands of the owners, discharged of so much of such
bottomry as the underwriters were liable for, and in consequence
thereof said vessel was libeled and condemned and sold, and thereby
wholly lost to the plaintiffs, then the plaintiffs are entitled to
recover for the whole value of the vessel."
The court refused to give this instruction and the plaintiffs
excepted to the refusal, and the court signed a bill of exceptions
upon both exceptions. The jury found a verdict for the plaintiffs
for three thousand four hundred and eighty-nine dollars and
twenty-two cents, upon which judgment passed for the plaintiffs.
And the present writ of error is brought by the plaintiffs for the
purpose of reviewing the instructions above stated so far as they
excepted thereto.
Although the prayers for the instructions by the defendants are
not before the Court for the purpose of direct consideration, as
the defendants have brought no writ of error, yet it is impossible
completely to understand the nature and extent and proper
construction of the opinion given by the court without adverting to
the propositions contained in them, for to them and to them only
was the opinion of the court given as a response.
The second instruction asked by the defendants in substance
insisted that to entitle the plaintiffs to recover for a total
loss, the damage to the
Gracchus from the accident should
be more than one-half the sum at which she was valued in the
policy, and that in estimating the damage, the costs of the repairs
only were to be taken, deducting one-third new for old. In effect,
therefore, it excluded all consideration of the salvage in the
ascertainment of the loss.
The third instruction was in substance similar to the second,
except that it did not insist upon the exclusion of the salvage. In
effect, therefore, it insisted upon the valuation in the policy as
the standard by which to ascertain whether the damage was half the
value of the
Gracchus or not.
The fourth instruction insisted that to entitle the plaintiffs
to recover for a total loss, the damage must exceed one-half the
value of the
Gracchus at the time of the accident, and
that in estimating the damage, the general and particular averages,
as adjusted at New Orleans, were to be taken, deducting one-third
new for old. In effect,
Page 37 U. S. 386
therefore, it insisted that nothing but these adjustments were
to be taken into consideration in ascertaining the totality of the
loss at the time of the abandonment (admitting the abandonment to
be sufficient), however imminent might be the dangers or great the
losses then actually impending over the
Gracchus. And all
three of these prayers further insisted that the deduction of
one-third new for old should be made from the amount of the
repairs, as in the case of a partial loss, in ascertaining whether
there was a right to abandon for a total loss upon the ground that
the damage exceeded a moiety of the value of the vessel.
The jury found a verdict for the plaintiffs for a partial loss,
assessing the damages at three thousand four hundred and
eighty-nine dollars and twenty-two cents, upon which the court gave
a judgment. On this judgment the plaintiffs entered a credit for
four hundred and eighty-five dollars and twenty-two cents, the
amount of the premium note and interest. The plaintiffs prosecuted
this writ of error.
Page 37 U. S. 391
MR. JUSTICE STORY delivered the opinion of the Court:
This cause comes before the Court upon a writ of error to the
Circuit Court of Maryland District. The original action was upon a
policy of insurance dated 22 of November, 1832, whereby the
defendants, The Maryland Insurance Company, caused the plaintiffs
by their agents, William Howell & Son, to be insured, lost or
not lost, ten thousand dollars, at a premium of four percent, on
the brig
Gracchus, Snow, master (valued at that sum), at
and from Baltimore, for six calendar months, commencing that day at
noon, and if she be on a passage at the expiration of the time, the
risk to continue at the same rate of premium until her arrival at
the port of destination. The declaration alleged a total loss by
the casting ashore and stranding of the brig on 23 March, 1833, in
the River Mississippi. Upon the trial of the cause, it appeared in
evidence that the brig sailed from Baltimore on a voyage to New
Orleans, and safely arrived there and took on board part of her
cargo (pork and sugar) at that port on a voyage for Baltimore, and
about the middle of 23 March, 1833, sailed from New Orleans,
intending to proceed to Sheppard's Plantation on the River
Mississippi, about thirty-three miles below New Orleans, to take in
the residue of her
Page 37 U. S. 392
cargo for the same voyage. At the English Turn, about twenty-two
miles from New Orleans, the brig attempted to come to anchor, and
in so doing lost the small bower anchor, and then dropped the best
bower anchor, which brought her up. The next morning, while the
brig was proceeding on her voyage, she struck on a log, broke the
rudder pintles, when she fell off and went on shore. A signal was
then made for a steamboat in sight, which came to the assistance of
the brig, and in attempting to haul her off, the hauser parted. It
was then found that the brig was making water very fast. Help was
obtained from a neighboring plantation. They commenced pumping and
discharging the cargo on board of the steamboat, and after
discharging all the pork and a part of the sugar, they succeeded in
freeing the ship on the afternoon of the same day. She was then got
off and proceeded to New Orleans, where she arrived the same night,
she continuing to leak and both pumps being kept going all the
time. The next day the master understood that the steamboat claimed
a salvage of fifty percent, and intended to libel for it. On the
27th of the same month the brig was taken across the river for
repairs. On the same day the brig was libeled for the salvage in
the District Court of Louisiana.
On 25 March, Snow, the master, wrote a letter to one of the
owners, containing an account of the loss and state of the brig,
and also of the claim by the salvors of fifty percent, which the
underwriters on the cargo and himself had objected to, adding that
they should hold the steamboat liable for any damage that might be
incurred on account of the detention.
On 22 April, Messrs. Howell & Sons addressed a letter to the
company, submitting the letter of 25 March to the company, and say
therein:
"In consequence of the damage, together with the detention that
must grow out of a law suit (in which it appears that the vessel is
involved), the voyage being broken up, we do hereby abandon to you
the brig
Gracchus, as insured in your office, per policy
No. 13,703, and claim for a total loss."
On the same day the company returned an answer saying:
"We cannot accept the abandonment tendered in your letter of
this date, but expect you to do what is necessary in the case for
the safety and relief of the vessel."
On the 9th of the ensuing May, the district court decreed
one-quarter of the value of the vessel and cargo (estimated at
seven thousand dollars) as salvage, the brig being valued at two
thousand five hundred dollars.
Page 37 U. S. 393
On the 14th of the same month, the master got possession again
of the brig, the salvage having been paid. On 3 June, 1833, the
brig was repaired and ready for a freight, and early in July she
sailed for Baltimore with a partial cargo on board on freight, and
duly arrived there in the latter part of the same month. The
repairs at New Orleans amounted to the sum of one thousand six
hundred and ninety dollars and fifteen cents, and the share of the
brig, at the general average or salvage, to the sum of one thousand
two hundred and forty-five dollars and seven cents, in the whole
amounting to two thousand nine hundred and thirty-five dollars and
twenty-two cents. To meet this sum and some other expenses, the
master obtained an advance from Messrs. Harrison, Brown & Co.,
of New Orleans, of three thousand seven hundred and fifteen dollars
and forty-one cents, and gave them as security therefor a bottomry
bond on the
Gracchus for the principal sum, and five
percent maritime premium, payable on the safe arrival of the brig
at Baltimore.
On this bottomry bond the brig was libeled in Baltimore, and no
claim being interposed by any person, she was by a decree of the
District Court of Maryland, on 5 September, 1833, ordered to be
sold to satisfy the bottomry bond, and she was accordingly sold by
the marshal about the 20th of the same month, to John B. Howell for
four thousand seven hundred and fifty dollars, and on the 24th of
the same month there was paid to the attorney of the libellant the
full amount due under the decree of the court. On the same day, the
president of the company addressed a letter to Messrs. Howell &
Son in which he said
"We have examined the statements of general and particular
average, and the accounts relating thereto which you handed us some
days ago respecting the expenses incurred on the brig
Gracchus, at New Orleans. Although some of the charges are
of a description for which the company is not liable by the terms
of their policy, yet, wishing to act liberally in the case, we have
agreed to admit every item in the accounts, and the different
amounts will be as follows."
Here follows a statement, deducting from the repairs one-third
new for old, and admitting the sum of two thousand four hundred and
nine dollars and eleven cents to be due to the plaintiffs, and
enclosing the premium note, and a check for the amount. The letter
then adds,
"If you find any other charge, &c., has been paid at New
Orleans, in order to raise the funds on bottomry, we will pay our
full proportion of the same upon being made acquainted with the
amount."
On the same day, Messrs. Howell & Son
Page 37 U. S. 394
returned an answer refusing to receive the premium note and
check, adding "We should do them (the owners) great injustice to
make such a settlement. Our opinion is that in law and equity they
have a claim for a total loss."
These are the principal facts material to be mentioned, though
much other evidence was introduced into the cause upon collateral
points by the parties.
The counsel for the defendants, after the evidence on each side
was closed, moved the court to instruct the jury as follows:
"Defendants' 1st Prayer -- The defendants, by their counsel,
pray the court to instruct the jury that the notice of abandonment
of 22 April, 1833, and the accompanying letter from captain Snow of
25 March, as given in evidence by the plaintiffs, do not show or
disclose facts which in law justify the offer to abandon then made,
and therefore that, in the absence of all evidence that said
abandonment was accepted by the defendants, the plaintiffs are
entitled to recover only for a partial loss."
"2. That if the said notice of abandonment was sufficient, still
the jury ought to find a verdict for a partial loss only, unless
they shall believe from the evidence that the
Gracchus
suffered damage from the accident that befell her on 24 March,
1833, to more than one-half the sum at which she was valued in the
policy, and that in estimating said damage, the jury ought to take
the cost of her repairs only, deducting one-third therefrom as in
the case of adjusting a partial loss."
"3. That if the said abandonment was sufficient, as is assumed
in the preceding prayer, still the jury ought to find a verdict for
a partial loss only unless it shall believe upon the evidence that
the damage so sustained by said brig exceeded in amount one-half
the sum at which she was valued in the policy, and that in
estimating the cost of her repairs for the purpose of ascertaining
the amount of such damage, the jury is bound to deduct one-third
therefrom, as in the case of a partial loss."
"4. That if said abandonment was sufficient, still the jury
ought to find a partial loss only, unless it shall believe that the
damage as aforesaid was more than one-half the value of the said
brig at the time the accident happened, according to the proof of
such value as give in evidence, and that in estimating the amount
of such damage, the jury is to take the amounts of the general and
particular averages
Page 37 U. S. 395
as adjusted at New Orleans, deducting one-third from the actual
cost of repairs."
But the court refused to give the instruction prayed for, and
gave to the jury the following instruction:
"If the jury find from the evidence, that the
Gracchus
was so damaged by the disaster mentioned in the letter of captain
Snow of March 25, 1833, that she could not be got off and repaired
without an expenditure of money to an amount exceeding half her
value at the port of New Orleans after such repairs were made, then
the plaintiffs are entitled to recover for a total loss under the
abandonment made on 22 April, 1833, and in ascertaining the amount
of such expenditure, the jury must include the sum for which the
brig was liable to the salvors according to the decree of the
District Court of Louisiana stated in the evidence, but if the jury
find that the vessel could have been got off and repaired without
an expenditure of money to the amount of more than half her value,
then upon the evidence offered, the plaintiffs are not entitled to
recover for a total loss on the ground that the voyage was retarded
or lost, nor on account of the arrest and detention of the vessel
by the admiralty process issued at the instance of the
salvors."
The defendants excepted to the refusal of the court to give the
instructions prayed, and also to the opinion actually given by the
court in their instructions to the jury. The plaintiffs also
excepted to the same opinion given by the court.
The plaintiffs also prayed
"the court to direct the jury that in this cause the insured, by
their letter of 22 April, authorized and required the proper
expenditures to be made upon the vessel, for which said
underwriters are liable under their policy; that no funds being
supplied by them in New Orleans to meet this loss, and the salvage
and repairs having been paid for by money raised upon respondentia
upon the vessel, if the jury shall find that said vessel, under the
lien of this bond, came to Baltimore, and the defendants were then
apprised of the existence of such respondentia, and were also
informed of the existence of the proceedings thereupon against said
vessel, and they neglected to pay so much thereof as they ought to
have paid to relieve said vessel, and omitted to place her in the
hands of the owners, discharged of so much of such bottomry as the
underwriters were liable for, and in consequence thereof said
vessel was libeled and condemned and sold and thereby wholly lost
to the
Page 37 U. S. 396
plaintiffs, then the plaintiffs are entitled to recover for the
whole value of the vessel."
The court refused to give this instruction, and the plaintiffs
excepted to the refusal, and the court signed a bill of exceptions
upon both exceptions. The jury found a verdict for the plaintiffs
for three thousand four hundred and eighty-nine dollars and
twenty-two cents, upon which judgment passed for the plaintiffs.
And the present writ of error is brought by the plaintiffs for the
purpose of reviewing the instructions above stated so far as they
excepted thereto.
Although the prayers for the instructions by the defendants are
not before the Court for the purpose of direct consideration, as
the defendants have brought no writ of error, yet it is impossible
completely to understand the nature and extent, and proper
construction of the opinion given by the court without adverting to
the propositions contained in them, for to them, and to them only
was the opinion of the court given as a response.
The second instruction asked by the defendants in substance
insisted, that to entitle the plaintiffs to recover for a total
loss, the damage to the
Gracchus from the accident should
be more than one-half the sum to which she was valued in the
policy, and that in estimating that damage, the costs of the
repairs only were to be taken, deducting one-third new for old. In
effect, therefore, it excluded all consideration of the salvage in
the ascertainment of the loss.
The third instruction was in substance similar to the second,
except that it did not insist upon the exclusion of the salvage. In
effect, therefore, it insisted upon the valuation in the policy as
the standard by which to ascertain whether the damage was half the
value of the
Gracchus or not.
The fourth instruction insisted that to entitle the plaintiffs
to recover for a total loss, the damage must exceed one-half the
value of the
Gracchus at the time of the accident, and
that in estimating the damage, the general and particular averages,
as adjusted at New Orleans, were to be taken, deducting one-third
new for old. In effect, therefore, it insisted that nothing but
these adjustments were to be taken into consideration in
ascertaining the totality of the loss at the time of the
abandonment (admitting the abandonment to be sufficient), however
imminent might be the dangers or great the losses then actually
impending over the
Gracchus. And all three of these
prayers further insisted that the deduction of one-third new for
old should be made from the amount of the repairs, as in the case
of a
Page 37 U. S. 397
partial loss, in ascertaining whether there was a right to
abandon for a total loss upon the ground that the damage exceeded a
moiety of the value of the vessel.
The instructions of the court actually given in these prayers
involve the following propositions. 1. That if the expenditures in
repairing the damage exceeded half the value of the brig at the
port of New Orleans, after such repairs were made, including
therein the salvage awarded to the salvors, the plaintiffs were
entitled to recover for a total loss under the abandonment made on
22 April, 1833. 2. If the expenditures to get off and repair the
brig were less than the half of such value, then the plaintiffs
were not entitled to recover for a total loss upon the ground that
the voyage was retarded or lost nor on account of the arrest and
detention of the brig under the admiralty process for the
salvage.
The question is whether these instructions were correct. In
considering the first, it is material to remark that by the well
settled principles of our law, the state of the facts, and not the
state of the information at the time of the abandonment,
constitutes the true criterion by which we are to ascertain whether
a total loss has occurred or not for which an abandonment can be
made. If the abandonment, when made, is good, the rights of the
parties are definitively fixed, and do not become changed by any
subsequent events. If, on the other hand, the abandonment, when
made, is not good, subsequent circumstances will not affect it so
as retroactively to impart to it a validity which it had not at its
origin. In some respects, our law on this point differs from that
of England, for by the latter, the right to a total loss vested by
an abandonment may be divested by subsequent events which change
that total loss into a partial loss. It is unnecessary to cite
cases on this subject, as the diversity is well known, and the
courts in neither country have shown any disposition of late years
to recede from their own doctrine. The cases of
Rhinelander
v. Insurance Company of Pennsylvania, 4 Cranch 29,
and
Marshall v. Delaware Insurance
Company, 4 Cranch 202, are direct affirmations of
our rule, and those of
Bainbridge v. Neilson, 10 East 329;
Patterson v. Ritchie, 4 M. & Selw. 394; and
McIver
v. Henderson, 4 M. & Selw. 584, of the English rule.
In cases where the abandonment is founded upon a supposed
technical total loss by a damage or injury exceeding one-half the
value of the vessel, although the fact of such damage or injury
must exist
Page 37 U. S. 398
at the time, yet it is necessarily open to proofs to be derived
from subsequent events. Thus, for example, if the repairs, when
subsequently made, clearly exceed the half value, it is plain that
this affords one of the best proofs of the actual damage or injury.
On the other hand, if the subsequent repairs are far below the half
value, this, so far as it goes, affords an inference the other way.
But it is not and in many cases cannot be decisive of the right to
abandon. In many cases of stranding, the state of the vessel at the
time may be such, from the immanency of the peril and the apparent
extent of expenditures required to deliver her from it, as to
justify an abandonment although, by some fortunate occurrence, she
may be delivered from her peril without an actual expenditure of
one-half of her value after she is in safety. Under such
circumstances, if in all human probability the expenditures which
must be incurred to deliver her from her peril are, at the time, so
far as any reasonable calculations can be made, in the highest
degree of probability beyond half value, and if her distress and
peril be such as would induce a considerate owner, uninsured, and
upon the spot, to withhold any attempt to get the vessel off
because of such apparently great expenditures, the abandonment
would doubtless be good. It was to such a case that Lord
Ellenborough alluded, in
Anderson v. Wallis, 2 M. &
Selw., when he said:
"There is not any case nor principle which authorizes an
abandonment unless where the loss has been actually a total loss or
in the highest degree probable at the time of the abandonment."
Mr. Chancellor Kent in his learned Commentaries, vol. 3, 321,
has laid down the true results of the doctrine of law on this
subject.
"The right of abandonment [says he] does not depend upon the
certainty, but upon the high probability of a total loss either of
the property or of the voyage or both. The insured is to act not
upon certainties, but upon probabilities, and if the facts present
a case of extreme hazard and of probable expense exceeding half the
value of the ship, the insured may abandon, though it should happen
that she was afterwards recovered at a less expense."
We have no difficulty, therefore, in acceding to the argument of
the counsel for the plaintiffs in error on this point. But its
application to the ruling of the court will be considered
hereafter.
In respect to the mode of ascertaining the value of the ship,
and, of course, whether she is injured to the amount of half her
value, it has upon the fullest consideration been held by this
Court that the true basis of the valuation is the value of the ship
at the time of the
Page 37 U. S. 399
disaster, and that if after the damage is or might be repaired
the ship is not or would not be worth, at the place of the repairs,
double the cost of the repairs, it is to be treated as a technical
total loss. This was the doctrine asserted in the
Patapsco
Insurance Company v. Southgate, 5 Pet. 604, in
which the court below had instructed the jury that if the vessel
could not have been repaired without an expenditure exceeding half
her value at the port of the repairs after the repairs were made,
it constituted a total loss. This Court held that instruction to be
entirely correct. In follows from this doctrine that the valuation
of the vessel in the policy, or the value at the home port, or in
the general market of other ports, constitutes no ingredient in
ascertaining whether the injury by the disaster is more than
one-half the value of the vessel or not. For the like reason, the
ordinary deduction in cases of a partial loss of one-third new for
old from the repairs is equally inapplicable to cases of a
technical total loss by an injury exceeding one-half of the value
of the vessel. That rule supposes the vessel to be repaired and
returned to the owner, who receives a correspondent benefit from
the repairs beyond his loss, to the amount of the one-third. But in
the case of a total loss, the owner receives no such benefit; the
vessel never returns to him, but is transferred to the
underwriters. If the actual cost of the repairs exceeds one-half of
her value after the repairs are made, then the case falls directly
within the predicament of the doctrine asserted in the case of
30 U. S. 5 Pet.
604. The same limitations of the rule, and the reasons of it, are
very accurately laid down by Mr. Chancellor Kent in his
Commentaries, 3 vol. 330, and in
Da Costa v. Newnham, 2
Term 407.
If, with these principles in view, we examine the first
instruction given in this case in the circuit court, it will be
found to be perfectly correct. Indeed, that part of the instruction
which declares that if the brig
"could not be got off and repaired without an expenditure of
money to an amount exceeding half her value at the port of New
Orleans after such repairs were made, then the plaintiffs are
entitled to recover for a total loss under the abandonment"
is precisely in the terms of the instruction given in
Patapsco Insurance Company v.
Southgate, 5 Pet. 604. The error, which has been
insisted on at the argument by the plaintiffs, is in the additional
direction that
"in ascertaining the amount of such expenditure, the jury must
include the sum for which the brig was liable to the salvors,
according to the decree of the District Court of Louisiana, stated
in
Page 37 U. S. 400
the evidence,"
which, it is contended, removed from the consideration of the
jury the right to take into the account the high probability at the
time of the abandonment of the allowance of a greater salvage, and
even to the extent of the fifty percent then claimed by the
salvors. And in support of the argument it is insisted that the
state of the facts, and the high probabilities at the time of the
abandonment, constitute the governing rule, and not the ultimate
result in the subsequent events. But it appears to us that the
argument is founded upon a total misunderstanding of the true
import of this part of the instruction. The court did not undertake
to say and did not say that the jury might not properly take into
consideration the high probability of a larger salvage at the time
of the abandonment, but simply that the jury must include in the
half value the amount of the actual salvage decreed, because that
was in truth a part of the loss. The instruction was therefore not
a limitation restrictive of the rights and claims of the
plaintiffs, but in fact a direction in favor of their rights and
claims and in support of the abandonment. This is demonstrated by
the then actual position of the cause. The defendants had asked an
instruction that the costs of the repairs only, exclusive of the
salvage, should be taken into consideration in estimating the half
value, and also that the one-third new for old should be deducted
from the amount of the cost in estimating the half value. The court
in effect negatived both instructions, and in the particulars now
objected to there was a positive direction to the jury not to
exclude, but to include, the salvage in the estimate of the loss.
In this view of the matter, the instruction was most favorable to
the plaintiffs, and so far from excluding evidence which might show
the amount of the actual damage at the time of the abandonment, it
resorted, and very properly resorted, to the subsequent
ascertainment of salvage as positive evidence, that to that extent
at least, the actual damage was enhanced beyond the cost of the
repairs. We are entirely satisfied with this part of the
instruction in this view, which seems to us to be the true
interpretation of it.
In respect to the other part of the instruction there is no
substantial difficulty. The mere retardation of the voyage by any
of the perils insured against, not amounting to or producing a
total incapacity of the ship eventually to perform the voyage,
cannot, upon principles well established, be admitted to constitute
a technical total loss which will authorize an abandonment. A
retardation for the purpose of repairing damages from the perils
insured against, that
Page 37 U. S. 401
damage not exceeding one moiety of the value of the ship, falls
directly within this doctrine.
Under such circumstances, if the ship can be repaired and is
repaired, and is thus capable of performing the voyage, there is no
ground of abandonment founded upon the consideration that the
voyage may not be worth pursuing for the interest of the ship
owner, or that the cargo has been injured, so that it is not worth
transporting further on the voyage, for the loss of the cargo for
the voyage has nothing to do with an insurance upon the ship for
the voyage. This was expressly held by this Court in the case of
Alexander v. Baltimore
Insurance Company, 4 Cranch 370, where it was
decided that an insurance on a ship for a voyage was not to be
treated as an insurance on the ship and the voyage or as an
undertaking that she shall actually perform the voyage, and only
that notwithstanding any of the perils insured against, she shall
be of ability to perform the voyage, and that the underwriters will
pay any damage sustained by her from those perils during the
voyage.
The court further held that upon such an insurance, a total loss
of the cargo for the voyage was not a total loss of the ship for
the voyage. In respect to the point of retardation for repairs, the
more recent authorities contain reasoning altogether satisfactory
and consistent with the true nature and objects of policies of
insurance. The subject was a good deal discussed in the case of
Anderson v. Wallis, 2 Maule & Selw. 240, which was a
policy on cargo, and again in
Everth v. Smith, 2 M. &
Selw. 278, which was a policy on freight, and again in
Falkner
v. Ritchie, 2 M. & Selw. 290, which was a policy on ship,
and in each of the cases the court came to the conclusion that a
mere retardation of the voyage by any peril insured against did not
entitle the insured to recover for a total loss if the thing
insured was capable of performing the voyage. Lord Ellenborough in
the first case said:
"Disappointment of arrival is a new head of abandonment in
insurance law. . . . If the retardation of the voyage be a cause of
abandonment, the happening of any marine peril to the ship by which
a delay is caused in her arrival at the earliest market would also
be a cause of abandonment. I am well aware that an insurance upon a
cargo for a particular voyage contemplates that the voyage shall be
performed with that cargo, and any risk which renders the cargo
permanently lost to the assured, may be a cause of abandonment. In
like manner a total loss of cargo may be effected not merely by the
destination of that cargo, but by a permanent incapacity of the
ship
Page 37 U. S. 402
to perform the voyage -- that is, a destruction of the
contemplated adventure. But the case of an interruption of the
voyage does not warrant the assured in totally disengaging himself
from the adventure and throwing this burden on the
underwriters."
In
Falkner v. Ritchie, 2 M. & Selw. 290, his
Lordship added: "What has a loss of the voyage to do with a loss of
the ship?" meaning, as the context shows, that the loss of the
voyage is no ground of abandonment where the ship is not damaged to
an extent which permanently disables her to perform it. The same
doctrine was affirmed in
Hunt v. Royal Exchange Assurance
Company, 5 M. & Selw. 47, and in
Naylor v.
Taylor, 9 Barn. & Cresw. 718. And it was long ago
recognized by this Court by necessary implication in the case of
Alexander v. Baltimore
Insurance Company, 4 Cranch 370, and
Smith v. Universal Insurance
Company, 6 Wheat. 176. In this latter case, the
Court said:
"The insurers do not undertake that the voyage shall be
performed without delay, or that the perils insured against shall
not occur. They undertake only for losses sustained by those
perils, and if any peril does act upon the subject, yet if it be
removed before any loss takes place, and the voyage be not thereby
broken up, but is or may be resumed, the insured cannot abandon for
a total loss."
Language more explicit upon this point could scarcely have been
used.
Nor is there any -- the slightest -- difference in law whether
the retardation or temporary suspension of the voyage be for the
purpose of repairs or to meet any other exigency which interrupts,
but does not finally defeat the actual resumption of it. The
detention of the ship under the admiralty proceedings does not,
therefore, in any manner change the posture of the case. It is
admitted on all sides, and indeed it admits of no legal
controversy, that this detention cannot be construed to be a
substantive peril within the clause of the policy respecting
"restraints and detainments of all kings, princes or people," for
the restraints and detainments there alluded to are the operations
of the sovereign power by an exercise of the
vis major, in
its sovereign capacity, controlling or divesting for the time the
dominion or authority of the owner over the ship, and not
proceedings of a mere civil nature to enforce private rights
claimed under the owner for services actually rendered in the
preservation of his property. This indeed, if it admitted of any
doubt, would be disposed of by the reasoning of the court in
Nesbitt v. Lushington, 4 Term R. 783, and
Thornely v.
Hebson, 2 Barn. & Ald. 513.
See
Page 37 U. S. 403
also 3 Kent's Comm. 304, 326. In truth, the detention
by the admiralty process was in this case, as is apparent from the
admitted facts, a mere retardation of the voyage. The brig was
delivered from that proceeding, the salvage was paid, and she not
only was capable, but did in fact resume and complete her voyage to
Baltimore.
The considerations already suggested dispose of the other point
raised under this instruction as to the loss of the voyage. It is
apparent that the loss of the voyage spoken of and necessarily
implied in this instruction upon the admitted state of the facts
was the loss of the cargo for the voyage, and not the loss of the
vessel by incapacity to perform the voyage. If the vessel could, as
the instruction supposes, be got off and repaired without an
expenditure exceeding half her value, and be thereby enabled to
resume the voyage, it is plain that the loss of the cargo for that
voyage constituted no total loss of the vessel for the voyage. It
was absolutely impossible for the court, upon the authorities
already cited, to arrive at any other conclusion.
The state of things at the time of the abandonment did not
demonstrate any incapacity of the ship to resume her voyage after
the repairs, and in point of fact, as has been already suggested,
she not only did resume it but actually performed it. The insurance
was upon time, and the policy actually expired by its own
limitation upon 22 May, 1833, before she had actually resumed her
voyage. But that can make no difference. An insurance on time
differs as to this point in no essential manner whatsoever from an
insurance upon a particular voyage except in this -- that in the
latter case the insurance is upon and for a specific voyage
described in the policy, whereas a policy on time insures no
specific voyage, but it covers any voyage or voyages whatsoever
undertaken within, and not exceeding in point of duration, the
limited period for which the insurance is made. But an insurance on
time by no means contains any undertaking on the part of the
underwriters that any particular voyage undertaken by the insured
within the prescribed period shall be performed before the
expiration of the policy. It warrants nothing as to any retardation
or prolongation of the voyage, but only that the ship shall be
capable of performing the voyage undertaken notwithstanding any
loss or injury which may accrue to her during the time for which
she is insured, and of resuming it if interrupted. In other words,
the undertaking is that the ship shall not, by the operation of any
peril insured against during the time
Page 37 U. S. 404
for which the policy continues, be totally and permanently lost
or disabled from performing the voyage then in progress or any
other voyage within the scope of the policy. The case of
Pole
v. Fitzgerald, Willes 641;
S.C. Amber 214, affords a
striking illustration of this doctrine, and whatever doubts may be
entertained as to some of the
dicta in that case, lord
Ellenborough has well said that it may be of great use to resort to
it in order to purify the mind from these generalities, respecting
the loss of the voyage of the ship, constituting,
per se,
a loss of the ship.
Falkner v. Ritchie, 2 Maule &
Selw. 293. There is no error, then, in the instructions actually
given to the jury in the response of the court to those asked by
the defendants.
In the next place as to the instruction asked by the plaintiffs
and refused by the court. In substance it insisted that if the
underwriters had authorized the expenditures to be made for the
repairs, and had not supplied the appropriate funds for these
repairs and for the salvage, and the bottomry bond was given to
secure them, and the underwriters were apprised of the admiralty
proceedings at Baltimore, and there neglected to pay so much
thereof as they ought to have paid to discharge the same, and that
the vessel in consequence thereof was sold under these proceedings,
then the plaintiffs were entitled to recover for the whole value of
the vessel. This instruction, it may be remarked, proceeds upon the
supposition that there was not a technical total loss entitling the
plaintiffs to abandon, and that the abandonment of 22 April was not
available for the plaintiffs. For, if it had been, then the
underwriters would have become from that time the owners of the
ship, and the subsequent losses, whatever they might be, would be
on their sole account. The case put, then, supposes that in point
of law, in the case of a merely partial loss to the ship, if money
is taken up on bottomry for the necessary repairs and expenditures,
it becomes the duty of the underwriters to deliver the ship from
the bottomry bond to the extent of their liability for the
expenditures, and that if they do not and the vessel is sold under
the bottomry bond, they are liable not only for the partial loss,
but for all other losses to the owner from their neglect. We know
of no principle of law which justifies any such doctrine. The
underwriters engage to pay the amount of the expenditures and
losses directly flowing from the perils insured against, but not
any remote or consequential losses to the owners from their neglect
to pay the same. It might be as well contended
Page 37 U. S. 405
that if by the neglect to pay a partial loss the owners were
prevented from undertaking a new and profitable voyage, the
underwriters would be responsible to them for such consequential
loss.
The maxim here, as in many other cases in the law, is
causa
proxima non remota spectatur. The underwriters are not bound
to supply funds in a foreign port for the repairs of any damage to
the ship, occasioned by a peril insured against. They undertake
only to pay the amount after due notice and proof of the loss, and
usually this is to be done (as was in fact the present case) after
a prescribed time from such notice and proof of the loss. If to
meet the expenditures for the repairs, the master is compelled to
take up money on bottomry, and thereby an additional premium
becomes payable, that constitutes a part of the loss for which the
underwriters are liable. But in cases of a partial loss, the money
upon bottomry is not taken up on account of the underwriters, but
of the owner, and they become liable to the payment of the loss
whether the bottomry bond ever becomes due and payable or not. In
short, with the mode by which the owner obtains the necessary
advances, they have nothing to do, except that they must bear their
share of the increased expenses to furnish the repairs as a common
sacrifice. Indeed, it seems difficult to understand upon what
ground it is that in case of a partial loss the owner is exonerated
from the duty of delivering his own ship from the lien of the
bottomry bond, and is at liberty to throw upon the underwriters the
whole obligation of discharging it under the penalty of being
otherwise responsible in case of a sale -- not for their share of
the loss (assuming that they were at all bound to discharge any
part of the bond), but for the whole loss. Upon what ground can it
be said that the loss of the vessel by the sale in this case is
attributable to the neglect of the underwriters which does not
equally apply to the owners. They had at least, upon their own
argument, an equal duty to perform, for the underwriters were not
liable for the whole amount of the bottomry bond, but for a part
only, and the owners were bound to discharge the residue. How,
then, can they call upon the underwriters to pay them a total loss
on account of a sale, which upon their own argument was as much
attributable to their own neglect as to that of the underwriters.
But we wish to be understood as putting this point upon its true
ground in point of law, and that is that in the case of a partial
loss, where money is taken up on bottomry bond, to defray the
expenditures to repair it, the underwriters have nothing to do with
the bottomry
Page 37 U. S. 406
bond, but are simply bound to pay the partial loss, including
their share of the extra expenses of obtaining the money in that
mode, as a part of the loss. If it were otherwise, any partial
loss, however small, might, if money were taken up on bottomry to
meet it, be converted at the will of the owner into a total loss if
the underwriters should neglect to pay to the owner the amount of
such partial loss. The case of
Thornely v. Hebson, 2 Barn.
& Ald. 513, inculcates a very different doctrine. It was there
held that even in the case of a libel for salvage, it is the duty
of the owner, if he can, to raise the money to pay the salvage, and
if he makes no such attempt, but suffers the ship to be sold under
the admiralty process, he cannot thereby convert a loss which is
partial into a total loss. And it was there further said by Mr.
Justice Bayley (what is entirely applicable to the present case)
that the sale, in order to constitute a total loss in such a case,
must be from necessity and wholly without the fault of the
owner.
The instruction asked in the present instance seems to have
proceeded wholly upon the ground of the doctrine asserted in the
case of
Da Costa v. Newnham, 2 Term 407. But assuming that
case to have been decided with entire correctness upon its own
particular circumstances, it seems difficult, consistently with the
principles of law, to apply the doctrine to cases which are not
exactly in the same predicament, and it is not the first time that
an attempt has been made to press that case into the service of
other cases which are essentially different. The whole argument
turns upon this -- that the brig never came into the hands of the
owner free from the lien of the bottomry bond, and therefore the
total loss by the sale is properly attributable to the neglect of
the underwriters. But the same argument would equally have applied
if there had been for the first time admiralty proceedings in the
home port against the brig (without any bottomry bond having been
given) for the repairs thus made in a foreign port, as well as for
the salvage. Yet no doubt could have been entertained that under
such circumstances the underwriters would not have been bound to
deliver the vessel from the liens thus incurred at the peril of
otherwise becoming answerable for a total loss. In what essential
particular is the case changed by the substitution of an express
lien by bottomry for an implied lien by the maritime law? In none
that we can perceive.
But what were the circumstances of the case of
Da Costa v.
Newnham? In that case, the insurance was for a voyage from
Leghorn to
Page 37 U. S. 407
London. The ship met with an accident in the course of the
voyage, and put into Nice for repairs. Upon receiving notice
thereof, the assured wished to abandon, and indeed was entitled to
abandon, but the underwriters insisted upon the ship's being
repaired, telling him to pay the tradesmen's bills. He consented,
at last, that the repairs should be done, but refused to advance
any money, in consequence of which it became necessary to take up a
large sum of money on a bottomry bond to defray the expenses. The
ship resumed and performed her voyage, and after her arrival, the
underwriters were applied to take up the bottomry bond, but they
refused. Admiralty proceedings were, as it should seem, accordingly
instituted, and the ship was sold for six hundred guineas, the
bottomry bond being for six hundred pounds, which, with the
interest, amounted to a larger sum,
viz., six hundred and
seventy-eight pounds.
The question under these circumstances was, whether the
plaintiff was entitled to recover. Mr. Justice Buller, who tried
the cause, was of opinion, under the circumstances, that for all
the subsequent injury which had accrued to the owner in consequence
of the refusal of the underwriters to discharge the bottomry bond,
and by which the owner was damnified to the full amount of the
insurance, the underwriters were liable, because it was their own
fault in not taking up the bond for the expenses of those repairs,
which had been incurred by their own express directions, and the
only remaining question was how the average was to be calculated.
The jury found a verdict for the owner for sixty-two pounds
nineteen shillings, which, together with seventeen pounds ten
shillings paid into court by the underwriters, they calculated as
the average loss, percent which the owner was entitled to. A motion
was afterwards made for a new trial and refused by the court
substantially upon the grounds maintained by the learned judge at
the trial.
From this statement of the facts and the reasoning of the court
applicable thereto in the case of
Da Costa v. Newnham it
is apparent that in that case the actual cost of the repairs
(including of necessity the bottomry premium) exceeded the actual
value of the ship; that the underwriters had fully authorized all
these repairs, and had expressly promised to pay all the costs of
the repairs and the necessary incidents. The owner of the ship, at
the termination of the voyage, never came into the possession of
the ship free from the lien of the bottomry bond, for the whole
amount of which, as it included nothing but the costs and incidents
of the repairs, the underwriters
Page 37 U. S. 408
were liable, and which, by necessary implication, they had
promised to pay. The sum claimed by the owner of the underwriters
was in fact less than the amount of the cost of the repairs, that
cost being six hundred and seventy-eight pounds, whereas the loss
claimed was a total loss of the ship, which sold for six hundred
guineas only, and it seems that the insurance was on an open
policy.
The question, in effect, therefore was whether the owner was not
entitled to recover the full amount of the insurance, which was the
amount of his actual loss directly arising from the breach of the
promise of indemnity made to him by the underwriters. Upon such a
point there should not seem to be much reason for any real
juridical doubt.
Now there are essential distinctions between that case and the
present. In the first place, the repairs in this case were not made
under any positive engagement of the underwriters beyond what the
policy, by its own terms, necessarily included. The language of the
underwriters in their answers, refusing the abandonment, in our
judgment imports no more than this. It merely says, "we expect you
to do what is necessary in the case for the safety and relief of
the vessel." It was rather an admonition than a contract; a warning
that the underwriters would hold the owners to the performance of
all the duties imposed upon them by law, and not any promise as to
their own obligations. In the next place, in the present case, the
loss is to be taken upon the very form of the instruction, prayed
to be a partial loss only, and as to the repairs, the underwriters
were clearly, in such a case, entitled to the deduction of
one-third new for old. In the case of
Da Costa v. Newnham,
the loss was treated by the court as a technical total loss on
account of the amount required for the necessary repairs. In the
next place, in that case the insured asked only to recover the
amount of the costs of the repairs, which in fact exceeded the
value of the ship; in the present case, the cost of the repairs and
the salvage, for which the underwriters were liable, fell short of
the half value, and yet the plaintiffs insist to recover for a
total loss. In the next place, in that case the underwriters, by
their refusal to make any advances, compelled and indeed authorized
the owner to resort to a bottomry bond to supply the means of
repairing the loss, and of course, as has been already intimated,
the underwriters, by necessary implication, undertook to indemnify
the owner against the lien and burden of the whole of
Page 37 U. S. 409
that bond in consideration of his undertaking to cause the
repairs to be made.
The refusal to make good that promise was the direct and
immediate cause of the loss and sale of the ship. In the present
case, the bottomry bond included charges and amounts for which the
underwriters were not liable. How then can it be inferred from the
facts stated in the instructions that the underwriters, by
implication and without consideration, undertook to indemnify the
plaintiffs against the whole bottomry bond, for the payment of a
part of which only they were by law responsible?
So that, admitting the authority of
Da Costa v. Newnham
to the fullest extent which its own circumstances warrant, it
stands upon grounds entirely distinguishable from those which ought
to govern the present case. If the underwriters in the present case
had authorized the whole expenditures on their sole account and had
promised to save the plaintiffs harmless from the whole amount of
the bottomry bond, and the plaintiffs had made the expenditures and
procured the advances for this purpose upon the faith of such
authority and promise, a very different case would have been
presented for our consideration. At present it is only necessary to
say that the instruction before us states no such case and calls
for no such question, and therefore
Da Costa v. Newnham
cannot be admitted to govern the present case.
Upon the whole, our opinion is that there is no error in the
instructions given or refused by the circuit court, and the
judgment is therefore
Affirmed with costs.
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the District of
Maryland and was argued by counsel. On consideration whereof it is
now here ordered and adjudged by this Court that the judgment of
the said circuit court in this cause be and the same is hereby
affirmed with costs and damages at the rate of six percentum per
annum.
