In an insurance upon freight, there is no total loss of a
memorandum article as long as the goods have not lost their
original character, but remain in specie, and in that condition are
capable of being shipped to their destined port, no matter what may
be the extent of the damage.
If, however, the articles are not capable of being carried in
specie to the port of destination, arising from danger to the
health of the crew or to the safety of the vessel, or the public
authorities at the port of distress order the articles to be thrown
overboard from fear of disease, there would be a total loss.
In construing the contract of insurance upon freight, the
interest of the insured or of the underwriters of the cargo is not
considered. Therefore, if the vessel is in a condition to carry on
the cargo to the port of destination or another vessel can be
procured for that purpose, it is the duty of the owner of the
vessel to carry it on, although it may be for the interest of the
insured and insurers of the cargo to sell it at the port of
distress.
If so sold, the insured cannot recover for a total loss of
freight.
But although it is the duty of the owner of the vessel either to
repair his own or to procure another at the port of distress to
carry on the cargo, yet if it should be made to appear that the
repairs or procurement of another vessel would necessarily produce
such a retardation of the voyage as would in all probability
occasion a destruction of the article in specie before it could
arrive at the port of destination, or from its damaged condition it
could not be reshipped in time consistently with the health of the
crew or safety of the vessel, or would not be in a fit condition,
from pestilential effluvia or otherwise, to be carried on, it then
became the duty of the master to sell the goods for the benefit of
whom it might concern.
A policy of insurance upon
"freight of the bark
Margaret Hugg at and from
Baltimore to Rio Janeiro and back to Havana or Matanzas or a port
in the United States, to the amount of $5,000, upon all lawful
goods &c., beginning the adventure upon the said freight from
and immediately following the lading thereof aforesaid at
Baltimore, and continuing the same until the said goods, wares, and
merchandise shall be safely landed at the port aforesaid,"
upon which a greater premium was paid than was usual for the
outward voyage alone, must not be construed as a policy upon the
round voyage.
The insurers were therefore not entitled to a deduction for the
outward freight.
The Reporter finds the following statement prefixed to the
opinion of the court, as delivered by MR. JUSTICE NELSON.
This is an action upon a policy of insurance on the freight of
the bark
Margaret Hugg, at and from Baltimore to Rio
Janeiro and back to Havana or Matanzas, with liberty to touch and
stay at any intermediate port in case of stress of weather or for
the purpose of transacting business. The amount $5,000; premium,
$158.25.
The policy contained the usual memorandum, enumerating various
articles warranted free from average and all others that were
perishable in their own nature.
About four hundred tons of jerked beef were shipped on board the
vessel at Montevideo, which were to be delivered in good order at
the port of Matanzas or Havana to the consignees,
Page 48 U. S. 596
they paying freight. The bill of lading was signed 25 April,
1842.
The vessel sailed from Montevideo on 29 April, and, after being
out some forty-seven days, encountered a storm and was driven on
Gingerbread Ground, where she received considerable damage; the
rudder was broken and unshipped, and as the extent of the damage
could not be ascertained, it was deemed prudent, on consultation
with the captain of a wrecking vessel and Bahama pilot, to go into
Nassau for the purpose of a survey and repairs. The wind was fair
for that port, but strong ahead in the direction of Matanzas. The
vessel was taken in charge of one of the wreckers, and arrived at
Nassau on the second day, about 20 June, and grounded on the bar
while entering the harbor and under the charge of the King's pilot,
and sustained a good deal additional damage.
A part of the beef had been thrown overboard to lighten the
vessel while on the Gingerbread Ground, and a much larger quantity
while on the bar at Nassau. She had leaked while on the ground in
the former place, so that it was necessary to work the pumps every
half hour, and at the latter there was seven or eight feet of water
in the hold, with some fourteen men at the pumps.
The beef was so much damaged by the sea water that the board of
health at Nassau refused to allow but about one hundred and fifty
tons to be landed. The rest was ordered to be carried outside the
bar and thrown into the sea for fear of disease; it was wet and
very much heated, some of it so changed as to become green, and all
emitting an offensive stench. The portion allowed to be landed was
wet and heated, and not in a fit condition to be shipped, and the
board of health recommended to the authorities that it should be
removed as soon as conveniently could be.
The vessel was surveyed after the cargo was discharged, and it
was found that the rudder was entirely broken off, the forefoot
gone, and the keel greatly shattered and damaged, and it appears to
be conceded that she could not have been repaired at that port so
as to have carried on the cargo, and that, if she could, it would
have cost more than half her value. She was repaired sufficiently
to bring her home in ballast. It also appears that there was no
vessel in port that could be procured to forward on the remaining
cargo even if it had been in a condition to be shipped.
The salvors libeled the vessel and cargo for salvage services in
the Vice-Admiralty Court of the Bahamas on 30 June, 1842, to which
the master put in an answer on 7
Page 48 U. S. 597
July, insisting that the libellants were entitled to
compensation for pilotage only, and not for salvage.
The court, on 18 July, decreed $2,100 salvage to the libellants
for services rendered to the vessel and cargo. Appraisers of the
vessel and cargo taken on shore had been previously appointed, and
on an examination of the cargo it was found to be so much damaged
and in such a condition that they advised an immediate sale, as it
was deteriorating in value daily.
The master assented to a sale accordingly, which was ordered by
the court on his application on 1 July. The net proceeds amounted
to $2,664.92. The time occupied in an ordinary voyage from Nassau
to Matanzas is three days, and to Baltimore ten.
It was proved by several masters of vessels that the navigation
at the place where the Margaret Hugg first grounded and was visited
by the pilots was very hazardous, and that under similar
circumstances they would have considered it their duty to have
carried their vessel into the harbor at Nassau.
The regular premium for insurance of freight of the cargo
covered by the policy for the outward voyage was about one and one
eighth percent
Upon this state of facts appearing at the trial, the following
questions were raised, and presented to the court,
viz.:
1. It being admitted that the loss is to be adjusted according
to the terms of the Baltimore Insurance Company, if the jury find
that jerked beef was a perishable article within the meaning of the
policy, are the defendants liable as for a total loss of freight
unless the entire cargo was so totally destroyed that no part of it
could have been carried to the port of destination even in a
deteriorated and valueless condition?
2. If the jury find that from the condition of that portion of
the cargo sold at Nassau (occasioned by the disasters stated in the
testimony), it was for the interest of the insured and insurers
upon the cargo that it should be so sold, and not transported to
Matanzas, is the plaintiff entitled to recover for a total loss of
freight, provided his own vessel could have been repaired in a
reasonable time, so as to perform the voyage in safety, or he could
have procured another vessel, and have transmitted to the port of
destination, in its deteriorated state, the portion sold at Nassau?
And
3. Assuming that the plaintiff is entitled to recover, is the
policy on the amount mentioned for one entire voyage round, from
Baltimore out and home again?, and are the defendants entitled to
deduct from the amount insured the freight earned in the voyage
from Baltimore to Rio upon the outward cargo?
Page 48 U. S. 604
MR. JUSTICE NELSON delivered the opinion of the Court after
reading the statement prefixed to this report.
The first point certified, upon the assumptions stated, involves
the question whether the underwriter of a policy upon freight of
goods warranted free from average is liable as for a total loss
unless the goods be actually destroyed by one of the perils insured
against, so as to be incapable of shipment to the port of
destination, or whether a total loss may result at the port of
distress from the goods having been so much damaged that, if sent
on, they would become of no value at the time they reached the port
of destination, and hence, instead of being sent on, may be sold
for the benefit of whom it may concern.
The contract of insurance upon freight is that the goods shall
arrive at the port of delivery notwithstanding the perils insured
against, and that if they fail thus to arrive and the owner is
thereby unable to earn his freight, the underwriter will make it
good.
It does not undertake that the goods shall be delivered in a
sound or merchantable state, or that the vessel in which they are
shipped shall be safe against the dangers of the sea, but that it
shall be in the power of the insured to earn his freight; that is
that the perils insured against shall not prevent the ship from
earning full freight for the assured in that voyage. If the ship
and cargo remain, notwithstanding the disasters, in a condition to
continue the voyage, it is in his power to earn freight, and he is
bound to proceed; but if damage happens to either and the voyage is
broken up, so that no freight can be earned, the owner is entitled
to recover, as for a total or partial loss, according as he may or
may not have earned freight
pro rata itineris.
If the damage happens to the vessel and that can be repaired at
the port of distress in a reasonable time and at a reasonable
expense, it is the duty of the owner to make the repairs and to
continue the voyage and earn his freight, and, on the other hand,
if the damage happens to the goods and the ship be in a capacity to
proceed, or, if disabled, another can be procured upon reasonable
terms, the owner of the ship will still be entitled to perform the
voyage and recover his freight unless the goods have been totally
destroyed. In every case, before he can recover of the underwriter,
he must show that he
Page 48 U. S. 605
was prevented by one of the perils insured against from
completing the voyage, and, for that reason, had failed to entitle
himself to freight from the shippers.
The first point certified to us assumes that the ship was
capable of carrying on the cargo to the port of delivery
notwithstanding the injuries received, and the only question is
whether the cargo was so much damaged and in such a condition as to
have dispensed with that duty.
In the case of memorandum articles, the exception of particular
average excludes a constructive total loss, and of course the
principle which allows an abandonment where the loss exceeds half
the value does not apply. There must be an actual total loss of the
goods. The object of the clause is to protect the underwriter from
any partial loss on articles of a perishable nature, which are
liable to inherent decay and damage, independently of the damage
occasioned by the perils insured against, and where it would be
difficult, if not impossible, to distinguish between them. In case
of a total loss consequent upon the happening of one of the perils,
the whole damage is presumed to have arisen from that cause, and
thus all dispute is avoided as to the origin or nature of the
loss.
What constitutes a total loss of a memorandum article has been
the subject of frequent discussion both in the courts of England
and this country, and in the former of some diversity of opinion;
but in most of the cases the decisions have been uniform and the
principle governing the question regarded as settled, and that is
so long as the goods have not lost their original character, but
remain in specie, and in that condition are capable of being
shipped to the destined port, there cannot be a total loss of the
article, whatever may be the extent of the damage, so as to subject
the underwriter. The loss is but partial. The cases are numerous on
the subject, and will be found collected in Park on Marine Ins.,
ch. 6, subd. 13, 247; 2 Phillips on Ins., ch. 18, 483; and 3 Kent's
Com. 295, 296. It would be useless to refer more particularly to
them.
The only doubt that has been expressed in respect to the
soundness of this rule is whether a destruction in value for all
the purposes of the adventure, so that the objects of the voyage
were no longer worth pursuing, should not be regarded as a total
loss within the memorandum clause, as well as a destruction in
specie. But although this has been suggested in several cases in
England as a proper qualification and as coming within the
obligation of the underwriter, there is no case to be found in
which the suggestion has received the sanction of judicial
authority.
In this country, the rule has been uniform that there must
Page 48 U. S. 606
be a destruction of the article in specie, as will be seen by a
reference to the following authorities.
Maggrath v.
Church, 1 Caines 196;
Neilson v. Col. Ins. Co., 3
Caines 108;
Le Roy v. Gouverneur, 1 Johns.Cas. 226;
Griswold v. New York Ins. Co., 1 Johns. 205, Livingston,
J.;
S.C., 3
id. 321;
Saltus v. Ocean Ins.
Co., 14
id. 138;
Whitney v. N.Y. Firemen Ins.
Co., 18
id. 208;
Brooke v. Louis. state Ins.
Co., 4 Martin N.S. 640;
S.C. 5
id. 530;
Morean v. U.S. Ins.
Co., 1 Wheat. 219;
McGaw v. Ocean Ins.
Co., 23 Pick. 405; 3 Sumner 544; 1 Story 342.
Whether the test of liability is made to depend upon the
destruction in specie, or in value, would, we are inclined to
think, as a general rule, make practically very little, if any,
difference; for while the goods remain in specie, and are capable
of being carried on in that condition to the destined port, it will
rarely happen that on their arrival they will be of no value to the
owner or consignee. The proposition assumes a complete destruction
in value, otherwise the uncertainty attending it would be an
insuperable objection; and, in that view, it may be a question even
if the degree of deterioration would not be greater to constitute a
total loss than is required under the present rule.
The rule as settled seems preferable, for its certainty and
simplicity, and as affording the best security to the underwriter
against the strong temptation that may frequently exist, on the
part of the master and shipper, to convert a partial into a total
loss.
Mr. Park, in speaking of the case of
Cocking v. Fraser,
4 Doug. 295, a leading one in the establishment of the rule,
observes that the wisdom of the decision is apparent; for,
otherwise, it would be a constant temptation to the assured,
whenever a cargo of this description was likely to reach the port
of destination in an unsound state, to throw the loss upon the
underwriters, by voluntarily giving up the further prosecution of
the voyage, to which they were not liable by the terms of the
memorandum. 1 Park 249.
The rule, it will be observed, as we have stated it,
contemplates the arrival of the goods, or some part of them, in
specie at the port of delivery, or that they were capable of being
shipped to that port in specie. And hence, if the commodity be
damaged so that it would not be allowed to remain on board
consistently with the health of the crew or safety of the vessel,
or if permission be refused to land the same by the public
authorities at the port of distress for fear of disease, and, for
these and like causes, should from necessity be destroyed by being
thrown overboard notwithstanding the article existed
Page 48 U. S. 607
in specie and might have been carried on in that condition,
there would still be a total loss within the meaning of the policy.
In the cases supposed, it is as effectually destroyed by a peril
insured against, as if it had gone to the bottom of the sea from
the wreck of the ship. The same result follows also if the goods be
so much damaged as to be incapable of reaching the port of
destination in their original character.
These principles are either stated in or are fairly deducible
from several cases, but especially from the cases of
Dyson v.
Rowcroft, 3 Bos. & Pul. 474, and
Roux v.
Salvador, 3 Bing. 266, and
S.C. 1 Bing. 526.
In
Roux v. Salvador, in the Exchequer, it was observed
that the argument rested upon the position that if at the
termination of the risk, the goods remained in specie, however
damaged, there was not a total loss, and it was admitted that the
position might be just if by the termination of the risk was meant
the arrival of the goods at their place of destination, but that
there was a fallacy in applying those words to the termination of
the adventure before that period by a peril of the sea, as the
object of the policy is to obtain an indemnity for any loss that
the assured might sustain by the goods being prevented by the
perils of the sea from arriving in safety at the port of
destination.
It was also remarked that if the goods once damaged by the
perils of the sea and necessarily landed before the termination of
the voyage were by reason of that damage in such a state, though
the species be not utterly destroyed, that they could not with
safety be reshipped into the same or any other vessel -- or if it
was certain that before the termination of the original voyage the
species itself would disappear -- in any of these cases, the
circumstance of their existence in specie at the forced termination
of the risk was of no importance.
The jury had found in that case that the hides were so far
damaged by a peril of the sea that they never could have arrived at
the port of destination in the form of hides, and as the
destruction was not complete when they were taken out of the vessel
at the port of distress, they became, in their then condition, a
salvage for the benefit of the party who was to sustain the
loss.
In respect to the first point, therefore, the court direct that
it be certified to the circuit court that if the jury find that the
jerked beef was a perishable article within the meaning of the
policy, the defendant is not liable as for a total loss of the
freight unless it appears that there was a destruction in specie of
the entire cargo, so that it had lost its original character at
Nassau, the port of distress, or that a total destruction would
Page 48 U. S. 608
have been inevitable from the damage received, if it had been
reshipped before it could have arrived at Matanzas, the port of
destination.
The second point certified assumes that the vessel,
notwithstanding the disaster, was in a condition to carry on the
cargo, or that another could be procured, and the question is
whether the plaintiff is entitled to recover as for a total loss of
freight if it appeared that it was for the interest of the insured
and insurer of the cargo, on account of the damaged condition of
the portion sold, that it should have been sold and not carried on
to Matanzas, the port of delivery.
Many of the considerations stated in our examination of the
first point certified have a direct application to this one, as it
there appears that the interest of the insured or of the
underwriter of the cargo is not taken into the account nor in any
way regarded in determining whether or not a total loss of the
freight has happened from any of the perils insured against, but
whether there has been a destruction of the entire cargo in specie
or such damage received as would inevitably prevent the arrival of
any portion of it in specie at the destined port.
The interest of the owner of the cargo may frequently be adverse
to that of the owner of the ship, for although the goods remain in
specie and in that condition capable of being carried on, it may be
for the interest of the owner or of the insurer of the cargo to
have it sold in its then damaged state at the intermediate port,
instead of taking the risk of further deterioration. But in that
case the owner or those representing him must act upon their own
responsibility, for if he elects to receive the goods voluntarily
at a place short of the port of destination, he is responsible for
the freight. The loss cannot be total or partial at his will or as
his interest may dictate.
It was said in
Griswold v. New York Ins. Co., which was
an action on a policy on freight, that whether it would have been
wise or foolish in the shipper to have sent on the flour in the
condition it was in was a question not to be put to the plaintiffs.
It was none of their concern. The risk of the value of the cargo at
the port of delivery lay with the owners of the cargo. All that the
plaintiffs had to do by their contract was to provide the means to
take on the cargo by repairing their ship or procuring another.
Other considerations may arise as between the owner and insurer
of the cargo, but it is not important now to go into them.
On looking into the facts in this case, it will be seen that the
portion of the beef landed at Nassau and sold was wet and heated,
and that the board of health had recommended to the
Page 48 U. S. 609
authorities that it should be removed as soon as it conveniently
could be without too great a sacrifice of the property. It is
obvious, therefore, that the perishable condition of the article
must be taken into consideration in deciding upon the obligation of
the master, in the emergency, to repair his vessel or to procure
another for the purpose of sending it on to the port of delivery.
If it should be made to appear that the repairs or procurement of
another vessel would necessarily produce such a retardation of the
voyage as would in all probability occasion a destruction of the
article in specie before it could arrive at the port of destination
or from its damaged condition could not be reshipped in time
consistently with the health of the crew or safety of the vessel,
or would not be in a fit condition from pestilential effluvia or
otherwise to be carried on, it then was the duty of the master to
sell the goods for the benefit of whom it might concern.
The cargo being in a perishable condition, the extent of the
repairs, or difficulty of procuring another vessel, and consequent
delay attending the same, are material considerations influencing
his judgment in deciding upon the necessity of a sale, for it would
be unreasonable to require him to subject his owner to this expense
when, at the same time, a strong probability existed that the cargo
would not be in a condition to be reshipped. 18 Johns. 208; 6 Cow.
270; 1 Bing. 526; 3
id. 266; 3 Brod. & Bing. 97;
S.C., 6 Moore 288; 6 Taunt. 383; 1 Holt, 48; 3 Kent's Com.
212, 213; 2 Phillips, 331
et seq.
The quantity and value of the portion saved are also material
circumstances to be considered in exercising a sound discretion in
respect to the extent of the repairs required to be made, or of
expense in the procurement of another vessel, with a view to the
earning of salvage for the benefit of the underwriter on freight.
The owner of the cargo is liable for any increased freight arising
from the hire of another vessel, and unless it can be procured at
an expense not exceeding the amount of the freight to be earned by
completing the voyage, the underwriter on freight has no right to
insist upon this duty of the master. Beyond this it becomes a
question between him and the owner or underwriter of the cargo. 3
Kent's Com. 212;
Shipton v. Thornton, 9 Adolph. &
Ellis 314;
Searle v. Scovel, 4 Johns.Ch. 218;
American
Ins. Co. v. Center, 4 Wend. 45; 2 Phillips 216.
In respect to the second question, therefore, we direct it to be
certified to the circuit court if the jury find that from the
condition of that portion of the cargo sold at Nassau it was for
the interest of the insured and insurers of the cargo that it
Page 48 U. S. 610
should have been so sold and not transported to Matanzas, still
the plaintiffs are not entitled to recover as for a total loss of
freight, provided their own vessel could have been repaired in a
reasonable time and at a reasonable expense so as to perform the
voyage or they could have procured another at Nassau, the port of
distress, and have transshipped the portion sold in specie to the
port of destination.
The third question is, assuming that the plaintiffs are entitled
to recover, is the policy on the amount mentioned for one entire
voyage round from Baltimore out and home again, and are the
defendants entitled to deduct from the amount insured the freight
earned in the voyage from Baltimore to Rio upon the outward
cargo.
The policy provides that the defendants, in consideration of
$156.25, agree to insure the plaintiffs &c., on freight of the
bark
Margaret Hugg at and from Baltimore to Rio Janeiro
and back to Havana or Matanzas, or a port in the United States
&c., to the amount of $5,000 upon all kinds of lawful goods
&c., beginning the adventure upon the said freight from and
immediately following the lading thereof aforesaid at Baltimore and
continuing the same until the said goods, wares, and merchandise
shall be safely landed at the port aforesaid.
It is insisted on the part of the defendants that the voyage
insured is one entire voyage from Baltimore out to Rio Janeiro and
then to Matanzas or home, and that they are entitled to a deduction
of the freight earned on the outward cargo from Baltimore to
Rio.
The Court is of opinion that upon a true construction of the
policy, the insurance was upon every successive cargo that was
taken on board in the course of the voyage out and home, and is to
be applied to the freight at risk at any time, whether on the
outward or homeward passage. This was the construction given to
these terms in a freight policy in
Davy v. Hallett, 3
Caines 16, and
The Columbian Ins. Co. v.
Catlet, 12 Wheat. 383. The insurance was regarded
as in effect covering freight upon separate voyages out and home,
to the amount of the valuation, and in the former case the payment
of double premium was deemed a pretty sure index to the intent of
the parties that the policy should attach on the outward or
homeward freight according to events, and was to be valid and
operative as long as there was aliment to keep it alive. All the
considerations urged in favor of this construction in the cases
referred to apply with equal force to the policy in question.
The Court directs, therefore, that it be certified to the
circuit
Page 48 U. S.
611
court that assuming the plaintiffs are entitled to recover,
the defendants are not entitled to deduct from the insured the
freight earned on the voyage from Baltimore to Rio upon the outward
cargo, as the policy is not for one entire voyage round from
Baltimore out and home.
Order
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 on the points and questions on which the judges of
the said circuit court were opposed in opinion, and which were
certified to this Court for its opinion agreeably to the act of
Congress in such case made and provided, and was argued by counsel.
On consideration whereof it is the opinion of this Court:
1st. That if the jury find that the jerked beef was a perishable
article within the meaning of the policy, the defendants are not
liable as for a total loss of the freight unless it appears that
there was a destruction in specie of the entire cargo, so that it
had lost its original character at Nassau, the port of distress, or
that a total destruction would have been inevitable from the damage
received if it had been reshipped before it could have arrived at
Matanzas, the port of destination.
2d. If the jury find that from the condition of that portion of
the cargo sold at Nassau, it was for the interest of the insured
and insurers of the cargo that it should have been so sold and not
transported to Matanzas, still that the plaintiffs are not entitled
to recover as for a total loss of freight, provided their own
vessel could have been repaired in a reasonable time and at a
reasonable expense, so as to perform the voyage, or they could have
procured another at Nassau, the port of distress, and have
transshipped the portion sold in specie to the port of
destination.
And 3d. That assuming the plaintiffs are entitled to recover,
the defendants are not entitled to deduct from the insured the
freight earned on the voyage from Baltimore to Rio upon the outward
cargo, as the policy is not for one entire voyage round from
Baltimore out and home.
Whereupon it is now here ordered and adjudged, that it be so
certified to the said circuit court.
