A capture of a neutral vessel as prize by a belligerent armed
vessel is a total loss under a policy of insurance, and the assured
is entitled thereon to abandon.
A capture by one belligerent from another constitutes, in the
technical sense of the word, a total loss, and gives an immediate
right to the assured to abandon to the insurers, although the
vessel may be afterwards recaptured or restored.
An embargo or detention by a foreign friendly power, constitutes
a total loss, and warrants an immediate abandonment.
The contract of insurance is a contract of indemnity, and
therefore the assured can "only recover according to the damage he
has sustained."
The state of the loss at the time of the offer to abandon, fixes
the right of the assured and of the assurers.
To constitute a right to abandon, there must have existed a
total loss, occasioned by one of the perils insured against, but
this total loss may be real or legal. When the loss is real, a
controversy can only respect the fact; but the circumstances that
constitute a legal or technical loss yet remain, in many cases,
open for consideration.
There are situations in which the delay of a voyage, the
deprivation of the right to conduct it, produce inconveniences to
the assured, for the calculation of which the law affords and can
afford no standard. In such cases there is, for the time, a total
loss, and in this state of things, the insured may abandon to the
underwriter, who stands in his place, and to whom justice is done
by enabling him to receive all that the insured might receive. A
capture by an enemy and an embargo by a foreign power are admitted
to be within this rule, and a complete arrest by a belligerent and
not an enemy seems in reason to be equally within it.
This was a case certified from the Circuit Court for the
District of Pennsylvania in which the opinions of the judges of
that court were opposed to each other upon the question whether the
plaintiff was entitled to recover upon a case stated, the material
facts of which were as follows:
The defendants insured $12,500 on the freight of the plaintiff's
American ship
The Manhattan, which had been chartered by
Minturn & Champlin for a voyage from New York to Batavia, and
back to New York. The freight was valued in the policy at $50,000.
The charter party contained a covenant that if any dispute should
arise between the plaintiff and Minturn & Champlin respecting
the freight, the cargo should not be detained by the plaintiff,
provided they
Page 8 U. S. 30
should give good security to abide by the award of arbitrators,
who were to be appointed to settle such dispute. On her homeward
voyage on 10 February, 1805, the ship was taken and detained on the
high seas by a British armed vessel, and the second mate and 21 of
the seamen taken out, and two British officers and 15 seamen put on
board, with orders to take her into a British port. The second mate
was put on board another vessel, and arrived in New York on 26
February, when he gave the above information to the plaintiff, who,
on 28 February, communicated it by his letter of abandonment of
that date, to the defendants.
The
Manhattan, with her cargo, was carried into Bermuda
on 12 February, and libeled as prize of war. On 20 April, 1805,
both vessel and cargo were acquitted. From this sentence, so far as
it respected the cargo only, an appeal was prayed, which does not
appear to have been decided, but on 8 May, the cargo was delivered
to its owners, on their giving security, and on 8 July, the vessel
and cargo arrived in New York; but before their arrival, the
defendants having refused to give counter security, so as to
relieve the owners of the cargo from the effect of the security
which they had given upon getting possession of their goods, the
plaintiff, on 6 June, 1805, after the vessel was liberated, brought
the present suit. Upon the arrival of the vessel and cargo, Minturn
& Champlin gave security to abide the award of the arbitrators
concerning the freight, according to the covenant in the charter
party, and obtained possession of the cargo.
Page 8 U. S. 41
MR. CHIEF JUSTICE MARSHALL, delivered the opinion of the Court
as follows.
The
Manhattan, a neutral ship, while prosecuting the
voyage insured, was captured by a belligerent cruiser, the second
mate and twenty-one of the hands were taken out, and two British
officers and fifteen seamen put on board, and she was ordered into
a British port. The mate soon afterwards arrived in the United
States in another vessel. On 26 February, 1805, he gave information
of these facts to the owner of the
Manhattan, who on the
28th of the same month communicated it to the insurers, and offered
to abandon to them. On 2 April, payment of the freight was demanded
and refused. The
Manhattan was carried into Bermudas, and
libeled as prize of war. On 20 April in the same year, both vessel
and cargo were acquitted. From this sentence, so far as respected
the cargo only, an appeal was prayed, which does not appear to have
been decided. The cargo was delivered to the owners on their giving
security, and on 8 July the vessel and cargo arrived at the port of
destination. The underwriters having refused to give counter
security, this action was brought on 6 June, after the vessel was
liberated, and before her arrival at the port of destination. The
policy is on the freight.
The question referred to this Court is whether the facts stated
entitle the insured to recover against the underwriters for a total
loss.
In examining this question, the material points to be determined
are
1st. Had the insured a right to abandon when the offer was
made?
2d. Have any circumstances since occurred which affect this
right?
These are important questions to the commercial interest of the
United States, and ought to be settled with as much clearness as
the case admits.
Page 8 U. S. 42
It is universally agreed that to constitute a right to abandon,
there must have existed a total loss occasioned by one of the
perils insured against, but this total loss may be real or legal.
Where the loss is real, a controversy can only respect the fact,
but the circumstances which constitute a legal or technical loss
yet remain in many cases open for consideration.
It has been decided that a capture by one belligerent from
another constitutes, in the technical sense of the word, a total
loss, and gives an immediate right to the insured to abandon to the
insurers, although the vessel may afterwards be recaptured and
restored.
It has also been decided that an embargo or detention by a
foreign friendly power constitutes a total loss and warrants an
immediate abandonment. But the capture or taking at sea of a
neutral vessel by a belligerent is a case on which the courts of
England do not appear to have expressly decided, and which must
depend on general principles on analogy and on a reasonable
construction of the contract between the parties.
A capture by an enemy is a total loss although the property be
not changed, because the taking is with an intent to deprive the
owner of it, and because the hope of recovery is too small and too
remote to suspend the right of the insured in expectation of that
event.
If a neutral ship be captured as enemy property, the taking is
unquestionably with a design to deprive the owner of it, and the
hope of recovery is in many cases remote, since it may often depend
on an appellate court, and though not equally improbable as in the
case of capture by an enemy, is not so certain as is stated in
argument by the counsel for the defendants.
The distinction between a capture by an enemy and by a
belligerent not an enemy, has not been taken in the cases adjudged
in England, so far as those cases have been laid before the court,
and the best general writers seem to arrange them in the same
class. 2 Marshall 422, 435.
Page 8 U. S. 43
It has been also determined that a total loss existed in the
case of an embargo or the detention of a foreign prince.
In one case cited at the bar,
Saloucci v. Johnson, the
Court of King's Bench determined that an illegal arrest at
sea amounted to a detention by a foreign prince, and although that
case has since been overruled in England, so far as it decided that
to resist a search did not justify a seizure, yet the principle
that an arrest at sea was to be resolved into a detention by a
foreign power, has not been denied. Marshall, after noticing the
contrary decisions respecting the right of a neutral to resist a
search, adds
"Yet the above case of
Saloucci v. Johnson may
nevertheless, I conceive, be considered as an authority to prove,
that if a neutral ship be unlawfully arrested and detained by a
belligerent cruiser, for any pretended offense against the law of
nations, this would be a detention of princes."
That a detention of a foreign power by embargo, or otherwise,
warrants an abandonment, is well settled. 2 Marshall 483.
The opinion given by the Court of King's Bench in the case of
Saloucci v. Johnson goes not further than to establish
that an unlawful arrest at sea is to be considered as the detention
of a foreign prince. Whether the arrest can only be considered as
unlawful when the cause alleged, if true, is not in itself
sufficient to justify a seizure, or when, if true, it would be
sufficient, but is in reality contrary to the fact, is not stated.
In point of reason, however, it would seem that when an arrest is
made at sea by a person acting under the authority of a prince, the
detention is as much the detention of princes in the one case as in
the other.
In the case of an embargo, the detention is lawful. The right of
any power to lay an embargo has not been questioned. Yet it is
universally admitted that an embargo constitutes a detention which
amounts at the time to a total loss and warrants an
abandonment.
Page 8 U. S. 44
In what consists the difference between a detention occasioned
by an embargo and a detention occasioned by an arrest at sea of a
neutral by a belligerent power?
An embargo is not laid with a view to deprive the owner of his
property, but the arrest is made with that view. In the first case,
therefore, the property detained is not in hazard; in the last it
always is in hazard. So far the claim to abandon on an arrest is
supported by stronger reason than the claim to abandon when
detained by an embargo.
But it is argued that the duration of an embargo has no definite
limitation, while a neutral vessel may count on being instantly
discharged. Such is the rapidity of proceeding in a court of
admiralty that its mandate of restoration is figuratively said to
be "borne on the wings of the wind."
Commercial contracts have but little connection with figurative
language, and are seldom rightly expounded by a course of
artificial reasoning. Merchants generally regard the fact itself,
and if the fact be attended to, an embargo seldom continues as long
as the trial of a prize cause, where an appeal is interposed. The
history of modern Europe, it is believed, does not furnish an
instance of an embargo of equal duration with the question whether
the cargo of the
Manhattan be or be not lawful prize. The
reasoning of the books in the case of a capture by an enemy and of
an embargo applies in terms, but certainly in reason, to an arrest
by a belligerent, not an enemy. 2 Marshall 483.
The reasoning of the English judges in all the cases which have
been read at bar and their decisions on the question of abandonment
have received the attention of the Court. To go through those cases
would protract this opinion to a length unnecessarily tedious. With
respect to them, therefore, it will only be observed that the
principles laid down appear to be applicable to an arrest as well
as to a capture or detention of foreign powers, and that a
distinction between an arrest and such capture or detention has
never been taken.
Page 8 U. S. 45
The contract of insurance is said to be a contract of indemnity,
and therefore (it is urged by the underwriters, and has been
repeatedly urged by them) the assured can only recover according to
the damage he has sustained. This is true and has uniformly been
admitted. But if full compensation could only be demanded where
there was an actual total loss, an abandonment could only take
place where there was nothing to abandon.
There are situations in which the delay of the voyage, the
deprivation of the right to conduct it, produce inconveniences to
the insured for the calculation of which the law affords and can
afford no standard. In such cases there is, for the time, a total
loss, and in this state of things the insured may abandon to the
underwriter, who stands in his place and to whom justice is done by
enabling him to receive all that the insured might receive. A
capture by an enemy and an embargo by a foreign power are admitted
to be within this rule, and a complete arrest by a belligerent not
an enemy seems in reason to be equally within it.
It is therefore the unanimous opinion of the Court that where,
as in this case, there is a complete taking at sea by a belligerent
who has taken full possession of the vessel as prize and continues
that possession to the time of the abandonment, there exists in
point of law a total loss, and the act of abandonment vests the
right to the thing abandoned in the underwriters and the amount of
insurance in the assured.
2. Have any circumstances occurred since the abandonment which
have converted this total into a partial loss?
Without reviewing the conduct of the assured subsequent to that
period, it will be sufficient to observe that he has performed no
act which can be construed into a relinquishment of the right which
was vested in him by the offer to abandon.
In only remains, then, to inquire whether the release and return
of the
Manhattan deprives the assured of
Page 8 U. S. 46
the right to resort to the underwriters for a total loss which
was given by the abandonment.
This point has never been decided in the courts of England.
In the case of
Hamilton v. Mendez, Lord Mansfield
leaves it completely undetermined whether the state of loss at the
time the abandonment is made, or at the time of action brought, or
at the time of the verdict rendered, shall fix the right to recover
for a partial or a total loss.
A majority of the judges are of opinion that the state of loss
at the time of abandonment must fix the rights of the parties to
recover on an action afterwards brought, and the judge who doubts
respecting it is of opinion that in this case, countersecurity
having been refused by the underwriters, the question of freight is
yet suspended.
It is to be certified to the circuit Court of Pennsylvania
that in the case stated for the opinion of this Court, the
plaintiff is entitled to recover for a total loss.
