Case ID: johns_12/html/0025-01.html
Source: Caselaw Access Project
Author: {"author": "Lewis, Radcliff, and Sanford, Senators,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William Ogden and John R. Murray, Plaintiffs in error, against The New-York Firemen Insurance Company, Defendants in error.
    
    of^ ^’u?” ia cause of spandonment, on a policy of insurance.
    After an for'a'iotaUos?, ceptS, '{& IT-sured cannot purchase the sáTe erwithout its being a waiver of the abandonment; given notice to tiíe timeeand j¡¡,*cs. c. Svot
    THIS cause came before this court on a writ of error from the supreme court. For the facts and judgment of the court below, see S. C. Vol. 10. pp. 177—180.
    The cause was argued by Colden and T. A. Emmet, for the plaintiffs in error; and by S. Jones, jun. and D. B. Ogden, for the defendants in error. . -
    
      Arguments for the plaintiffs in error.
    
    As to the right to abandon in this case, there can be no question. The only point . ■ , . , , , , , . ... in controversy is, whether the sale and purchase in this case was a waiver of the abandonment. If another person, other than the plaintiffs, had purchased, though for the benefit of the insured, it is not contended that it would amount to a waiver of the abandonment. The declaration of war does not destroy the contract, but puts an end to the voyage, so as to entitle the insured to recover for a total loss. The war intervened after the abandonment, which was not accepted by the insurers, as it ought to have been. All the difficulties which arose after-wards, were the consequence of the improper conduct of the insurers.
    We deny that the abandonment, in this case, vested the property in the insurers, so that the insured had no right to interfere with it. The insured has a right to sell the property, after an abandonment, which the insurer has refused or neglected to accept, and to pay the loss.
    
    If the insured lias-no lien after a. rightful abandonment, yet he has the legal possession, and has a right to sell ajid keep the proceeds, in part payment of the loss. If the insurers refuse to accept the abandonment, and pay the loss, the insured may refuse to give up the property, until paid. It is, qua a mortgage; and the insured is not bound to look to the insurers fo.l’ more tlian the residue remaining unpaid, after the sale.
    The insured cannot he properly considered as. a trustee ; but is rather a’ mortgagee, with the additional circumstance, that the conduct of the insurer has forced him’ into that situation. In Robinson & Hartshorne v. United Insurance Company
      
       it is true, the insured were trustees, and plainly, because ^ the assurers had accepted the abandonment, and paid the loss ; and during the time the insurer has to make his acceptance, or to refuse the offer of abandonment, the insured is a trustee. But where an abandonment íiás been rightfully made,-and wrong-" fully refused, and the property is; left in .the hands of the insured, he is not,' in that case, a trustee." The law will not impose on him, against his will, so" responsible a character as that of trustee. If it be said that the insurers have not had their interest duly promoted, we answer, that if they had done their duty, they would have accepted the abandonment, and taken care of the property themselves. In all the cases which may bel cited, it will be found, either that there has not been time for the insurer to accept, or there has been a refusal of the abandonment. '
    In this case, the plaintiffs ought to be placed in the condition of a mortgagee, or, rather, in a better situation, because the situation has been forced upon them, against their wish or consent, by the insurers. It would be very inequitable, to ■allow the insurer to derive a privilege or advantage from his own misconduct, and to throw a disability or disadvantage on the insured, against his will, and in consequence of his acting éx necessitate.
    
    But even if the insured is considered a trustee, it canhot vary the case. Notice was given to the insurers, that it was necessary; for the interest of all parties concerned, to sell; This was sufficient to put them on their guard, and" they should have seen whether the trustee was acting for their interest, or have given Mm instructions. As they did not see fit to say any thing on the subject, the trustee had a right to purchase. A mortgagee may sell, and yet become a purchaser. If the insured had a right to buy, he certainly had a right to use and employ the vessel.- Tt is true, the insured could not prosecute the original voyage, or the one insured, on their own account. They did not attempt this, but sent the vessel on a new and different vo^e’
    
    The case of Abbot v. Broome, is not analogous to the one before the court, for here was a notice of sale, and it was clearly for the interest of the insurers, that Murray attended the sale, and bought in the vessel. If he had not done so, she would have sold for a less price, and the loss of the insurers have been much greater. It may be said, perhaps, that the insured, in attending the sale, was actuated more by a view to Ms own interest than that of the insurers; but the notice given by him to the insurers was sufficient to counteract any such intention; for the insurers might have sent an agent to attend and bid, so as to compel the insured to purchase at the highest price. The case of Abbot v. Sebor, is contrary to that of Abbot v. Broome, though the circumstances are the same. There was an employment of the vessel by the insured, after the purchase, in both cases, and such also was the ease of Saidler & Craig v. Church.
    
    Again, if a trustee wishes to purchase the property of the ecstvy que trust, equity will discharge him from his trusteeship, so far as to enable him to do so; but, in a case like the present, equity could not relieve ; nor does law or equity ever recognise a party standing in such a situation, by necessity, as a trustee.
    Even if the doctrine of trusteeship were applicable, it would only enable the insurers to consider the property as purchased for them, if he preferred to do so; and, in the present case, they have not chosen so to consider it, which clearly shows that the property has not been sacrificed, as is pretended. This doctrine of trusteeship does not make a repurchase a waiver of abandonment. The doctrine that a repurchase is a waiver of an abandonment, stands on different principles.
    It may be comprehended in two positions; 1. Whenever, before an abandonment is made, a technical total loss exists, the insured voluntarily does an act which enables him, at a loss less than half the value, to pursue the voyage insured, this voluntary act turns the previous technical total loss into a partial loss, and destroys the right of abandonment.
    
    2. Whenever, after an abandonment has been rightfully made, on an existing technical total loss, the insured does a voluntary act which removes the technical total loss, and enables the gre* perty insured to proceed on the voyage insured, such voluntary act shall be a waiver of the abandonment. - ,r
    Where the act is done by the captain, supercargo, or agent,. and it is afterwards ratified or adopted by the insured, it must be deemed, in its le|al> operation, as if done by the insured himself, at the time it was, in fact, done by such agent. And the case of Saidler & Craig v. Church would have fallen under the first position, if it had occurred after the decision of the court of errors, in Church v. Bedient;
      
       but it wasyat thafc time, held . ■ . ' • • . that an abandonment ¡nadé in ignorance of the total loss having ceased, was valid. But, considering the abandonment as rightfully made, the case of Saidler & Craig v. Church, and that of Abbot v. Sebor, if it be law, must be classed under the second position.
    .Fioin these two positions, and principally from the second, may be. deduced this corollary: . ' .
    
      3. Where, on a technical total loss an abandonment has been duly made, no rightful act of the insured, which does not ,do away the technical total loss, and. enable the property to proceed on the voyage insured, shall be construed as a waiver of the,abandonment. And this corollary'is entirely applicable. to, and ought to, govern, the decision of the case now before the court. These positions secure to the insured an indemnity, and no more. . ./■■.. • .
    
      Arguments for the defendants in error.
    
    The decision of the court below was founded on clear and well-settled principles of law. An act of abandonment transfers the whole property to the insurer, and gives him'the possession, and as complete control of it, as if there had been a regular bill of sale and de«. livery, and the insured have nothing more to do with the property. His remedy is on his special contract, and, if well advised, he will not intermeddle with what he has once renounced and abandoned. He agrees, by the policy, that if he takes any step in regard to ’ the property abandoned, that he will act as agent of the insurer. Any .intermeddling, therefore, with the property, after an abandonment, is in contradiction to the act of abandonment, and a waiver of if. it is only, in consequence of: the. absolute renunciation of all right, possession, and usd. of the. property, that the insured are entitled to. recover for a total lóss-j and/whenever the insured has subsequently intermeddled with or used the property, and there lias been a recovery fora total loss, there has been an assent or acquiescence on the part of the insurer.
    
    There is no such repugnancy or contradiction between the eases of Abbot v. Broome and Abbot v. Sebor as has been sugrested. In the one case there was an affirmance of the acts of the assured by the assurer, and in the other there was not, but the contrary. The right of the insurer to affirm the acts of the insured or Ms agents abroad, is settled in the case of Robertson & Hartshorne v. The United Insurance Company, which case accords with the principles for which we contend.
    The insured, by the present case, have exercised the highest act of ownership over the property, by a sale of it. The case of Walden v. The Pœnix Insurance Company,
      
       decides that the insured cannot buy the property. The principles of the law of insurance are well settled, that in all cases of abandonment, the assured and their agents, captain, supercargo, &c. thenceforward, ex necessitate, become the agents of the insurer; they act quasi his agents, of course, without further ceremony; and this, even where the abandonment takes place at a port where both parties and all their agents reside and are presents If, however, the insured or his agent do an act beyond what the necessity of the case requires, such act may be affirmed or not, by the insurer. If the insured buys in the property, the insurer may sanction the purchase, and the abandonment remáis good, and the insured must account to the insurer as his princi - pal, but if he does not assent or affirm the purchase, the abandonment is waived and annulled.
    Considering the insured as trustees, the case of the respondents becomes still stronger. A cestuy que trust can never be devested of his property, unless under a sale by his own directions, under a judgment of law; or unless made to a strange? without notice. It is to be observed that the ship’s papers remained in the names of the appellants, after the sale, precisely the same as they were before the abandonment. The appellants clearly exceeded their powers as agents or trustees ; and having acted for themselves, as owners, they must be considered as waiving the abandonment.
    It is a settled rule in equity that a trustee shall never purchase trust property, unless he has some interest therein, as well as the cestuy que trust, or purchases of and from the cestuy pue trust.
      
       ^ This doctrine applies with great force to cases, of insurance. Bystanders will seldom bid at sales of property in that situation, where they gee the original owner is himself biddirigí. with.a view, as they may suppose, to save something from. the wreck. The assent of the cestuy que trust ought to be tinqerstandmgiy given, otherwise the purchase' by the trustee is Void. The cestuy] que trust may, if he chooses, affirm the purchase, and the cases cited on,,the other, side are those in which the purchases were so affirmed. The rights of the insurer can never be affected by any acts of the insured, without his consent; it is the purchase by a trustee, not the sale, that is forbidden by law. . • " ■ ,
    The subsequent employment of the vessel shows in what character the appellants acted, and whether they purchased,as the agents and trustees of the respondents.’ For they must have acted without any instructions from the respondents, and, indeed, without their knowledge.
    The notice given to the respondents cannot affect the decision of this cause. They had every reason to suppose, from that notice, that the sale would be regular, and according to the rules of law; arid, therefore,' that the insured could not buy in the property. The insurers, it is true, might have attended the sale, but their omission to do so cannot prejudice their rights, or vary their situation, The case of a mortgagee is different from that of a trustee. The mortgagee does not sell the property, It is a judicial sale, or sale by operation of law. Besides, the mortgagee is a party in interest./ The case, therefqre, of a mortgagee, is not analogous to the present.
    'The case of Storer v. Gray, in the supreme court of Magsaclius'etts, .was overruled in that of Oliver v. Newburyport Marine Insurance Company, and~ in which they sanction the principles laid down, in Abbot v. Broome, Saidler & Craig v. Church, and Robertson & Hartshorne v. The United Insurance Company.
    
      
      
         5 Johns. Rep. 299, 310. Marsh on Ins. 508. Park on Ins. 109.
    
    
      
      
         Abbot v. Broome, 1 Caines Rep. 295. Hamilton, arguendo. Walden v. Phœnix Ins. C 5 Johns. Re 310.
    
    
      
       1 Johns. Rep. 592.
    
    
      
       2 Caines Cas. 269.
    
    
      
       3 Johns. Cas. 39.
    
    
      
      
        1 Caines Rep. 297, in note.
    
    
      
      
         Marsh. on Ins. 581. 1 Esp. Rep. 237. 3 Mass. Rep. 37. Marsh on Ins. (ed. by Condy,) 582. 2 Mass. Rep. 585.
      
    
    
      
      
         1 Caines’ Cases, 21. (in 1894.)
    
    
      
      
         1 Johns. cases, 147, 154. (in 1799.)
    
    
      
      
        3 Johns. Cases, 39. 1 Johns. Rep. 613.
      
    
    
      
      
         5 Johns. Rep. 310.
    
    
      
      
         Munro v. Allnire, 2 Caines' Cases, 183-191. per Benson, J. 8 Ves. jun. 345, 346. 13 Ves. jun. 600. 2 Bro. Ch. Cas. 400. 9 Ves. jun. 217.
    
    
      
      
         2 Mass. Rep. 565.
    
    
      
      
         3Mass. Rep.
      
    
   Lewis, Radcliff, and Sanford, Senators,

expressed themselves to be entirely satisfied with the decision -of the supreme court; that it was founded on sound andjust principles ; and that, assenting to the judgment, and the reasons given by the court below, they did hot .think it necessary to state, their reasons at length, but contented themselves with declaring their opinion, that the judgment of the supreme court ought to be affirmed.

. This being tlie unanimous opinion of the court, it was, there- „ , , . , ^ fore, okdeked and adjudged, that the judgment oi the supreme court be, in all tilings, affirmed, &c.

Judgment affirmed. 
      
       April 1, 1814.