Case ID: mass_4/html/0198-01.html
Source: Caselaw Access Project
Author: {"author": "Parsons, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

* Samuel A. Dorr versus The New England Marine Insurance Company.
    Whether the obligations and rights of the parties to a policy of insurance are determined by the actual state of the fact, or of the intelligence received, at the time of an offer to abandon, quare.
    
    This was an action of the case upon a policy of insurance, by which the defendants caused the plaintiff to be insured 12,800 dollars on a quantity of teas on board the ship Radius, at and from Neto York to Bremen, against the usual perils. The plaintiff demands damages as for a total loss.
    The cause came before the Court on a case stated, in which it was agreed that the policy was effected, as alleged by the plaintiff; that he was interested in the teas to the amount insured; that the ship sailed on the voyage insured, with the teas on board on freight, March 16th, 1806, and, on the 28th of April following, was captured by a British armed ship, sent into England, and there libelled as prize in the High Court of Admiralty; that, on the 20th of May following, a restoration of the ship was decreed to the master; that the cargo was unladen, and, on the 16th of June following, the said teas were decreed to be restored to Thomas Wilson, the claimant, who, on the 22d of the same June, received them in behalf of the owner, or of whomsoever it might concern, he being decreed to pay a certain proportion of the captor’s expenses, and also to give security to pay the master the freight of said teas, if the same should be decreed to him, which was afterwards done, and the freight paid him by Wilson; that, afterwards, on the 18th day of July, 1806, the plaintiff, having received intelligence of the said capture and detention, immediately offered to abandon his interest in the teas to the defendants, who refused to accept the same, the decree of restoration not being known to either of the parties, until after the 23d of September in the same year, on which day this action was commenced; that Wilson was the plaintiff’s correspondent in London, and, about the 19th of May aforesaid, had received advice from the plaintiff of the shipment of the teas to Bremen, and that, when sold there, the net proceeds would be remitted to him; but he had no authority or direction from the plaintiff to claim or dispose of the teas; but, concluding it would be most [ * 222 ] for the plaintiff’s * interest, and the former master refusing to take them on board, he shipped them on board a. Swedish ship for Bremen, on the 28th of July following; that the teas arrived safe at Bremen, were there sold, and the proceeds remitted to Wilson, who now holds them for the use of those to whom they may belong.
    If the Court should be of opinion that the plaintiff is entitled, upon these facts, to recover for a total loss, the defendants agreed to be defaulted, and that judgment be rendered for the plaintiff for the amount thereof, with interest from the 18th of September, 1806, and costs, deducting the premium, and one per cent., as agreed in the policy; if the Court should be of opinion that the plaintiff is entitled to recover for a partial loss only, the defendants agreed to be defaulted, and that it be referred to assessors, to be appointed by the Court, to ascertain the amount of such partial loss, on such principles as the Court shall prescribe, and that judgment be rendered for the plaintiff, for the amount so ascertained, with costs.
    
      Jackson, for the plaintiff,
    observed, that he considered this case as settled by the decision in Lee vs. Boardman, 
       unless the circumstance of the decree of restoration having taken place before the abandonment varies the principle. But as this fact was unknown to the parties in this country, it cannot affect the decision of the case. The right of the assured to abandon, and the duty of the assurer to accept the abandonment, must depend on the state of facts at the period of the last intelligence from the ship. The abandonment is made with reference to that period. If it refers to the actual state of facts at the time of the offer, whence arises the necessity of a speedy election after the receipt of intelligence ? If the obligation of the assurer depends on the state of the case as it actually exists in a distant country, although unknown to either party, then the obligations and the rights of the assured must depend upon the same facts; and it is then of no importance whether he abandons sooner or later after receipt of the intelligence, since his right depends on the facts at the moment of his offer, not on those existing at any former period. There certainly is a reciprocity * in these rights and obligations. It is ab- [ * 223 J surd to say that the assured is bound to make his election to-day, and that he is concluded by his offer to abandon, and yet that the underwriter may wait, perhaps six months, (as would be the case in an India voyage,) to decide by future intelligence whether he is bound to accept it. If the assurer may wait to ascertain whether the facts proved to be as supposed, and may decide by the event, the assured must have the same option. As he made the offer on this presumption, if it prove unfounded in fact, he ought not to be bound If, then, neither party is bound, there is an end to the vested right, which the books say is the fruit of the abandonment
    
      Foreign jurists  concur that abandonment may be made for defaut de nouvelles, the time for which is regulated by the ordinances of Louis XIV.; and when so made, is not defeated by the arrival of the vessel in safety, although that event disapproves the facts on the presumption of which it was made. The same principle governs in effecting the insurance originally. For an insurance made after the sailing of the ship is predicated upon the state of facts last known to the parties, and whether she was actually lost, at the time of making the contract, or afterwards arrives in good safety, the parties are equally bound.
    In the case of capture, one reason given by Sergeant Marshall 
       for the right of abandonment is, that the owners lose the control and power of disposition of the property, and it would be unreasonable to make them wait the event of the capture. The idea then is, that after abandonment they have no further concern with the property insured, but must look to the sum due from the underwriters. Over this last they are presumed to have a control; this they can dispose of, and they may calculate and rely upon it in their speculations, as they could on the property insured before the capture. In case of a capture in a remote country, the insured, upon advice of it, must speedily elect whether to abandon or not. But unless the doctrine contended for be true, the assurers, after the offer of abandonment is made, have a right to wait [ * 224 ] several months to ascertain how the * facts stood on the day of the offer to abandon. For if the property being in fact at that time liberated discharges them, they must be entitled to a reasonable time to ascertain the fact. Then the offer, for all that time, precludes the assured from interfering with the property, lest he should prejudice the abandonment; and the assurer abstains, lest he should be considered as accepting it.
    The assurer is only bound to pay at a certain limited time after notice and proof of loss; and the like proof must accompany the offer to abandon, or the assurer is not bound to accept it. By proof is not understood legal judicial evidence, but satisfactory proof of the fact in the sense of the expression as used among merchants. But an offer to abandon property in a foreign port cannot be accompanied with evidence of the facts as existing on the day the offer is made, and thus the assurer can never be bound to accept the abandonment.
    But, however the opinion of the Court may be upon the foregoing question, it is contended for the plaintiff that the facts in this case show an existing total loss of the voyage at the time the abandonment took place. The tea was then in England, where, with the expenses caused by the capture, and which, by the decree of the Admiralty, were a lien upon it, it had lost more than half its value, and in this view there existed a constructive total loss. But the insurance was to Bremen, and the master had refused to take the tea on board and complete the voyage, which was thus tota ly defeated at that time.
    The case, it is true, finds that it had been delivered to Wilson, who had volunteered his services, and claimed it on behalf of the plaintiff. But for this he had no previous authority, nor has the plaintiff ever confirmed his doings since. His unauthorized acts cannot, therefore, conclude the plaintiff, and they were, in effect, as much the acts of the defendants themselves as of the plaintiff, who has lost the whole benefit of his adventure, for which he now asks an indemnity from those whom he thinks bound by law to furnish it.
    The Solicitor-General, of counsel for the defendants,
    observed that the facts in this case gave rise to a question, which he believed had never yet received a decision in the English courts, in the courts of this state, or in those of the United * States, excepting a case lately pending in the Circuit [ * 225 ] Court of the United States, in Pennsylvania district, which he should presently take occasion to cite.
    It is contended for the defendants, in this case, that the plaintiff cannot recover a total loss; because, in the first place, it appears by the facts agreed that the property insured was in safety, and actually restored to the plaintiff at the time he made the offer to abandon. Since the decision in the case of Lee vs. Boardman, it will not be contended but that a total loss once existed under this policy. But a very material distinction between that case and the one now before the Court, and which the defendants rely upon, is that, in Lee vs. Boardman, the property was in a state of actual arrest and detention at the time of the abandonment, whereas, in the case at bar, the property was not merely decreed to be released, but was in fact delivered to, and in the full possession of the plaintiff’s agent.
    In Pole vs. Fitzgerald, 
       it was unanimously decided, in the exchequer chamber, that a ship being in safety at the time of abandonment, the assured could not recover. The right of abandonment, in cases of capture, is limited by Marshall 
       to the time “ while the ship continues under detention.” So “ the assured car. only abandon while it is a total loss.”  Again, “There is nc vested right to a total loss, till the insured, having a right to abandon, elects to do so; for he is only entitled to an indemnity foi his ass as it stands at the time of the action brought, or offer to abandon.”  It appears, then, from these authorities, and more fully from the cases cited by Marshall in support of them, that if, at the time of the offer to abandon, the restraint has ceased, or the property is in safety, the right to abandon is gone also.
    In Lee vs. Boardman, the Court say, “ Had he [the plaintiff] neglected to abandon until after the restoration of the ship to the master or supercargo, he would have waived [ * 226 ] *his right to consider the capture a total loss.” And it appears that the decision of that case was principally bottomed on the fact, that the offer to abandon was made while the ship was actually detained by the captors. The Court observe that Lord Mansfield entirely and justly discountenanced the doctrine that a capture alone, .without condemnation, and without abandonment during its continuance, was a total loss.
    It is further contended that the restitution of the property, having been made at the time of the offer to abandon, defeats the plaintiff’s claim to a total loss, although that restitution was at the time unknown to him. This was expressly decided by the Circuit Court of the United States in a late case arising in the district of Pennsylvania. [Here the Solicitor-General read a note of the case of the Rolla, which was contained in a newspaper, in which Judge Washington is reported to have determined, 1. That the state of the fact, not of the intelligence, at the time of abandonment, must decide the question of total or average loss. 2. That capture and restitution before abandonment, though not known here, defeat the claim for a total loss. 3. That the property being safe, although not actually in the possession of the assured, the right to abandon and claim as for a total loss cannot be exercised at a subsequent period, with or without notice of the fact here. On this last point, however, Judge Washington only declared the leaning of his mind; as he thought the fact of actual restitution to the assured before the time of abandonment, sufficiently established by the evidence in the case he was then deciding.]
    The legal principle, that all decisions shall be governed by the actual state of the fact, is universal. The law of insurance pre cisely conforms to it; for the contract of insurance, and all questians arising under it, are to be construed and decided according to the rules of the common law.
    In the following instances, the rights of the parties depend on the fact., and not on the intelligence.
    1. Warranties both express and implied. When the breach proceeds from misinformation, or any other cause, whether innocent or fraudulent, the contract is void. Seaworthiness, although an implied warranty, must be taken according to the fact: if the breach in this case happen * through ignorance or [ * 227 J misinformation of the assured, and even after he has taken every precaution to have his ship seaworthy, the contract is, nevertheless, void.
    2. Representations must be taken according to the fact, not ac cording to the intelligence. If the representation be incorrect in a material point, though it be innocently made, and believed to be true by the party making it, yet it avoids the contract.
    3. Interest in the property insured must be averred and proved. The assured may have information from a foreign country that his property is to be shipped, and upon that intelligence effects his insurance. It turns out that the property never was shipped. The fact in this case will govern the decision, and for want of interest the assured cannot recover.
    4. A risk may have terminated, before the. insurance is effected, by an arrival or loss; but, if not known to the party, the insurance is good. In this instance, the exception proves the rule; for it is in virtue of the words “ lost, or not lost,” that this exception is provided for.
    Why should falsehood or mistake be made the ground of a decision in a controversy concerning property ? Suppose two vessels to be sailing in company, and to be met by an enemy at sea; one is taken; the other escapes, and brings intelligence of the capture, upon which intelligence an abandonment is immediately made; suppose, in a few hours after the separation of these vessels, the captured vessel is recovered, either by her own crew, by a ransom, or by a recapture and an agreed salvage immediately paid; she pursues her voyage, and arrives in safety. Is it possible that upon such facts the assured would recover for a total loss? Yet he certainly may recover, if the intelligence at the time of abandonment, and not the fact, is to fix the rights of the parties.
    
      Jackson, in reply,
    agreed that the main question, which had been argued, had not yet been decided in Westminster Hall; but he contended that the passages cited for the defendants from Marshall, were very far from supporting the doctrine urged by the Solicitor-General. Thus, page 484, “ If, at the time the assured receives advice of the loss, or before he has elected to abandon [ * 223 ] he receives advice that the *ship or goods are recovered or are in safety, he cannot then abandon; ” plainly and necessarily implying that, if he has received advice of the loss, and not of the recovery, he may abandon. And it is an absurdity to say that he had at one time a vested right to abandon, if, at a future period, it may become no right at all.
    It cannot be denied that the opinion of Judge Washington, as reported in the case of the Rolla, is in point against the plaintiff's claim. But a contrary decision has been made by the Circuit Court sitting in this district; and while it is conceded that Judge Wash ington is among the first common lawyers in the United States, it will not be denied us that commercial law is at least as well understood in this part of the Union, as in Virginia. That opinion was also subject to revision in the Supreme Court.
    The reasoning of the Court in Lee vs. Boardman, from the inconvenience of an uncertainty as to the rights and duties of the parties to an insurance, applies with equal force to the present case. But if the defendant’s argument is to prevail, abandonment, instead of disentangling, will cause more embarrassment than ever, and this to one party as well as the other. The property will be without an apparent owner. No one will take care of its preservation. The assurer and assured will equally stand aloof, lest, by intermeddling, the former may be deemed to have accepted the abandonment, or the latter to have waived it.
    In the case before the Court, however, the loss continued total at the time of the abandonment. The cargo was actually out of the plaintiff’s custody or control. After abandonment, the custody and control, whenever regained, accrued to the assurers.
    
      
      
        Ante, vol. iii. 238.
    
    
      
      
        Vahn, h. t. Art 60 —2 Emerig. 195, c. 17, (j 6. — Poihter, h, 1.138,
    
    
      
       Page 483, 484
    
    
      
      
        Willeys Rep. 641. — Note. The chief ji sfcice said that a better report of this casi is in 5 Brown's Parl. Cases, 131.
    
    
      
       Page 483.
    
    
      
       Page 484.
    
    
      
      
        Ibid. 485. — Hamilton vs. Mendes, 2 Bur. 1198. — Dutilh. vs Gatliffe, 4 Dallas, 446.
    
   The Court took time for advisement, and their opinion was after-wards delivered by

Parsons, C. J.

[After stating the facts in the case.] Upon these facts the plaintiff claims to recover a total loss, because the loss was once total; and if it was by any subsequent events turned into a partial loss, he had no intelligence of those events when he made the offer to abandon; and also because the total loss was not in fact reduced to a partial loss by any subsequent events before he made the offer.

[ * 229 ] *The defendants admit a partial loss, but deny a total loss, because the total loss had in fact become a partial loss by subsequent events, before the offer to abandon, although the owner had received no intelligence of them.

By the capture, detention, and suit, in the Admiralty, to obtain a condemnation of the teas, there was a constructive total loss of the plaintiff’s property; and if the suit had been depending when he offered to abandon, it is admitted by the defendants that the plaintiff ought to recover a total loss. When he offered to abandon, he had intelligence of the capture, detention, and pendency, of the suit; but, while the intelligence of these facts was travelling to him, a restoration of his property was decreed to him, which he had in fact received, it is said, by his agent, Wilson; but of this restitution and receipt he had no intelligence, when he offered to abandon.

These events, of which neither party had knowledge, it is said oy the defendants, must operate upon the rights of the parties, and will defeat the election to abandon, which the facts known might have vested in the plaintiff. And the decision of the Supreme National Court in the case of Marshall vs. the Delaware Insurance Company, not yet reported, is cited in point.

Several objections of much weight have been urged against this position of the defendants, resulting from the nature of insurance, and the usage of merchants. It is said that in making the contract of insurance, the information of the parties, and not the facts, always govern; that if the risk on the property to be insured is in fact terminated, either by a safe arrival, or by an absolute total loss, at the time of the insurance, yet if the parties were not informed of those facts, the policy will be valid; that mercantile convenience requires that some rule should be settled, by which the parties may know when the owner may elect to abandon, because the right of election, when once existing, is a vested right; but" if the owner cannot govern himself by his intelligence, but must be governed by facts, of which he cannot have knowledge, the parties cannot know, in most cases, whether he has a right to abandon at the time he makes the offer; that by law the owner must make his election within * a reasonable time after he has intelli- [ * 230 ] gence of a constructive total loss, or he loses his right to abandon; his right must therefore depend upon the facts of which he has intelligence, and not upon facts which may afterwards exist, but of which he can have no knowledge when he is obliged to make his election; that a contingent right to abandon is not recognized by the law merchant; for an owner, calculating on the danger to which his ship is exposed, cannot elect to abandon on the contingency that she is lost, which may prove to be the fact, and avail himself of his offer to abandon, when subsequent information shall prove that his right to abandon existed when the offer was made; but he must have intelligence of the loss before he is admitted to his election of abandoning.

There may arise great inconvenience from the defendants’ positian; for if the information of the parties is not to decide on the right to abandon, neither party, after the offer is made, will give any directions for the management or preservation of the property insured, as the offer to abandon will not be waived by the owner, nor admitted by the assurer, until future intelligence shall ascertain the state of the property when the offer to abandon was made.

It is also the usage of merchants to consider the right to abandon as depending on the facts known, and upon this principle premiums of insurance have been regulated.

There is no adjudged case directly in point in our books; but it is remarkable that there is no case to be found, where a total loss has been held changed to a partial loss, unless the owner had notice of the change before his offer to abandon. In an action against The Massachusetts Fire and Marine Insurance Company, in the United States Circuit Court, where the property insured was captured and detained at Gibraltar for some months, but liberated before the offer to abandon, although the liberation was unknown to the parties, one of the counsel for the defendants made the present objection to a total loss, because the parties are to be governed by the facts existing at the time when the offer to abandon is made, and not by the facts of which they have intelligence; but as the other counsel for the defendants admitted that it was the usage of merchants to be governed by the facts, of which intel[*231 ] ligence had been received, the * question was not discussed at the bar, and the court, in directing the jury, considered the law to be according to the usage.

But we do not think it necessary to decide this question, because we are not satisfied, from the facts in the case, that the constructive total loss, which it is admitted once existed, had ceased before the eighteenth day of July, when the offer to abandon was made.

It may be admitted as a general rule, that when a vessel is wrecked, so that she cannot carry her cargo to the port of delivery, but the cargo is safely delivered to the owner, who may ship it in a reasonable time on board other vessels to the port of delivery, he shall not abandon the cargo, but shall pay the original ship a pro rata freight.

In the present case, the ship, by a sentence of the Admiralty having jurisdiction of the cause by reason of the capture, was discharged of the teas, which were holden to pay the master his full freight; and when the teas were decreed to be restored to Wilson, he was obliged to give security for the freight. The captain refused to receive the teas on board, and the voyage insured was lost, and must be considered as continuing lost, until an opportunity offered to the owner of shipping them on board another ship for Bremen. If Wilson be considered as the owner’s agent, and a delivery of the teas to him as a delivery to the plaintiff, the case states no opportunity of shipping them to Bremen in another ship, until the twenty-eighth of July following, when it was put on board a Swedish ship. This was not done until ten days after the offer to abandon was made, and thirty-six days after Wilson had received the teas.

The loss, therefore, continued constructively total, when the offer to abandon was made; for the safety of the cargo will not change the total loss of the voyage existing, until there be an opportunity in a reasonable time to re-ship the cargo, and the owner is not obliged to wait for other ships.

This opinion is formed on the admission that the principles in this case are the same which apply to a ship wrecked, and also that Wilson was the plaintiff’s agent; both of which are questionable.

*In this case, the cargo was not only taken and de- [ * 232 J tained as prize, but taken out of the vessel, and compelled to pay the full freight, and the master was discharged of his obligation to perform the voyage when the ship was able; and we can find no case where, under these circumstances, the owner, receiving his cargo in a foreign port, is obliged to hire another ship to transmit his goods to the port of destination.

Neither does Wilson appear to be the plaintiff’s agent, authorized by his act to bind the plaintiff’s property. He had no previous authority from the plaintiff, who did not afterwards assent to his acts; and he must be considered merely as volunteering in the service, subject to the assent or dissent of the plaintiff upon notice.

Upon the whole view of the case, we are of opinion that the total loss arising from the capture continued so to be total at the time the offer to abandon was made, and that the plaintiff recover a total loss, 
      
      
        Marshall, 505, Manning vs. Newnham
      
     
      
       [It is now well settled in the United, States, that the right of abandonment depends on the facts existing at the time, and not on the information received by the assured. In England, the right of abandonment, it seems, depends on the state of things at the time of bringing the action upon the policy. Bradlie & Al. vs. The Maryland Ins. Co., 12 Peters, 378.—Marshall vs. Delaware Ins. Co., 4 Cranch, 202.— Alexander vs. Baltimore Ins. Co., 4 Cranch. 370. — Peele vs. Merch. Ins. Co., 3 Mason, 27. — Church vs. Bedient, 1 Caines's Cas. 21. — Hallet vs. Peyton, 1 Caines’s Cas. 28. — Schieffelyn vs. New York Ins. Co., 9 Johns. 26. — Adams vs. Delaware Ins. Co., 3 Bin. 287. — Marshall vs. Delaware Ins. Co., 2 Wash. 51. — Dickey vs. New York Ins. Co., 4 Cow. 222.— Wend. 658.— Church vs. Marine Ins. Co., 1 Mas. 241. — Humphrey vs Union Ins. Co , 3 Mason, 429. — Bambridge vs. Neilson, 10 East, 329. — Patterson vs Richie, 4 M. & S. 394. — McIver vs. Henderson, 4 M. & S. 584. — Naylor vs. Taylor, 9 Barn. & Cres. 718. — Ed.]