# Patapsco Insurance Company v. Southgate

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United States Supreme Court
30 U.S. 604
Patapsco Insurance Company v. Southgate
ERROR from the circuit court of the district of Maryland.
The defendants in error instituted an action against the Patapsco Insurance Company, in the circuit court of Maryland, on a policy of insurance on the schooner Frances, Seaward, master, from Curacoa, or a port of departure in the West Indies, or on the Maine, to a port in the United States. On her voyage from Carthagena to Norfolk the Frances encountered a severe gale, and sustained such injuries as made it necessary for her, after two days, to put back to Carthagena: on entering that port she struck several times on a sand bar; and on examination it was found that she required considerable repairs in her hull and rigging. She was placed, by the captain under the care of the American consul at Carthagena; and was sold by him at private sale to Evans for one hundred and forty dollars, with the consent of the captain. Evans afterwards sold the Frances to Palmer for two hundred dollars. She was repaired by Palmer, and returned to the United States. The plaintiffs claimed a total loss from the underwriters.
On the trial in the circuit court, the defendants took exceptions to the opinions of the court, on points submitted by the plaintiffs and by the defendants, for instructions to the jury; which, with the facts of the case, are fully stated in the opinion of the court.
The deposition of Thomas Evans was offered in evidence, by the plaintiffs below; and after exceptions to its legality by the defendants, was admitted by this court. The deposition was taken, ex parte, at Norfolk, before the mayor of that place. In the caption, the mayor states the witness to be a resident in Norfolk; and in his certificate declares the reason for taking it to be, that the witness 'lives at a greater distance than one hundred miles from the place of trial, to wit: at the borough Norfolk.' No subpoena was issued for Evans, and no other evidence was offered of the place of his residence, than the caption of the deposition in the handwriting of the mayor of Norfolk.
The jury having found a verdict for the plaintiff in the circuit court, the defendants prosecuted this writ of error.
The case was argued by Mr Mayer and Mr Wirt for the plaintiffs in error; and by Mr Stewart and Mr Taney for the defendants.
For the plaintiffs in error it was contended:
The deposition, ex parte, of Evans, ought not to have been admitted in evidence; because the act of congress allowing depositions of this kind is not to be construed to extend to depositions taken at a place, to which a subpoena from the court of trial will not reach. Only depositions, de bene esse, may be taken under the act; and de bene esse, ex vi termini, imports a power, by ordinary common law process, to obtain the evidence; and a subpoena is that ordinary means. 3 Wash. C. C. R. 415, 529. At least no such deposition can be read, unless due diligence be first used to obtain the attendance of the witness at the trial, or his evidence under commission, according to the rules of the court. 2 Wash. C. C. R. 487. 4 Wash. C. C. R. 215. 1 Peters's C. C. R. 291. Nothing to this effect was in proof at the trial.
No evidence was offered to show that the vessel was injured by any of the accidents insured against injury, beyond one half of her value. The underwriters do not insure the goodness of the ship; and the deficiencies, which form the ground of the claim, must be traced to the disaster which has befallen the vessel within the perils of the policy, and must be proved and measured by regular details and estimates. Cazalet vs. St Barbe, 1 T. R. 190. 1 Johns. Rep. 336. Fontaine vs. Phenix Insurance Company, 11 Johns. Rep. 295.
It may also be questioned, whether, in the estimating of the injury to be beyond one half, the customary rule must not be observed, of deducting from the repairs one third on account of the new work. 3 Mas. 75. 2 Caines' Ca. Er. 157. It is true, the insurer, if the abandonment be valid, will have the vessel, and consequently the benefit of the new work; but the very inquiry here is, whether the abandonment be well grounded; and that is to be learnt only by seeing what injury is really sustained. That necessarily refers us to the value of the old work, in its competent condition, at the commencement of the risk; nothing more being incumbent on the insurer by his contract, than to replace the insured property in its original state, either specifically or by a pecuniary equivalent.
It is not settled to what place the estimate of the vessel's worth, when supposed to be repaired, is to be referred; when the ascertainment is making whether she will be worth repairing. It is to be presumed her value, in her improved condition at her home port, is most just; because, there the vessel is to be available to the owners for sale or enterprise; and the natural occupation of a vessel, to carry merchandize, will be supposed to be the object of the owners in having her at a foreign port, and not the sale of the vessel. 11 Johns. Rep. 295. 2 Caines' Ca. Er. 157. 2 Mason, 71. All analogy from the settlement of the contribution, in general averages, authorizes the present construction. Marshall, 621, 628.
But an abandonment was necessary for sustaining a claim of total loss, admitting the vessel to have been deteriorated by the disasters, beyond one half of her value. Phill. 383. 1 T. R. 611.
There was neither an actual nor constructive abandonment here. An abandonment must be explicit and absolute, and must use terms of cession, that, by clear intent, transfer the property in the thing insured. A mere claim for total loss will not avail as an abandonment. Parmeter vs. Toddhunter, 1 Camp. 451. Turner vs. Edwards, 12 East, 488. Phill. Ins. 447. Marsh. Ins. 600.
The protest does not amount to an abandonment in this case, though transmitted by the insured, and containing words of abandonment in the close of it; because not made by the persons having the property in thing insured, and because the insured transmitted it to the underwriters only as a protest, or detail of the circumstances of the loss.
If there be evidence of abandonment, it is, nevertheless, necessary under the policy in this cause, to show notice of an intention to abandon. The abandonment and the notice, it has been decided in Catlett vs. Columbian Insurance Company, 12 Wheat. 393, may operate by one instrument. But the instrument should contain words of a prospective import. That is not the case in any of the written acts of the parties here.
If there was an abandonment, yet the state of the vessel must be regarded as the vessel was at the time of the abandonment. She had then been repaired, at a trivial expense; and, the sale being a nullity, she was in the hands of the insurers in point of law. Though supposed once to be irretrievably injured, she was not so then; and her repairs having proved to be practicable, at so small a sum, demonstrated that she never was actually thus injured. In reference to this point, on the time of abandoning, the case must be treated in analogy to that of a capture and re-capture.
Only extreme necessity will justify a sale by the master; and that necessity must be found by the jury to have existed: and the jury, and not the master, is the arbiter on that issue of necessity, upon a view of all the circumstances of the case. The honest discretion of the captain is not the sanction here; however that discretion may be conclusive as to all proceedings within the sphere of his ordinary business as master. A sale is, however, without those limits; and must be justified by a superadded agency, which only the force of circumstances can confer upon him. It is not enough, therefore, that the master shall appear to the jury to have had an honest view to his owner's interest in a sale of the ship; but the jury must find that, according to the aspect and state of things, the sale was in fact for the owner's interest, because of the necessity to resort to that measure. It must be an interest created by the exigency, and not produced by any collateral circumstances beyond those connected with the restoration of the vessel. All the authorities may in this view be easily explained and reconciled, where on this head they use the terms, 'for the best of all concerned;' 'for the benefit of the concerned;' 'as a prudent man uninsured would do;' as applied to the master's discretional sale of the vessel. All these rules come round to the principle of the necessity, within which strictly the question of the owner's interest on the emergency lies. What is a case of necessity depends on the circumstances and many varieties of accident; but a necessity, in reference to a sale, may be said to be the state of things which, from actual ascertainment where practicable, or from appearances, where they can alone be consulted, requires instant action; and where there is a choice only between the certain or probable loss of the vessel, and the saving of so much of her as the proceeds of a sale may yield.
Every case of necessity must exhibit a perspective destruction, or an injury already sustained, to a degree irreparable, or demonstrating, in connexion with the expense, that repairs would be an idle waste of money. The first instance is an example of mere jeopardy; the latter is the case that should now be before the court to entitle the insured to succeed. The case of jeopardy is to be found by the jury, from the threatening perils of the ship; the case of sustained injury, from the fact of her actual condition, and the well ascertained expense of repairs, and the value of the vessel after repairs, determined upon some sure data. Hayman vs. Molton, 5 Esp. R. P. C. 67. Reid vs. Darby, 10 East, 343. Miller vs. Fletcher, 1 Doug. 231. Read vs. Bonham, 7 Serg. and Lowb. 386. Scull vs. Briddle, 2 Wash. C. C. R. 150. Queen vs. Union Insurance Company, 2 Wash. C. C. R. 331. Church vs. Marine Insurance Company, 1 Mason, 341. Robinson vs. Clark, 8 Serg. and Lowb. 376. Ludlow vs. Columbian Insurance Company, 1 Johns.Rep. 336. Phil. Ins. 395, 408, 409, 412. Marsh. 580. Fontaine vs. Phoenix Insurance Company, 11 Johns. Rep. 295. Idle vs. Royal Ex. Ass. Company, 4 Serg. and Lowb. 279, and note of this case in 7 Serg. and Lowb. 386. Green vs. Royal Ex. Ass. Company, 6 Taunt. 71. 3 Kent. Com. 134. Plantamour vs. Staples, 1 T. R. 611 (note), as to which case J. Butler's words are misquoted in Marsh. 582, and in Idle vs. Royal Ex. Ass. Company, 4 Serg. and Lowb. 279.
After an abandonment once effectually made, the master becomes the agent of the insurers. For the purposes of this case, it may be admitted, that in that event he is exclusively their agent. And the books must be understood to refer to the master's agency after a valid abandonment, where sometimes they speak of his discretion as agent. Phil. Ins. 468, 471. Marsh. 615, a. 2 Wash. C. C. R. 61. 6 Cranch R. 272. And the clause in the policies which authorized the insurer and his agents to 'labour, travail, &c., without prejudice to the insurance,' refers only to the conduct of the master after a complete ground for abandonment has occurred. 1 T. R. 613. Marsh. 334, 615. 2 Wash. C. C. R. 61. No necessity for a sale is shown here. 1 T. R. 190.
Well settled principles of insurance law are opposed to making the sale of the master the measure, or ground, of the claim. It is settled that an insurer is never to be involved by the fluctuation of the market. Marsh. 628. So the adventure of the ship is never considered as insured in connexion with the ship. An insurance on the ship is upon the ship for the voyage, not on the ship and voyage; showing that the thing itself, and not its speculation or fluctuating value, is always regarded in the determination of the insurer's liability. Phill. Ins. 283. 4 Cranch, 370, 373. So, it is settled that the goodness of the ship is not insured; but the contract only is, that she shall not be rendered defective by certain accidents: a principle that would be overthrown if the insurer were to be made liable according to the state of the market for ships at any casual port of distress. 1 T. R. 190. So it is said to be repugnant to the contract of indemnity, which a policy of insurance is, that one shall recover for a total loss, where the event shows there was, in fact and intrinsically, only a partial loss. Marsh. 575. 2 Burr. 1198. Hamilton vs. Mendez, Phill. 395, 326.
The insurer ought not to pay less, nor the insured to receive more, than the amount of actual loss; that is, an amount commensurate with the physical injury, and required to repair that injury. Marsh. 577. Fontaine vs. Phoenix Insurance Company, 11 Johns. Rep. 295. There is no right to abandon, on the supposition of events which turn out to have been misconceived. Bainbridge vs. Neilson, 10 East, 343.
The sale in this case was void; the mate and the captain being interested in the purchase, having no right to make the purchase at the first sale: nor Palmer at the final disposition of her, because Palmer was one of the surveyors: by the survey he promoted the sale, and stood, therefore, in a fiduciary relation with the owners of the vessel, which disabled him from being a purchaser. The insured had a right to vacate the sale, and the sale being in point of law, null at the election of the insured, will be regarded as absolutely so, as to the insurers, whether the insured actually make an election or not. 5 Esp. 67. Church vs. Marine Insurance Company, 1 Mason 351. Baker vs. Insurance Company, 2 Mason 370. 6 Pick. 198. 1 Esp. 237. 4 Binney, 386. Phill. Ins. 423.
This being then a case where there has been no abandonment, and the act of the master, by a sale, not being, in law, competent to make the loss actually total, and the ship in consequence of the absolute nullity of the sale being deemed to be specifically in the hands of the insured; the claim here can only be for a partial loss, to the extent of the sum required to repair at Carthagena the real injury sustained by the vessel.
Mr Stewart and Mr Taney, for the defendants, contended:
The deposition of Evans, taken before the mayor of Norfolk, was admissible in evidence. It was objected to, on the grounds 'that no subpoena had been issued for him, and no evidence, out of the deposition, produced as to his residence, or any inability on his part to attend the trial.'
It was not denied, that the provisions of the act of congress had been strictly pursued. The officer, by whom the deposition was taken, had the power, and he was under no disqualification to exercise it; the oath was administered in due form, and a due return made of the deposition, with a certificate of the reasons for taking it. But it was said that the deposition was only de bene esse, and that until, by the return of a subpoena, or by some other mode of proof, to the court, it was shown that his attendance could not be had, the deposition could not be read. It was insisted, that the act of September 24th, 1789, was passed to facilitate the administration of justice, to render it more convenient and less expensive, and that every caution and check had been employed in the requisitions of that act, to prevent the dangers likely to attend ex parte examinations. That the ceremony of issuing a subpoena was not in the contemplation of that act, because where the place of trial was in one of the United States, and the residence of the witness in another state, at a greater distance than one hundred miles from the place of trial, the subpoena would be unavailing. The act intended to reach all cases, where the witness resided at a greater distance than one hundred miles from the place of the trial; the whole object of that law being the procurement of testimony, under suitable sanctions, and in the manner least burdensome to the suitors and witnesses. Depositions taken at that distance were de bene esse, only in case the witness was within the reach of the process of the court at the time of the trial, with the knowledge of the party seeking to use the deposition.
In providing for this contingent arrival of the witness within the process of the court, the depositions were styled de bene esse.
Under the opposite construction, a commission would be the only mode to take the testimony of witnesses residing out of the district, at a greater distance than one hundred miles: upon what principle can we so limit the operation of a law, whose words are general and comprehensive. In all the cases in the enacting clause, the depositions are absolute, unless the witnesses are afterwards shown to be within the reach of the process of the court.
In the case of the Lessee of Barent et ux. vs. Day, 3 Wash. C. C. R. 244, a subpoena was dispensed with, because the witness was shown to be so advanced in age as to be unable to attend.
In the case of Beale vs. Thompson and Maris, reported in 8 Cranch 71, a deposition taken under the act of congress in New Hampshire, was offered in evidence in the circuit court for the district of Columbia, and rejected, because opened out of court. No objection was there made upon the ground taken in the case in 3 Wash. C. C. R. 414.
The counsel for the defendant in error referred to the case of Bell vs. Morrison et al. 1 Peters, 356, to show, that the certificate of the magistrate taking the deposition is good evidence of the facts therein stated.
If the damage done to the vessel by the peril of the sea on the voyage insured could not be repaired without an expenditure of money, to an amount exceeding half her value at the port of Carthagena, after such repairs, the plaintiffs had a right to abandon and recover for a total loss.
It was contended that this rule was a positive one, originating in the convenience of having a precise test in all cases. Cited Smith vs. Bell, 2 Caines' Ca. in Error, 153. Center vs. American Insurance Company, 7 Cow. 564. Peele vs. The Merchants' Insurance Company, 3 Mason's Rep. 28, 69, 72. 3 Kent's Com. 276.
If upon the information obtained, and the circumstances known to the captain at the time of the sale in question, after due and diligent inquiry, it was absolutely necessary, and for the interest of the concerned, that the vessel should be sold; and if a prudent and discreet owner, placed in the like circumstance, would have come to the same conclusion, and sold the vessel in like manner; then the sale made by the captain was justifiable, and the plaintiffs had a right to abandon: whether such a necessity existed at the time of the sale, was a question proper for the jury to decide according to the rule stated in the opinion of the court.
It was contended, that the master of a vessel has a right to sell the vessel, in a case of extreme necessity; that upon the happening of any unforeseen emergency, which requires prompt and decisive action by the master, he becomes the agent of all parties, and is competent to bind them by acts done within the scope of the agency, and done with good faith, and for the benefit of all concerned; that the sale described in the testimony was made so in the prosecution of such an agency, arising from a condition of extreme necessity; was made honestly, without knowledge of the insurance, and for the advantage of all concerned in the adventure. All the transactions at Carthagena, after the return of the schooner Frances to port, in a most disabled and unseaworthy condition, took place under the auspices and sanction of the United States consul, whose official station invited confidence, and was to be deemed a sure guarantee of the diligence and fidelity of the captain, in the absence of all proof to the contrary. Hayman vs. Molton, 5 Esp. 65. Mills vs. Fletcher, Douglas, 231. Plantamour vs. Staples, 1 D. and E. 611 (note). Robertson vs. Caruthers, 3 S. and L. 479. Idle vs. The Royal Ex. Ass. Company, 4 S. and L. Read vs. Bonham, 7 S. and L. 384. Robertson vs. Clarke, 8 S. and L. 373. Scull vs. Briddle, 2 Wash. C. C. R. 151. Fontaine vs. The Phoenix Insurance Company, 11 Johns. 293. Centre vs. The American Insurance Company, 7 Cowen, 564, 582. Gordon vs. Mass. Fire and Mar. Ins. Comp. 2 Pick. 249. Phillips on Ins. 408.
The letters of the plaintiffs, dated May 1st and May 5th, 1824, together with the documents and accounts transmitted with them, were a sufficient abandonment. It was contended that there is no prescribed form in which an abandonment is to be made: that any act manifesting the intention of the insured to look to the insurer for the stipulated indemnity, constitutes a sufficient abandonment, upon which to base a claim for a total loss; and that the correspondence between the parties demonstrated that they treated the claim as a claim for a total loss, in connexion with an implied surrender of all the property to the insurers. 8 D. and E. 273. 3 Yeates, 378. Condy's Marshall, 599, b. 1 Binney, 47. 7 S. and L. 384. 4 S. and L. 272.
It was also contended, that inasmuch as the protest (one of the transmitted documents) contained a formal abandonment in terms of cession, and claimed for a total loss, it became, by the transmission of it, the abandonment of the assured. It was the act of an agent, adopted, as soon as it was known, by the principal; and was therefore a valid and formal cession of the plaintiff's property.
The sale by the captain being justified by the circumstances of necessity under which it was made, divested the defendants in error of their legal title to the vessel, and therefore left nothing to abandon. Storer vs. Gray, 2 Mass. 565. Gordon vs. Mass. Fire and Marine Insurance Company, 2 Pick. 249.
It was further insisted, that in such a case an abandonment would be an idle ceremony. The object of an abandonment is, to subrogate the insurer to all the rights and property of the insured; but if these rights and property were divested by a legal and justifiable sale, an abandonment was useless as well as inoperative.
Mr Justice THOMPSON delivered the opinion of the Court.

## Notes

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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