Opinion ID: 2101902
Heading Depth: 1
Heading Rank: 2

Heading: Evidence of Aetna's Initial Acquisition of Ownership

Text: The Lady Elgin was a total loss, and Aetna's payment to Hubbard on the claim considerably exceeded that provided under the policy for the ship. After an insurer pays a claim on a total loss, it has the prerogative either to reject or accept abandonment of the remains of the insured vessel. An acceptance of abandonment means that the underwriter is vested with complete title to the wreckage including any rights or liabilities that may attach. The expert testimony of Ivan Avery and George Stellwag established that once the insurer pays on the loss, ownership of the wreckage passes automatically to that insurer, and it is unnecessary for the claimant to make an express tender of abandonment. Avery testified that in 1860, in the vast majority of cases of total loss, the practice of underwriters was to accept ownership of the insured wreckage. Avery further testified that he had no question that Aetna had accepted abandonment of the Lady Elgin. This opinion was partially based upon the notation in one of the letters that the Augusta had been libelled for $42,000. According to Avery, this fact played a very important role in Aetna's decision to accept title, because it represented the amount that Augusta was likely going to have to pay in damages to the owners of the Lady Elgin. If Aetna accepted abandonment, it would obtain the right to these damages through subrogation. The State called Victor Simone as a marine insurance expert. Simone testified that an insurance company's determination of whether to accept or reject abandonment is unrelated to its decision to pay a claim, because the latter decision merely turns upon whether the claim falls within coverage. Simone testified that it was common for insurance companies to refuse abandonment, and that he believed Aetna never acquired title to the Lady Elgin because (1) in response to a request to admit promulgated by the State, Aetna conceded that on October 10, 1860, it had not accepted abandonment of the ship; (2) there was no evidence that Aetna acquired title; and (3) common sense dictated rejection of the wreckage because it would be difficult to salvage and had little salvage value. Addressing the statement in the letter of October 10, 1860, regarding Captain Dorr's instruction not to accept abandonment, Simone testified that this clearly showed that Aetna would not accept ownership of the vessel. Stellwag gave a contrary opinion, however, testifying that Captain Dorr's instruction was merely a recommendation, and that it was too early for a final decision by Aetna because the claim on the loss had not yet been paid.