Court Opinion

ID: 6411640
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:53:08.52451+00
Date Added: 2024-06-11T15:51:23.676900
License: Public Domain

Bigelow, J.
1. Assuming that, on the facts proved at the trial, an abandonment Was necessary to enable the plaintiff tc *451recover for a constructive total loss, we are of opinion that sufficient facts were shown to establish a valid abandonment.
, If the case stood on the letter of December 13th from the plaintiff to the defendants, communicating to them the letter which he had received from the master, there would have been more reason for maintaining that the abandonment was insufficient, because neither his letter nor that"of the master contained any distinct or definite statement from which it could with certainty be inferred that the loss was owing to a peril insured against. A condemnation in a foreign port, after a survey occasioned by the necessity of there making extensive and costly repairs on the vessel, without any intimation as to the cause which rendered them necessary, may, under certain circumstances, be deficient in one of the essential requisites of a valid abandonment. As such condemnation and sale might be expedient and necessary from causes other than that arising from the risks covered by the policy, a mere statement of them as the cause of abandonment, and the foundation of a claim for a total loss, may give no information to the insurer, on which he can act with safety, that the loss in fact arose from one of the perils against which he agreed to indemnify the assured. The validity of such an abandonment, however, depends very much on the circumstances under which it was made, and how it must have been understood by the parties. Heebner v. Eagle Ins. Co. ante, 136.
But the case of the plaintiff does not rest on these letters. It appears that subsequently, and within thirty days after he received the letter of the master communicating to him intelligence of the loss of the vessel, and immediately after the master’s return, he went to the defendants in company with the master, exhibited to them the protest and survey, and then claimed of them a total loss. No particular form is necessary to constitute a valid abandonment, nor need it be in writing. It is sufficient if the assured claims a total loss of the insurers, under circumstances from which an intent to abandon may be fairly inferred. Nor is it requisite that the cause of the loss should be distinctly stated, if the assured, in *452making the abandonment, refers to the intelligence in his possession as the ground of his claim, puts it within the reach of the underwriter, and the latter omits to inquire unto the circumstances or to ask for further information. 2 Phil. Ins. § 1682. Patapsco Ins. Co. v. Southgate, 5 Pet. 604. Macy v. Whaling Ins. Co. 9 Met. 359. Heebner v. Eagle Ins. Co. ante, 139. The defendants could have had no doubt of the intention of the plaintiff to make an abandonment by his claim for a total loss in company with the master on the 10th, 11th or 12th of January. This verbal claim, in connection with his previous letter of December 13th, in which he made an explicit abandonment of both vessel and freight, left no doubt as to his intention, and it could not have been misunderstood by the defendants. There was a sufficient disclosure of the cause of the loss. By the protest it appears that the vessel, in her passage from the Chincha Islands to Callao, met with strong breezes and a heavy sea, after which she leaked badly; that she was tight and stanch when she set sail; and that the leaks were not occasioned by any insufficiency of the vessel. By the survey made at Callao, it is shown that she was “ much strained, and had worked in her whole frame.” These papers were exhibited to the defendants ; and the master was present, who knew the circumstances and the occasion of the injury to the vessel, from whom the defendants might have obtained further and fuller information, if they had deemed it necessary to ask for it. Nor can it be contended that this abandonment was not seasonable. It was made as soon as the plaintiff had received sufficient intelligence of the cause of the loss to enable him to make it. On the 13th of December he communicated to the defendants all the information he had by the letter from the master of November 10th. As this did not contain any statement of the cause of the loss, the subsequent delay was not only not unreasonable, but was essential to enable the assured to make his abandonment complete and sufficient. The jury having found that the loss was occasioned by perils of the sea, and it being admitted that the plaintiff is entitled to recover for a total loss of the ship if a valid abandonment was made, we *453are of opinion that he has established a right to recover so much of his claim as is equal to the sum at which the ship was valued in the policy.
2. The only other question in thé case is, whether the facts proved at the trial show a valid claim for a total loss of freight to the full amount insured by the policy. Two questions arise on this part of the case.
The first is, whether, if the defendants are liable at all, a recovery is to be had for the full sum at which the freight is valued in the policy, or only for the difference between the valuation and the amount earned on the outward voyage; in other words, Is the sum which was received by the plaintiff for the carriage of a cargo from Boston to San Francisco to be deducted from the sum at which the freight is valued, in order to ascertain the sum to which the plaintiff is entitled in case of a loss of freight occurring on the homeward voyage ? Upon this point we can entertain no doubt. The voyages contemplated and covered by the terms of the policy were to ports at a long distance from each other, on each of which the amount of freight pending might be very nearly equal to the valuation, and the aggregate of that which would be at risk during all the successive voyages would far exceed it. If the policy is to be construed so that the freight earned on the first voyage is to be deducted from the valuation, the freight which would be at risk during the subsequent stages named in the policy would be nearly, if not entirely uninsured. Such could not have been the intention of the parties in making the contract of insurance. In the absence of any explicit provision to the contrary, the reasonable inference is, that the parties intended to protect by the policy the subject matter which would be at risk during the successive stages of the voyages specified. The insurance is not on th aggregate freight of all the voyages, but on the freight pending during each period. The rule of law applicable to the construction of policies like the one declared on, is well and carefully stated in 2 Phil. Ins. § 1208. It is in substance this : A valuation of freight in a policy for successive voyages is presumed to be of that successively pending : but this presumption is liable *454to be rebutted by circumstances showing that the valuation is applicable to the aggregate amount of the successive freights. No such circumstances exist in the present case. On the contrary, it appeal-s that distinct voyages or adventures, not one round voyage, were contemplated by the parties; that the amount of the outward freight, which must have been ascertained when the policy was issued, nearly exhausted the valuation, so that, on 'the construction contended for by the defendants, the subsequent voyages would be substantially uninsured; and that the premium seems to have been calculated on the basis of a continuance of the entire risk during the successive voyages, as is shown by the stipulation for additional premiums. Begarding the contract as one of indemnity, it should be construed in such manner as to give protection to the assured for the amount of the subject matter at risk to the extent of the valuation, unless a different intention is unequivocally manifested. For this reason a different rule of interpretation is to be applied to policies from that applicable to charter parties, in determining whether a sum stipulated to be paid for the hire of a vessel is divisible, or due only on the completion of an entire voyage or succession of voyages. Davy v. Hallett, 3 Caines, 16. Patapsco Ins. Co. v. Biscoe, 7 Gill & Johns. 293. Hughes v. Union Ins. Co. 8 Wheat. 294. Hugg v. Augusta Ins. & Banking Co. 7 How. 595. 1 Arnould on Ins. § 128. It follows that as the homeward voyage had commenced, and the entire subject of valuation was at risk, when the injury by a peril of the sea happened, which occasioned a total loss of the ship, the assured, if he can recover at all for a loss of freight, is entitled to the full sum at which it is valued in the policy.
3. This brings us to the consideration of the remaining and more interesting question, whether the facts disclosed are such as to give the plaintiff any claim on the defendants for a loss of freight. The ground on which this claim is resisted is, that although there may have been a constructive total loss of the ship, consequent on a justifiable sale, rendered necessary by perils insured against, there has been no loss of freight whatever, because it appears that the cargo with which the ship was laden *455was taken out uninjured, and transhipped by the master on board of another vessel, by which it was conveyed in safety to the port of destination, where the agreed price for its carriage was paid by the consignees; and that it makes no difference in this respect, that the cost of transhipment and carriage by the substituted vessel is equivalent to the sum agreed to be paid to" the plaintiff for the transportation of the cargo by the original ship.
But we cannot think this view of the facts is founded on a just appreciation of the contract of insurance on freight, or of the relation which subsisted between the master and the parties interested in the ship, cargo and freight, at the time when the constructive loss' of the vessel took place. By a contract of insurance on freight, the underwriters agree to make good to the owner of the ship the sum which would have been earned as a compensation for the carriage of the cargo, but for the intervention of the perils insured against. In other words, it is an agreement that the perils insured against shall not prevent the owner from earning freight on a particular voyage. If a policy is made on the freight of a cargo laden on board of a vessel destined for a designated voyage, the risk attaches to that particular cargo on board of that vessel. It is, in effect, a stipulation that the insurer will indemnify the owner, if the vessel, owing to one of the perils insured against, is prevented from earning the freight on that cargo. It has therefore been said by this court, that after a policy has so attached to that vessel and cargo, as a general rule, with some exceptions, if the vessel is wholly lost by a peril insured against, the power of earning freight is lost, and the insurer is liable on his contract. Lord v. Neptune Ins. Co. ante, 113.
In the application of this rule, the effect of a constructive total loss of the vessel is the same as an actual total loss. This is the necessary result of the legal right which the owner has to abandon bis vessel and give up the voyage for a sufficient cause. The contract of affreightment and that of insurance on the freight must be presumed to have been made in contemplation of a contingency which might justify such aoandonment. As the ship, cargo and freight are each proper subjects of insurance, *456the owner of each may well protect his interest by a policy ■ and the right of each under his policy cannot be in any way affected or impaired by the existence of insurance on the other subjects at risk. Lord v. Neptune Ins. Co. ante, 121. Therefore the right of the owner, in case of a constructive total loss; to abandon his vessel and thereby to lose the power of earning freight, cannot be restricted or taken away by the existence of policies on the cargo and freight. Indeed, the insurers on the latter must be presumed to have taken, as one of the risks included in their contract, a constructive total loss of the vessel by one of the perils insured against. Therefore a technical total loss of the vessel may involve a loss of the freight; because, by her lawful abandonment to the underwriters and the consequent vesting in them of the title to the vessel and her capacity to earn freight, (if it cannot be otherwise earned,) he has lost the freight which he would have earned by the completion of her destined voyages. Such, as we have before said, with some exceptions, is the general rule, and by it the plaintiff is entitled to recover his full freight in this action, unless the transhipment of the cargo to another vessel and its carriage to the port of discharge for a sum paid to the owners of the substituted vessel, vqual to that which would have been paid to the plaintiff, if his vessel had completed the voyage and delivered the cargo, takes the case out of the rule and brings it within a recognized exception to it. No authority in support of such an exception has been cited, nor are we able to find any foundation for it in the principles of law applicable to freight as a subject matter of insurance. On the contrary, it seems to us to be inconsistent with them. The elementary definition of the term “ freight,” as used in policies, is the earnings derived by a shipowner from the use of his vessel for the carriage of goods. 1 Phil. Ins. § 327. 1 Arnould on Ins. § 89. If a vessel is lost by perils of the sea, and the cargo is sent forward by the master by another ship, at a rate of freight equal to that which the original vessel would have earned if she had successfully prosecuted her voyage, the owner receives nothing as the earnings of his vessel. The compensation paid for the transportation of the cargo by the con *457signees of the shipper passes into the hands of the owner of the substituted vessel. The insured in fact loses not only the profits ■ which would have accrued to him from the contract of affreightment, if he had fulfilled it by delivering the cargo in his own vessel, but also the expense incurred by him in preparing his vessel for the cargo, taking it on board and carrying it to the place of transhipment. It cannot be said that under such circumstances freight, in the sense in which it was understood by the parties to the contract of insurance, has been earned by the assured. The guaranty of the insurer amounts to something more than an agreement that the cargo shall be delivered at the port of destination, so that the amount stipulated to be paid for freight shall be due from the shippers. Such an interpretation of the contract would dissociate freight, as a subject of insurance, from the vessel by which it is to be earned, and attach it wholly to the cargo; and the policy would cease to be a contract of indemnity, by which the owner of a vessel would be protected against loss by reason of the failure of his vessel to earn freight in consequence of a peril insured against.
But it is urged on the part of the defendants, that the loss of a sffp at an intermediate port does not necessarily draw after it the loss of the freight; because, if the cargo remains, as in the present case, uninjured, so that it can be transhipped and forwarded, it is the duty of the master to send it on. Both branches of this proposition, taken separately, are true. No doubt there are cases where a vessel is disabled by perils of the sea, and is thus lost or abandoned, in which no claim for a total loss of freight, either actual or constructive, can be maintained. If, for example, a part of the prescribed voyage has been accomplished before the happening of the peril which has disabled the ship, and the cargo remains in specie, so that it can be sent forward to the port of discharge at a cost less than a moiety of the stipulated freight, no total loss of freight is thereby occasioned In such case, it is in the power of the owner of the ship, through his agent the master, by a proper exertion of due diligence, to receive a large part of the freight which his vessel had earned prior to her loss. This opportunity he cannot disregard or throw *458away. The perils insured against have not deprived him of his freight, or of the capacity of earning it. It is the neglect and omission of his agent, the master, which prevents him from receiving from the shippers the larger part of the stipulated freight as the earnings of his vessel. But it does not follow that, in all cases where the cargo remains in a condition to be reshipped and carried to the end of the voyage, it is the duty of the master, as agent for the owner of the ship, to reship and forward it, or that, if such reshipment is made and the cargo is forwarded and delivered to the consignees, the stipulated freight is thereby earned, so that no claim for a total loss of freight can in such case be sustained. If at the intermediate port the cost of forwarding the cargo in a substituted vessel is as great as or larger than the freight stipulated to be paid by the shipper, the owner of the original vessel can earn no freight, in the sense in which this term is used in a policy on the freight of his vessel, by forwarding the cargo. Nothing can accrue to him, or to the underwriters on freight, by the transhipment and carriage of the cargo. The expense of forwarding the cargo, which is a consequence of a peril insured against, absorbs all that is received for its transportation, and there is no excess of the freight stipulated to be paid for the hire of the original vessel, over the cost of sending forward the cargo, which can come either to the owner of the vessel or the underwriter on freight.
The mistake occurs in supposing that the master is obliged, in his capacity as agent for the owner of the vessel, in all cases of disaster to the vessel, to send forward the cargo, if it remains in a condition to render its transhipment judicious and expedient. But how is any such duty or burden imposed on the owner of the vessel? Certainly not by virtue of the contract of affreightment. That involves no undertaking that the cargo shall be forwarded to its place of destination at all events and under all circumstances. On the contrary, it is always subject to the proviso that its performance may be defeated and excused by perils of the sea. Nor can it be said that the contract of insurance on freight imposes on the assured any obligation to forward the cargo after the loss of the ship, when no part of the *459stipulated freight, which was the subject of insurance, can be thereby saved, but the expense of forwarding will equal or exceed the sum to be paid by the shippers. In such case the goods or the cargo by being sent forward can indeed earn freight, but not the freight covered by the policy. The lost vessel can earn no freight, nor by sending forward the cargo can anything be saved as her earnings of that part of the voyage which she has performed. There can be, in such a case, no salvage of freight. We by no means intend to say that it may not be the duty of the master to forward the cargo, after the loss of the vessel, when it can be done for the same or even a greater freight than was to be paid, under the charter party or bill of lading, for carriage by the original vessel. But such an act by the master, although judicious and expedient, would not deprive the owner of his claim for a total loss of freight. If it did, the law would operate with great inequality and injustice. An owner, in case of the loss of his vessel at an intermediate port, where the master was unable to find another vessel to carry on the cargo, would recover the whole sum insured on his freight. What good reason can be given for depriving an owner of his indemnity under his policy for loss of freight, merely because the master preserves the goods, and causes them to be sent forward to the port of destination, at a cost which absorbs the whole sum which was to be paid for the freight of the original ship, leaving nothing to be received under the original contract of affreightment ? The actual loss to the owner of the ship is the same in both cases. He receives no benefit by the transhipment of the cargo. The only difference is, that the master in the latter case is enabled to do an act which may enure to the benefit of the owner of the cargo. But certainly this is no reason for taking away the owner's right to an indemnity under his policy on the freight of his vessel.
The cases cited by the learned counsel for the defendants do not go to the extent of maintaining the position on which they rely. Some of the decisions of the courts in this country contain dicta in which the duty of the-master to tranship is stated without any qualification whatever; but it is in none of :hem *460determined that this is a duty which in every case devolves on him as the agent of the master or of the insurer on freight. It may be difficult to define with accuracy the extent of the master’s authority to act for the various parties interested in a voyage, or to fix, definitely, the point at which his agency for one party ceases and for another begins. But we think it may be safely said that whenever and as soon as the owner of a vessel, by reason of the perils of the sea, ceases to have any interest either in the ship or freight, so that nothing of either can be saved or protected by any act of the master, his authority to bind the owner is at an end. The subject matter of the master’s agency for the owner of the ship has in such case ceased to exist, and his power to bind his principal ceases with it. The owner himself, if present at an intermediate port under such circumstances, would have no motive or interest in the further prosecution of the voyage. Hence it is that although, in the ordinary state of things, the. master is a stranger to the cargo beyond the purposes of safe custody and carriage, yet in cases of necessity, unforeseen and unprovided for, the character of agent for the owner of the cargo may be forced upon him, not by the immediate act of the owner, but by the policy of the law ; otherwise valuable property in his possession and control might be left without any means of care or protection. It may be that the owner of the vessel may adopt and ratify a transhipment made by the master, where the voyage is completed and the cargo carried in a substituted vessel for the original freight, leaving nothing as earnings of the lost vessel. The owner of the cargo could in such case make no complaint or objection, because the contract of affreightment would be fully complied with. But such an act of the master, as binding the owner of the ship, would derive its efficacy, not from his'original authority, but-from the subsequent ratification. In the absence of any adoption or recognition by the owner of such transhipment, we know of no principle or authority on which it can be held absolutely binding on him. On the contrary, the more reasonable doctrine is that stated in 2 Phil. Ins. § 1634: “ If the motives of the master’s course are wholly on the side of one party, then he *461must be presumed to have acted on behalf of such party.” See The Gratitudine, 3 Rob. Adm. 240; Shipton v. Thornton, 9 Ad. & El. 333; Gibbs v. Grey, 2 H. & N. 22; Emerigon on Insurance, c. 12, sect. 16, § 6, (Meredith’s ed) 343.
Upon the direct question whether, on the facts proved at the trial, the defendants are liable for a total loss of freight, the authorities are quite decisive. In Whitney v. New York Firemen Ins. Co. 18 Johns. 210, the court say, “ To sustain such an action on a policy for freight, the plaintiff must prove that the ship was disabled by the perils insured against, and that the cargo could not have been carried forward from the port of necessity to the port of destination for one half the freight valued in the policy.” The same doctrine is fully recognized in American Ins. Co. v. Curtis, 4 Wend. 53, in which the chancellor states the rule thus : “ If no freight pro rata itineris has been earned, or the expense of sending on the cargo by another vessel is equal to or exceeds the whole amount of freight agreed upon by the charter party, there is an absolute total loss of freight. If the expense of sending on the cargo by another vessel will exceed a moiety of the freight, it is a technical total loss of the freight, which will authorize the assured to abandon.” These decisions, it is to be observed, were made subsequently to the decisions of the cases in the courts of the same state, cited by the counsel for the defendants, in which the duty of the master to tranship and forward the cargo had been stated in the broadest and most comprehensive terms.
In our own court the decision in Coolidge v. Gloucester Marine Ins. Co. 15 Mass. 341, seems directly in point. That was a case of a constructive total loss of the vessel, which was abandoned to the insurers. She was afterwards repaired, and took on board the same cargo with which she had been laden at the time of the loss, and carried it to the port of destination for “ the same amount which would have been earned, if the ship had not met with any disaster.” The court say that the vessel, when repaired, must be regarded as a new vessel, and if the master could have procured a new vessel to carry the goods to the port of delivery, “ no one would have doubted but that the owners *462of the new vessel would have been entitled to the earnings;” and it was held that there was a total loss of freight. See also 2 Phil, on Ins. ^ 1444,1632.
It was suggested by the learned counsel for the defendants, that the expense of forwarding the cargo by the substituted vessel was only an additional cost or charge which would destroy or take away the profits which otherwise might have been earned under the charter party, and that as the policy did not cover a loss of profits or include a guaranty that the cost of transporting the cargo to the port of destination should not exceed or equal the stipulated freight, there could be no claim for a total loss of freight in this case, inasmuch as the agreed price was paid by the consignees of the cargo. The fallacy of this argument has been already adverted to. It proceeds on the ground that the guaranty of the insured is, that the goods shall earn freight; whereas the real contract is, that the vessel shall earn freight by carrying the goods notwithstanding the perils of the sea. The interest in the freight is connected with the ownership of the vessel, and the insurance upon it is on an accessory to such ownership. It is not an insurance that the cargo will earn freight, as disconnected from the vessel. Besides, we do not see why this argument of the counsel against the right to recover in this case for a total loss would not be equally strong against the right to claim a partial loss, when a large part of the freight had been earned by the original vessel, and the expense of forwarding the cargo had been paid by the owner of the ship. It might be said in such case that the whole freight had been earned and received by the owner of the ship, and that the additional cost of transhipment was only an expense which diminished the profits that might have otherwise accrued, and was not a proper subject for a claim of loss under the policy. But it cannot be doubted that the additional freight paid for the carriage of the goods by the substituted ship would be a partial loss for which the insurer on freight would be liable.
Without going more at large into arguments and illustrations bearing on the question, we are of opinion, on the authorities *463and principles above set forth, that the plaintiff has established a claim for a total loss of freight, and that judgment must be entered accordingly.

Judgment on the verdict for the plaintiff.