Court Opinion

ID: 9653886
Source: CourtListenerOpinion
Date Created: 2023-08-23 17:58:03.260676+00
Date Added: 2024-06-11T18:12:55.024479
License: Public Domain

CHASE, Circuit Judge
(after stating the facts as above).
The facts as stated above were not disputed. It is claimed by the libelee, however, that the gist of the action is the breach of a contract to procure insurance of goods to be carried by water, and that such a contract is not cognizable in admiralty. We would have no quarrel with the appellant’s version of the law applicable if we could agree that it has comprehended correctly the cause of action in suit. Virginia-Carolina Chemical Co. v. Chesapeake Lighterage & Towing Co. (C. C. A.) 279 P. 684; The City of Clarksville (D. C.) 94 F. 201; Marquardt v. French (D. C.) 53 F. 603.
 There was no breach of any contract to procure insurance. On the contrary, insurance quite satisfactory to all concerned was procured and went into effect. That part of the contract was fully performed at New York. When the barges left New York in tow for Toledo, the only portion of the contract still executory on the part of the libelee was the carriage of the rock by water. That this was a maritime contract no one doubts. We are now concerned only with the manner in which the libelee attempted to perform it. Having obtained insurance as agreed, the conditions of that insurance relating to carriage became a part of its contract with the libelant, and it was bound to carry the rock in whatever manner would comply with the terms of the insurance policy it had chosen. When the rock left New York, the libelant had the express promise of the libelee to tow it to Toledo, and the implied promise to tow it on from Buffalo only after inspection had been made as provided in the insurance policy. The requirement to carry with such inspection was not a separate undertaking. Inspection at Buffalo was but an agreed incident of the one and only carriage contract itself, as much so as if the original agreement between the parties had had nothing to do with insurance, but had expressly provided for such an inspection before the rock was exposed to the perils of a lake'voyage. Because the continued validity of the insurance in force was dependent upon such inspection, which had become an implied condition of, not a condition precedent to, the carriage, the consequences of a breach of such contractual duty extend to and -affect a nonmaritime subject embraced in the original contract which included both a maritime agreement to carry goods and- a non-maritime agreement to place insurance upon them. When the nonmaritime agreement to procure insurance was performed at New York, there remained to be performed only a purely maritime contract, which had for one of its requirements inspection at Buffalo. The subject-matter of the contract itself, rather than the effect of its breach, is the test by which the nature of the agreement is to be determined, and the only obligation the libelee is charged with having failed to perform is that of carrying the rock by water from New York to Toledo in the manner agreed upon. This manner of carriage was open to whatever agreement the parties saw fit to make so long as no law was violated, and an inspection of boats and cargo before venturing upon the lake at Buffalo is so plainly an aid to the safe carriage of the goods that it cannot be divorced from the transportation of which it was but an incident and held to be the basis of a separate and distinct undertaking which created any new or nonmaritime obligations. This rock and these boats were not to be taken to Buffalo for inspection as the object to be attained, but were to be inspected at Buffalo the better to enable the maritime contract to carry the rock to Toledo by way of Buffalo to be safely performed. Compare Loma Fruit Co. v. International Nav. Co. (C. C. A.) 11 F.(2d) 124, 126, 127; Nash v. Bohlen (D. C.) 167 F. 427.
The District Court held the measure of damages -to be “the net loss from destruction of or injury to the cargo,” and that is said to be erroneous. There can be no doubt that the libelant lost whatever insurance it could have collected but for the libelee’s failure to carry with inspection as agreed. This makes the damages recoverable the same as in cases where there has been a breach of a contract to insure. In such cases liability as the insurer is enforced. Morris v. Summerl, Fed. Cas. No. 9,837; Marquardt v. French (D. C.) 53 F. 603. If the insurance company would have been liable for “the net loss,” there was no error in the computation of damages. None of the rock reached its destination. One cargo was an actual total loss. The three other cargoes were necessarily sold at an intermediate port and became a salvage loss. Under these circumstances the correct method of adjustment is to deduct the net amount realized from the sale from the value stated in the policy, and the remainder reflects the compensable loss under the policy. There is no occasion for pro*88eeeding -with reference to the rules- obtaining in the adjustment of a particular average loss. London Assurance v. Companhia De Moagens Do Barreiro, 167 U. S. 149, 168, 17 S. Ct. 785, 42 L. Ed. 113; La Fonciere Compagnie D’Assurances v. Koons (C. C. A.) 75 F. 110. See Id. [D. C.] 71 F. 978.
 It fairly appeared that the libelee represented to the libelant before the trial of the action against the insurance company in the state court, and the president of the libelee testified in that suit, to the effect that the clause in the open policy providing for inspection at Buffalo had been understood and agreed by the libelee and the insurance company to mean inspection of equipment at the beginning of the season rather than inspection on each particular voyage. In reliance upon such representation, the libelant sued the insurance company, and incurred expense in prosecuting that fruitless suit. This expense was apparently incurred in good faith in an attempt to recover insurance which this libelee then insisted Was recoverable, and was made necessary by the libelee’s breach of its carriage contract. Its reasonable amount is therefore recoverable in an action on the contract. Straus v. Victor Talking Mach. Co. (C. C. A.) 297 F. 791, 811; Chambers v. Upton (C. C.) 34 F. 473; New York State Marine Ins. Co. v. Protection Ins. Co., Fed. Cas. No. 10,216; Town of Duxbury v. Vermont Central Ry. Co., 26 Vt. 751. The evidence tending to show the amount reasonably, necessarily, and actually expended for this purpose was not contradicted. It was sufficient prima facie- proof of this element of damage.
Decree affirmed.