Court Opinion

ID: 9416294
Source: CourtListenerOpinion
Date Created: 2023-08-02 19:39:38.314987+00
Date Added: 2024-06-11T17:21:24.763945
License: Public Domain

Mr. Justice Johnson.
I concur with the Court in all the points decided in this cause, except that which relates to freight. On that it is my impression, that they have misapprehended the case, the question, and the doctrine on which it turns. If so, it is not to be wondered at if it should appear that they have decided upon the authority of adjudications which have ho bearing upon the case.
The great disadvantage of Catlett’s cause, arises from the form in which this question is presented. It is raised in the adjustment of this loss, dnd comes up so confounded and blended with other matters, that it may well bewilder those who are more conversant with special pleadings, than with mercantile .statements. To give this question a fair chance with a lawyer, it should have come up on an action instituted by the underwriters to recover of the ship owner money which arose from the proceeds of an abandoned cargo, and had been remitted to the owner. The questions on the subject of freight would then have been distinctly presented, to wit, whether the freight had been earned, and whether-the owner had not a right to set it. off against the proceeds of the abandoned cargo, , And who would then entertain a doubt upon the snbject ? Would the ship owner have been permitted to pay over the proceeds of the abandoned cargo to the underwriters, and take his remedy against the shipper of.the goods? No one can imagine such adoctrine.
It is said, that the owner of the cargo shall, in no case, throw the freight upon the underwriter. But there are other interests always involved in such.cases, besides those *398°wner and underwriter of the cargo. The ship owner has his rights, and is not bound to forego his lien on the cargo ^0r freight, and to look to an absent, or insolvent owner, or insurer, for indemnity. The master is his agent to receive the freight, as well as agent'of the underwriter to remit the .salvage, and has a right, nay, is bound, to take care of the interests of his employer.
It is not, therefore^ thé owner of the cargo who throws the freight upon, the underwriter, but the owner of the ship, in the fair exercise of his- unquestionable rights. It is clear, then, that the freight may be lqgally thrown upon the underwriters,, by the act of another, even in opposition to the will of the insured. It must, then, be ascertained, whether the underwriter, who has thus had the freight thrown upon' him, by having it deducted from the proceeds of the salvage, can recover it back from the insured. And, in order to examine the. question distinctly, we will suppose the case of a payment of a loss before the freight has been thus thrown upon the underwriter; that is,' before the proceeds of. the salvage have been realized and remitted. to the ship owner, and by'him applied to his own freight. ■
And on what principle could a right in the insurer to recover back, in such an action against the insured, be maintained ?
It must be recollected, that I am here speaking of the case of an abandonment, on a voyage in which freight has been earned. In cases of absolute fotal loss, no freight can be earned ; but in that .of a technical total loss, it is well known that freight may be earned. It was not disputed in the argument, that freight, in this case, was earned; and the sufficiency of the abandonment to cast the loss upon the underwriters, is no,w decided. It is true, the underwriters-did not accept the abandonment, and have not, by any express act, accepted the salvage, but they are doing it now when they lay claim.to the-proceeds of the' salvage remitted to Catlett. If they do not mean to be encumbered with the freight, let them withdraw their claim to the remittance, and Catlett then remains in possession of the cargo, subject tó his lieu for freight.
The,case must, then, be considered as one In which the *399ireight is earned, and both the abandonment and salvage accepted; but the proceeds of the'latter remitted to tb^ ship owner, and by him retained for freight. The question will he, whether, in such a case, the underwriter, who has thus been compelled, in effect, to pay the freight,“can recover it, in any form of action, from the insured 1
What is the effect of a valid abandonment ? The right here contended for is, “ the right to pay the freight out of the salvage.” It is not true, in a sense applicable to this case, that the insured has no right to throw the freight upon the insurer. The right to abandon positively implies the right to throw the freight upon the underwriter indirectly. It is a right to charge him with a total loss, and if he gets nothing from the wreck, the insured has only asserted his rights against him to their acknowledged extent. It is a right to convert a partial actual loss, into a technical total loss.
There is one technical total loss familiarly known to lawyers and merchants, which occurs without abondonment. I mean, where the goods saved are less in value than the freight. There is a complete analogy between the two cases; and in the latter case, it is expressly adjudged,' and so laid down by the best elementary writers, “ that the insured has a right to apply the salvage to pay the freight, (2 Marsh. 588.) giving credit for the balance only to the underwriter.” (2 Marsh. 619.) And this is precisely the right which Catlett contends for in the present case.
The right so to apply the salvage results unavoidably from the received and acknowledged consequences of the right of abandonment.
Take the familiar case that occurs every day in time ot war. A vessel is captured by an enemy ; the insurer on the cargo hears of it, tenders his abandonment, and it is accepted and paid. Who, at that period, would think.of making a discount of the freight from the policy ? It has not been earned; the insured never was liable for it. But the ship is rescued by her crew, proceeds on her voyage, arrives in safety, and delivers her cargo. Here freight is earned, and must he paid; but by whom ? Certainly not by the shipper, . for he is divorced from the adventure, and the goods as much *400the property of the underwriters as if they had purchased and shipped them.
I have mentioned the case of an accepted abandonment; but the effect of a valid abandonment is the same as if it had, been accepted.
In the case at bar, at what point of time did tile transfer of interest take place ? Certainly at the instant when the accident happened. The abandonment has the same effect as if the owner and insurer had been on board, and the abandonment made at the moment the misfortune occurred. But freight had not then been earned; the liability for it had aot attached on the insured; and, in the eye of the law, as between him and the underwriter, it could do more attach on him than if the cargo had then gone to the bottom. By the abandonment, it is as to him as if it had gone to the bottom. The law places it.in that situation, by declaring it a total loss; and the language of the books on this subject is, “ :hat he ought not to be placed in a worse situation than if the cargo had gone to the bottom.” (Boyfield & Brown, 2 Str. et passim.) The insured never incurred the liability for the freight, but the underwriters did ; for when the freight was earned, he stood in the place of the insured.
In arguing to show that a' liability for the freight never did attach upon the insured as between him and the underwriter, 1 have considered the transfer by abandonment as taking place at the moment of the accident. But as to the effect of the abandonment the law goes further, and considers the underwriter in the light of the owner from the commencement of the voyage. (Marshall, 601—2.) Upon this principle it is, that in the case of a ship insured and abandoned, the underwriter is entitled to whatever freight she may afterwards earn. In the language of Mr. Marshall, “ the insurer becomes the legal assignee and owner, and from that time he is liable for all her future outgoings, and, consequently, entitled to all her future earnings.”
But if entitled to freight to be earned by the ship, why should not the cargo in his hands remain liable for freight to be afterwards incurred'? Liability in the, one instance is the correlative of right in the other. It is altogether a mistake vo call this charging the underwriter with the freight. The *401proposition affirmed is, that the abandonment does not discharge the cargo from the lien for the freight, to which it was subject in the hands of the insured. Even in the hands of the owner, this liability was not unlimited and unconditional; for if damage is incurred, (by perils of the sea, not from internal decay,) and the salvage goods will not pay the freight in value, the owner is not bound to receive them. Of his interest in this behalf he may judge for himself; it is only when he does receive them that he must pay. . And this is precisely the alternative which Catlett holds out to the underwriters.
There is a very strong, and, I-think, conclusive adjudication on this subject, to be found in the third volume of the Massachusetts Reports; it is the case of Fotheringham v. Prince, p. 563. vol. 3.
Wages are to the ship what freight is to the cargo ; a contingent liability attaching only on the fulfilment of the contract. In the case referred to, a vessel had been insured from St. Ubes to a port of discharge in the United States. She was cast away on Cape Cod, and abandoned, but the salvage was sufficient to pay the wages, and the proceeds were remitted to the underwriters. The wages were thus earned, and the owners were compelled to pay them, and now brought suit against the underwriters, counting as well for money had and received, as on the policy. The Court decided, that the underwriters were bound to refund the money paid for wages by the owner; and the adjudication is in principle precisely what is here contended for in behalf of the plaintiff below. Had the salvage in this case been remitted to the underwriters, and Catlett brought his action for money had and received to recover his freight, it would have been a.c,a'se on all-fours with the present.
It has been supposed that to decide that point against the underwriters, would be to make them liablejbr two insurances upon receiving one premium; that it would be ..making them liable for both freight and cargo, upon a premium received only on the cargo.
But, it may be truly said, that the inconsistency is on the other side; the argument is directly in point in favour of this claim for freight. This decision is not only njakitfg *402Catlett liable on the cargo, where he was his own insurer for the freight only, but is making him lose his freight after he had earned it, and pay it into the pockets of underwriters who had never insured it, and, therefore, could not acquire jt by abandonment.
Supposp another Company had insured the freight in this instance, and Catlett had abandoned to them, can it be doubted, that if the proceeds of the salvage had been remit;* ted to the insurers on the cargo, the insurers on the freight would have been entitled to recover it of them ? If so, Catlett is entitled to it, for he was his own insurer on the freight. Whether we consider him as having.insured, or having.earned it, his right is incontestible.
But, it is supposed; that the cases of Baillie v. Modigliani, and of Caze & Richaud v. The Baltimore Insurance Company, have established a contrary doctrine. It appears tome, that it is by placing too much confidence in the gene» ral language of indexes, and marginal notes, and misapprehending the doctrine op which this case turns, that the-mistake arises.
We have nothing hut a manuscript report of that case of Baillie v. Modigliani, and obviously one for which the learned judge, by whom the decision was made, is very little indebtéd to his reporter. We find in it a mass of correct principles, thrown together without order, and without object, and which, I make no doubt, is the skeleton of a. very learned and correct opinion; and one which, had we the whole of it, would have furnished a full exposition of the doctrine of this case, as well as qf that. But, as a decision, the case of Baillie v. Modigliani does not touch- the present case. For, in that case, there was no abandonment; the cargo was sold in France, with the benefit of the pro rata freight, and the owners wished to charge the underwriters with the freight so paid, as a loss incident to the capture. The question in the present case did not arise there, and could not arise in any case that does not comprise in it both the ingredients of technical total loss, and freight earned. That was a case of partial loss, and ,what the judge chose to say about the doctrine of the case of a total loss, was rnere gratis dicta< it would be but charity, or an act of *403justice to his learning, to suppose, that if he ever did utter the words attributed to him, to wit, “ In case of a loss, total as between the insurer and insured, with salvage, the owner may either take the part saved, or abandon, but in neither case can he throw the freight upon the underwriters ; because they have not engaged to indemnify him against it, and have nothing to do with it;” that he had in mind the only sense of those words in which it was possible that he could be correct; which was, “ that they could'in no case raise a personal charge for freight against the underwriters, where sufficient salvage to pay the freight had never come to their hands.”
In any other sense, every merchant oh the Exchange of London could have told his lordship that he was incorrect. To have obtained from the learned judge a decision applicable to the present cause, the question. should have been propounded to him as applicable to a case of technical total loss, with salvage sufficient to cover the freight. The answer would then have been rendered in the language of the books, a language on this subject equally that of lawyers, merchants, and insurers, “ Where freight is earned, the insured, in the case propounded, has a right to apply the salvage to the paymeiit of freightwhich is, in so manv words, what Catlett contends for in the present cause.
I have reasoned all along on the assumption that it makes no difference in principle whether the vessel and cargo be owned by the same individual, or by different persons, consider it unquestionable, and even conceded; and, indeed, where the cargo is insured, and the vessel not, after abandonment, the underwriter is, in the eye of the law, an owner ah origine, of the cargo, and so distinct from the ship owner. In the case of Caze & Richaud v. The Baltimore Insurance Company, (7 Cranch’s Rep. 358.) the counsel attempted to draw a distinction; but the Court did not listen to it, and in {heir decision obviously consider it as immaterial to the question before them.
The case of Caze v. Richaud is that which is relied on as most fatal to the claim of freight in the present cause.; but to me it appears as plain as an axiom, that the Court have themselves made it a different cáse, andadjudged *404it to be no authority against the present claim. No one pretends that Catlett could have retained for freight if no freight had been earned. But this is the express decision of the Court in the case'of Caze & Michaud; and if there was no frejgj,t due, of what consequence to the decision was' it t6 say, “ that it was no lien upon the cargo,” or that “ the underwriters could not be made to pay the freight ?” The proposition was equally true, of the most indifferent' person. It is of no consequence as to the bearing of that decision upon this case, to inquire whether the Court were right or wrong in deciding that no freight was earned. In so deciding, they have made it a different case from this in an indispensable circumstance, the earning of freight; and * plainly shown, that they could not have had in contemplation to decide a case in which freight had been earned, which is the present . case. I believe myself, that we were wrong in every line of-that decision; that it will not stand the lest of commercial law in any one of the three propositions that it lays down.
The case was this: a vessel and cargo belonging to the same owner sailed from Bordeaux for this country. The cargo was insured, the vessel and freight not. On her voyage, there being war between Great Britain and France, she was captured and carried into Halifax, having then crossed the Atlantic, and gone three fourths of the way on her course' to her port of destination. The cargo was abandoned, and vessel and cargo both condemned ; but- on an appeal, the condemnation was reversed as to both. It is mentioned in the report, that there was no appeal “ as to the freight but the case is defective in showing whether separate claims were filed for ship and cargo, or the two included in a joint •claim by the owner. If joint, the question of freight could not have arisen. But if, as seems probable from the proceeds of the cargo passing into the hands of the underwriters, the claims were several, then a question may be raised whether the plaintiff was not concluded by his acquiescence in a judicial decision of a competent tribunal against the claim to freight. This would have sustained the judgment against him in this Court, had there been no other obstacle to his recovering.'
*405As the abandonment was accepted, and the sum insured paid, the proceeds of the cargo got into the hands of the underwriters, and that suit was instituted for money had and received to the use of the ship-owner. Had he prefetted this claim against the proceeds of the cargo, while lying in the registry of the British admiralty, there cannot be a doubt that it would have been adjudged to him in the distribution of the money among the several claimants.
The three propositions which the opinion affirms in the case of Caze & Richaud, are,
1. That under no circumstances can the insured throw -the freight upon the underwriters, even by abandonment.
2. That no freight, even pro rata, was earned in that cause.
3. That the lien of the owner on the cargo for his freight eould not affect the question.
On the first point, no one will pretend to maintain the affirmative as a general proposition. Losses aré either total, partial,'or technically total. Upon an actual total loss no question of freight can ever arise, for there is no freight earned. In the case of partial loss, it is never admitted in adjustments ; and this is the full import of the decision in Baillie v. Modigliani, and -in the case of Gibson v. The Philadelphia Insurance Company, and some others. It is a charge payable after the arrival of goods at their port of destination, and therefore, never admitted into an adjustment of a partial loss. The cases of technical total loss are of. two kinds, as has been before noticed; the one with, the other without abandonment. It is not contended that, even in these, the insured can throw the freight upon the underwriters otherwise than incidentally by abandonment. It has been shown, that this is not the principle at all, upon which the doctrine insisted on by Catlett rests, and may, therefore,, be safely conceded to the case o I Modigliani, and all others in which, these dicta are to be found. The principle is, “ that the owner cannot, by his abandonment, devest the lien which the ship owner Jias in the goods abandoned.” That the underwriter takes the cargo cum onere, — a rule which is held sacred even against hostile capture, (the Der Mohr in 3 and 5 Robinson.) The law is, that the master is not bound to pari *406with his cargo, and fails in his duty if he does, until his freight is. paid. Why should he be so bound any more in tjje cagc 0f thg transfer by abandonment, than in any other tranfer ? In that class of technical total losses, which arises where the freight incurred exceeds the value of the thing saved, it is expressly decided, that the right to apply the sal* vage to the freight exists ; and it is impossible to draw a distinction between that class of cases, and the cases of teehnb cal total ,.oss produced by abandonment.
The'full latitude of the assertion, therefore, that the insured cannot throw the freight upon the insurer, may be conceded without affecting the right of the party to freight in the present case. The rule is rightly laid down, but its application is mistaken.
The same observations dispose of the third position assumed by the Court in Caze & Richaud, since it must be obvious, that the lien of the ship-owner on the cargo is all important to the question. The right to apply, the salvage to the freight grows out of the right of the master to hold the cargo for the freight, whatever change of interest may be produced in it by the act of the owners of the cargo.
The consideration of the second proposition of the Court in Caze &Richaud'1 s case, is not material to this cause, any further than it shows that they considered themselves as deciding a case the very reverse of the present.
Yet so convinced am I, that the decision there made against a pro rata freight was a hasty decision, that 1 will conclude with expressing a hope that, if ever the subject should again- come before this Court, it will pause and examine the doctrine without prejudice from that decision, since it is one which involves principles of great interest to the mercantile -world, and on which, I will undertake to say, if ever that case should be reviewed, there will be found a vast deal of learning and authority against the decision, and very little to sustain it.
In the very case which the Court profess to decide, -the cáse of Baillie v. Modigliani, the same pro rata charge was paid and acquiesced in by the Court and the bar, without a question.

*407
March 15th

Upon the whole, I never was clearer in any opinion in my life, than that the decision now rendered against the allowance of freight in this adjustment, is not to be sustained by either principle or authority.
[After the opinion of the Court was delivered in this case, the parties ascertained, that the auditors report was incorrect, (by the disallowance of the freight,) in some other respects, and required a different adjustment; and application was accordingly made for a hearing upon these points. The following additional opinion was subsequently delivered by the Court.]
Mr. Justice Story.
In consequence of the former opidion delivered in this cause, the parties have found it necessary to re-adjust the auditor’s report in several particulars not suggested at the former argument. Indeed, upon that argument, the parties assumed that the. report was perfectly correct, except as to the item of freight. We have examined the report, and are satisfied that the original plaintiff is entitled to recover the sum of 6,626 dollars and 18 cents, with interest from the 14th of October, 1822, which is the residue of the sum of 10,000 dollars insured by the Company, deducting the premium note and the proportion of salvage belonging to the underwriters, which has been received by the original plaintiff; and the judgment of the Circuit Court is to be reformed accordingly.
Judgment. This cause came on, &c. On consideration whereof, it is ordered and adjudged by the Court, that there is error in so much of the judgment .as allowed to the said Catlett, as freight to be deducted from the salvage, the sum of two thousand and forty-one dollars and twepty-five cents. And it is further ordered and adjudged, that upon the reformation of the auditor’s report; required by the disallowance of the freight aforesaid and otherwise, there is now due and payable to the said Catlett the sum of 6,626 dollars and 18 cents, together with interest thereon, from the 14lh of October, 1822, the said sum being the balance of the sum of 10,000 dollars insured, after *408deducting the amount of the premium due on the policy, viz. 3,76 dollars, and also the proportion of the salvage be-l°ng‘ng *° die said Columbian Insurance Company, viz. 2,997 dollars and 82 cents, received by the said Catlett; and that the judgment of the Circuit Court, to the amount of the said sum of 6,626 dollars and 18 cents, and interest thereon from the 14th of October, 1822, be and hereby is affirmed; and as to the residue of the said judgment, be and hereby is reversed: and the cause is to be remanded to the said Circuit Court, with directions to enter judgment for the said Catlett accordingly: the parties in the. Court beloyv to be at liberty to open the auditor’s report, so far as respects the item for 480 dollars, the proceeds of the doubloons, and the item for, 719 dollars and 37 cents paid over to captain M-Knight; and the judgment to be varied by the Circuit Court as these items may be found for either parly 5 execution, however, to be granted immediately for the balance of the judgment, deducting the said sum of 719 dollars and 37 cents.