Court Opinion

ID: 3602044
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:48:17.284337+00
Date Added: 2024-06-11T13:58:34.829098
License: Public Domain

It must be admitted that, if the ship-owner is to receive from the insurers his full freight, and they are to pay the wages of the seamen, he will be in a better condition than if the voyage had been safely performed; as, in the latter event, he would have received the freight, but been bound for the wages. But this consequence is not a sufficient reason, in itself, for charging the ship-owner with the wages. In the case of an absolute, total loss of vessel and cargo, he would also have been a gainer to the extent of the wages; and yet, if that had been the result, he would have recovered the gross freight without any deduction for wages.
The wages of seamen are a lien or charge upon the ship and the freight earned. If ship and cargo be lost, the wages are gone; but whatever shall be saved of ship and freight is pledged for the payment of wages. The ship-owner is personally liable for the wages of the crew; and his ship and its *Page 459 
freight, as between him and the seamen, are equally liable for the payment. In this case, after the disaster, there was an abandonment by the ship-owner of the interest of the freight insured to the defendants, and accepted by them, which operated as a voluntary transfer of the freight by him, entitling him to receive the full value thereof as if earned. The defendants, as abandonees, acquired the entire interest in the subject insured, and were entitled to the salvage, subject only to such claims as are legally and equitably chargeable as against insurers. After the abandonment, the owner saved from the fragments of the vessel more than sufficient to satisfy the wages; and also as much of the cargo as produced freight to the amount of $4,276.37, which he collected. There was, therefore, enough of savings from either source to pay wages; and the point is, as between the plaintiff and defendants, who should answer for them. Two considerations naturally arise in determining the question: 1st. Are the savings of the ship or the freight primarily liable to wages? and 2d. What are the charges subject to which an insurer takes a subject on abandonment? There is very little authority on the question, whether the salvage of ship or freight are to be primarily resorted to for the payment of wages, when the salvage of either is sufficient to satisfy them. Undoubtedly the seaman has a lien upon both, and may pursue it; but I am not aware of any decision or principle of maritime law to require him to primarily enforce his lien on freight savings when there shall be enough of the savings of the ship to satisfy it; or, where no disaster befalls the ship and freight is earned, that he must first resort to the freight, and not to the ship, for his wages. The mariner's contract and lien have a prior origin as to the ship than as to the freight. The lien commences on the ship before the freight is earned, and endures even if freight is not saved sufficient to pay wages, provided he stay by the ship; and what is rescued is first liable to pay wages. The ship is naturally the first object looked at by the mariner as a pledge. It is a visible, certain subject, which he can appreciate, and with which he contracts, and, as we all know, *Page 460 
practically, to which he first resorts. Freight, being the earnings of the ship in the course of the voyage, is the natural fund out of which the wages are contemplated to be paid; but the ship is also bound by the lien of wages, and, as between the owner and seaman, the former being the proprietor both of ship and freight, the latter is not driven primarily to the freight for indemnity; nor can I see upon what principle the freight should be first exhausted, and the vessel only resorted to when it proves insufficient. In the case of The Dawn (Davies, 121), it was said by Judge WARE that, "where the interests of third parties are involved, as between underwriters when the ship and freight are insured by separate policies, it would seem, upon principles of natural law, that the freight ought first to be exhausted, and the vessel resorted to only as a subsidiary fund when the freight proves insufficient." What principle he refers to is not clear, unless it be that which he had previously enunciated, that "freight is indeed the natural fund for the payment of wages; and the seamen have a privileged claim against it." If it should be conceded, however, that, by any principle of maritime law, as between insurers of the ship and insurers of the freight, the freight is the primary fund for the payment of the seamen's wages, it would not follow that, as between the owner of the ship and the abandonee of the freight, the principle would apply. The ship-owner is the absolute proprietor, both of ship and freight; and, when he parts with freight for its full value, cannot be supposed to create a lien in derogation of his grant. If there were an incumbrance embracing the whole subject, by the ordinary equity it becomes a primary charge on what is retained by the grantor. If, before the disaster, the ship-owner in this case had granted the pending freight to third persons, it would have implied the obligation on his part to pay all the ordinary expenses of earning the freight. The disaster occurring can only vary this obligation by subjecting the grantees to the extraordinary expenses growing out of the disaster. On principle, therefore, it would seem to me plain that the ship and the remnants saved should bear the wages in preference to abandoned freight. *Page 461 
2. When there has been an abandonment of freight, the salvage belongs to the insurers. The subject may, however, be incumbered by charges for which the insurers are answerable, and which loss they must bear. What are the burdens, charges, or liens upon the salvage that the abandonees of freight are subject to, and must bear? Only such as are created by the occurrence of the peril insured, and not those which, in the ordinary course, would be incurred by the subject, whether the peril had happened or not. Writers on maritime law and insurance declare it to be an elementary principle that the insurers are only to pay liens arising from the peril insured, and not from perils not insured against. Parsons, in his treatise on Maritime Law, says: "The salvage of course belongs to the insurers; but if it be incumbered by any charge or lien by a peril against which they have insured, they are, of course, answerable for this, and bear the loss. But if the salvage have burdens, charges or liens upon it, springing from perils which are not insured against, this must be the loss of the insured, who must discharge their burdens, or pay or allow to the insurers the sum they pay, or are bound to pay." (2 Pars. Mar. Law, 418.) So, also, it is said in Arnould on Insurance: "The abandonees of freight take as salvage the net proceeds of the freight ultimately earned, after deducting the cost of reloading the cargo on board, and the other expenses of earning the freight rendered necessary by the casualty; but the same rule does not extend to incumbrances or liens with which the property is burdened by the assured by contracts with third parties before the casualty took place, and not arising out of the perils insured against." (2 Arn. on Ins., 1183, Am. ed.)
By the abandonment, the insured, I think, in this case, became a trustee for the insurers as to all the subject insured which might come to his hands afterwards, and subject only to such claims on his part as were legally and equitably chargeable as against the insurers. The mariners' wages were not a charge of that description. It was not a burden springing from any peril against which the underwriters had insured. *Page 462 
They did not guarantee the insured on freight against the wages by the aid of which, in part, it was earned; but the wages were an incumbrance, or lien, with which the assured had burdened the property before the casualty took place, and not arising out of the peril insured against. It was a burden created by the ship-owner on his vessel and freight. By the abandonment of the freight insured, he, in equity, transferred to the insurers, not as a mere incident to the ship, but as an independent subject, capable of separate existence, and to be separately regarded, the existing freight, and received its full amount from them as if it had been earned. It would be contrary to principle that he should deduct any part of the ordinary charge of earning it. He should discharge the burden himself, or pay or allow to the insurers the sum they pay, or are bound to pay.
My conclusions are, that the seamen's wages should not have been deducted from or paid out of the freight, but out of the savings of the ship. The freight apportioned to the ship was $2,565.70; exceeding the unpaid part of the sum insured by $65.70.
The order of the Superior Court granting a new trial should be affirmed, and judgment absolute rendered against the plaintiffs.
DENIO and GOULD, Js., concurred with ALLEN, J.; SMITH, J., concurred with WRIGHT, J.; DAVIES and SUTHERLAND, Js., were also for affirmance.
Judgment absolute for defendants, and case remitted to ascertain the amount due them for overpayment. *Page 463