8 U.S. 202
4 Cranch 202
2 L.Ed. 596
MARSHALL
v.
THE DELAWARE INSURANCE COMPANY.
February Term, 1808
ERROR to the circuit court for the district of Pennsylvania, in an action for a total loss, on a policy of insurance on the Brig Rolla, her cargo and freight.
The material facts stated, were, that the Brig Rolla, a neutral vessel, while prosecuting the voyage insured, was captured by a belligerent cruiser, and libelled as prize of war. On the 9th of July, 1806, a final sentence in favour of the vessel and cargo was passed, and on the 19th of the same month, about 1 o'clock P. M. restitution was made. On the 17th of July assured in New-York received information of the capture, and immediately gave orders to his agent in Philadelphia to abandon to the underwriters. In pursuance of these orders the offer to abandon was made on the morning of the 19th.
The judgment of the court below was for the defendants.
Hopkinson, for plaintiff.
The question in this case is whether the plaintiff is entitled to recover for a total, or only for a partial loss.
The proceeds of the cargo have been received by the plaintiff, who sold the same for account of the underwriters if they will receive them.
If the abandonment was made before the restoration in fact of the cargo to the captain on the 19th of July, the plaintiff has a right to recover for a total loss, according to the decision in Rhinelander's case, at last term, (ante, p. 41.
The plaintiff having shown a total loss, by the capture, it is incumbent on the defendants to show that the property was restored before the abandonment. On the 17th the plaintiff received information of the capture; on the 18th he wrote and put into the post-office at New-York, the letter to his agent in Philadelphia, directing the abandonment to be made; on the 19th it was received in Philadelphia, and the abandonment offered. The abandonment must relate to the 18th, when the plaintiff wrote his letter and made his election to abandon. Abandonment is an ex parte act, and if the plaintiff has a right to abandon at the time when he elects and offers to abandon, the defendants are liable from that time. No consent is necessary on the part of the defendants. The plaintiff was bound from the date of his letter; and the defendants must be equally bound.
But although the property may have been in fact restored before the abandonment, if that restoration was unknown to the plaintiff, it is yet an undecided question, whether the abandonment is not valid.
The opinion of Lord Mansfield in Hamilton v. Mendes, unlike the opinions of that great man, is confused and contradictory, sometimes making the question of right to abandon depend upon the state of the information, and sometimes on the fact itself.
It is not reasonable that the insured should be bound to abandon upon receipt of the first intelligence, and yet the underwriter be permitted to take advantage of subsequent events. There would be no mutuality in this principle. It would be ruinous to merchants thus to be kept out of their money. Besides, the contract is for indemnity, and there can be no fairer mode of ascertaining the indemnity than to give the underwriters the thing itself, subject to the chance of recovery, and let them pay the price. If the thing is restored and goes to a good market, the underwriters derive the benefit; if a loss happens, it is what they are bound by their contract to sustain. But as to the state of the fact itself, we contend that there was no actual restoration of the property before the offer to abandon. If there was, it is for them to show it. The onus probandi is on them.
If it is necessary to the justice of the case, the court will divide the day, and ascertain which event did first actually happen. 3 Burrow, 1434. Combe v. Pitt.
Dallas and Rawle, contra, contended,
That the peril being at an end, at the time of the offer to abandon, the plaintiff cannot recover for a total loss, unless the consequences of the capture created a total loss either in fact or in lar.
The peril by capture was at an end on the 9th of July, when the final decree of restitution, was pronounced in the court of dernier resort.
The right to restitution was consummate, and the authority to restore absolute. What remained was mere matter of form. The vessel and cargo were in the hands of the public officer, who held the same, after the decree, in trust for the owner. There was no longer any hostile or adverse possession. The property was in no danger of condemnation, or even of further detention.
The state of the fact, and not of the information, is the test of the right to abandon. If intelligence were the test, any idle vague rumour might compel the underwriters to pay a total loss when the property was in fact in perfect safety the whole time.
The contract is that the property shall not perish by the peril, not that it shall not encounter the peril. A storm may injure it, but if the injury does not exceed half the value, and the voyage be not broken up, it is not a total loss. The underwriters are only bound to pay the partial loss. It is a contract of indemnity only; the liability of the defendants therefore must depend on the state of the fact, and not of the intelligence. Park, 77. 155. 160. 144, 145, 146. 148. 152. 156. 167. Esp. Ca. N. P. 237. M'Masters v. Shoolbred. Rhinelander v. In. Co. Pennsylvania, (ante, p. 41.) Dutilgh v. Gatliff, cited in Rhinelander's case. 1 N. Y. Cases in Error, 21, 22. 1 Johnson, 205.
It is not contended that the consequences of the capture created a total loss, either in fact or in law. The expenses, pillage, and damage did not amount to more than one-fourth of the insured value, and these the underwriters are willing to pay. The vessel arrived at her destined port. She performed the voyage insured.
Ingersoll, in reply.
It is said that the restitution is to be considered as referring back to the time of the decree; but that point was otherwise decided in the case of Dutilgh v. Gatliff, in the supreme court of Pennsylvania. It was there decided that although at the time of the offer to abandon, there was a decree of restitution, yet as that decree was not known to the party who offered to abandon, and as in fact the property was then in possession of the captors, the insured had a right to recover for a total loss.
February 23.
MARSHALL, Ch. J. after stating the facts of the case as above, delivered the opinion of the court as follows.
The question submitted to the consideration of the court is this: Is the assured entitled to recover for a partial or for a total loss?
In support of the claim for a total loss, two points have been made:
1st. That the state of information at the time of the abandonment, not the state of the fact, must decide the right of the assured to abandon.
If this be otherwise, then, it is contended,
2d. That the right to abandon is coextensive with the detention, which continued until restitution was made in fact, and that restitution in fact, though made on the same day, was posterior in point of time to the abandonment.
1. Does the right to abandon depend on the fact, or on the information of the parties?
The right to abandon is founded on an actual or legal total loss. It appears to the court to consist with the nature of the contract, which is truly stated to be a contract of indemnity, that the real state of loss at the time the abandonment is made, is the proper and safe criterion of the rights of the parties. Might they depend absolutely on the state of information, a seizure which scarcely interrupted the voyage might be, and frequently would be converted into a total loss, and the contests respecting the real state of information might be endless. Intelligence of capture and of restitution might be received at the same time, and the insured might suppress the one and act upon the other.
This point came under the consideration of the court in the case of Rhinelander v. The Insurance Company of Pennsylvania, in which case it was said, that 'where a belligerent has taken full possession of a vessel as prize, and continues that possession to the time of the abandonment, there exists, in point of law, a total loss.' The court, in delivering this opinion, understood itself to require, that the continuance of the possession up to the time of the abandonment, or a technical total loss incurred, notwithstanding the restoration, was necessary to justify a recovery as for a total loss.
In considering the second point, the court proceeded to inquire whether the technical total loss on which the right to abandon depended, was terminated by the decree of restitution, or continued until that decree was carried into execution, and restitution was made in fact.
The real object of the policy is not to effect a change in property, but to indemnify the insured. Whenever, therefore, only a partial loss is sustained by one of the perils insured against, the original owner of the property retains it, prosecutes his voyage, and recovers for his partial loss.
But the voyage may be really broken up, without the destruction of the vessel and cargo. A detention by a foreign prince, either by embargo or capture, may be of such long duration as to defeat the voyage. This is a peril insured against, and of its continuance no certain estimate can be made. In the case of capture it is, for the time, a total loss, and no person can confidently say that the loss will not finally be total. So of an embargo. Its duration cannot be measured, and it may destroy the object of the voyage. These detentions, therefore, are, for the time, total losses, and they furnish reasonable ground for the apprehension that their continuance may be of such duration as to break up the voyage, or ruin the assured, by keeping his property out of his possession. Such a case, therefore, upon the true principles of the contract, has been considered as justifying an abandonment, and a recovery for a total loss.
But when a final decree of restitution, from which it is admitted that no appeal lies, has been awarded, the peril is over. On no reasonable calculation can it be supposed that such a delay of restitution will ensue, as from that time to break up the voyage. There is no reason to presume a subsequent detention on the part of the foreign prince. There is no motive for such detention. The master of the captured vessel may perhaps not be ready to receive possession, and the delay may proceed from him. At any rate, without some evidence that the peril was not actually determined, the court cannot consider it as continuing after the sentence was pronounced. A technical total loss originates in the danger of a real total loss. The court cannot suppose such a danger to have existed after a final sentence of acquittal, unless some order of court relative to a reconsideration could be shown, or it should appear that some other delays were interposed by the court which had pronounced the sentence, or by the sovereign of the captor.
Had the facts on which this question depends been known at New-York and Philadelphia as they occurred, could it have been said that there existed a technical total loss? After a decree of restitution, could it be said that while means were taking to carry that decree into execution, while the mandate for restitution was passing from the court to the vessel, the assured had a right to elect to consider his vessel as lost, and to abandon to the underwriters? To this court, it seems that the right to make such an election at such a time, would be inconsistent with the spirit of the contract, and that the technical total loss was terminated by the decree of restitution, unless something subsequent to that decree could be shown to prove the continuance of the danger, or of an adversary detention.
Nothing in this opinion is intended to extend to the case where a cargo may be lost, without the loss of the vessel.
There is no error in the judgment of the circuit court of Pennsylvania, and it is to be affirmed with costs.
Judgment affirmed.
Last modified: October 1, 2009