Willard v. Millers' & Manufacturers' Insurance

Scott, Judge,

delivered the opinion of the court.

From the cases to which reference has been made, one would come to the conclusion that the defence to this action is conceived in the idea that a total loss of freight can only exist, or can be said to have taken place, when the cargo is destroyed or in such a state that freight can not be earned in respect to it. This may be true as far as it goes ; but it is not the only event which will entitle the assured to an action on a policy against a total loss of freight. Insurance of freight covers the risk of a loss of it by reason of a loss of either the ship by the perils insured against whereby it is prevented from transporting the cargo, or a loss of the goods by the perils insured against whereby the earning of freight by the transportation of them is prevented. ( 1 Phill. 1142 .) Cases in reference to what constitutes a total loss of the cargo have no application to that now under consideration. The claim of the plaintiff to a re *564 covery for a total loss rests upon tbe breaking up of tbe voyage, whereby be was absolutely prevented from earning freight.

Tbe policy on freight, covering both tbe vessel and cargo against tbe perils for which the insurance was effected, it is necessary that there should have been a total loss of the freight in order to warrant a recovery on the policy, it being only against a total loss. In the law of insurance, a total loss of the subject of an insurance is where, by the perils insured against, it is destroyed or so injured as to be of trifling or no value to the assured for the purposes and uses for which it was intended ; or is taken out of the possession and control of the assured, whereby he is deprived of it; or where the voyage or adventure for which the insurance is made is otherwise broken up by the perils insured against. The interpretation given to the policy, by the instruction of the defendant, is, that if any the least amount of freight is earned, the underwriter is discharged and the assured has no right to recover, as the policy is only against a total loss. But this we conceive is not the meaning of the contract. If the cargo is lost, or if the vessel is totally disabled from performing the duty of transporting the cargo, and can not be repaired in a reasonable time to perform it, the contract, according to the construction given to it by the writers on the law of marine insurance, is violated, and the assured has a right to recover for a total loss. If the vessel is disabled, and the cargo remains, and freight is afterwards earned in respect to it, such freight does not affect the right of action, but is only considered in adjusting the amount of the loss. Phillips says that if the ship is rendered innavigable, and can not be repaired for the prosecution of the voyage, and another can be procured within a reasonable time and distance, and the master has means to procure such other at an expense materially less than the amount of the freight for the voyage, the underwriter on freight or profits is not liable to be prejudiced by the master’s neglect to tranship, any more than the underwriter upon the cargo, and the loss will be adjusted as if the cargo had been transhipped and forwarded, and will be partial or total accord *565 ing to the amount of the loss. (Phil, on Ins. § 1682.) This clearly shows that after the vessel is disabled, the freight that is or may be earned in respect to the cargo does not affect the right of action on the policy, but is regarded only in the adjustment of the loss. If, notwithstanding the disaster to the vessel, partial freight is earned, it will be allowed the underwriter; if the entire freight is .earned, or might have been earned, the assured will recover nothing ; for the contract of insurance being one of indemnity, if the assured has sustained no loss, or if he might have avoided the loss, he will not be entitled to recover any thing. In order to show that on a policy on freight against a total loss there may be a recovery notwithstanding there is salvage, we will refer to what was said by the court in the case of Murray v. Hatch, 6 Mass. 475 , which was an action on a policy on freight against a total loss. The court says, “ as to the distinction contended for by the defendant’s counsel, and stated in the exceptions, of a constructively total and a physically total loss, intending by the latter a loss without any salvage, it is not warranted by any of the text writers upon the subject of marine insurance ; a total loss with salvage is a case frequently mentioned and described; and indeed it is difficult to conceive of any event or peril provided against by the ordinary forms of insurance which does not admit the supposition of some salvage remotely possible at the least; as in the case of a ship foundering or burnt at sea, every possible chance of salvage is by no means excluded. But in the technical sense of the words “ total loss,” and for every beneficial purpose in which a contract of insurance can be employed, a ship foundered or burnt at sea, or wrecked or broken upon the land, so as to be past relief or repair, is specifically and as a vessel totally destroyed ; and such an event is a total loss, and, when it has happened from a peril insured against it, is a loss for which the underwriter is liable, notwithstanding a salvage and a very considerable salvage remaining, and notwithstanding any restriction the policy may contain as being expressed to be an insurance against a total loss only, or as containing an excep *566 tion or warranty on the part of the assured against average or partial losses.”

As the bill of exceptions was only prepared with a view to raise the question involved in the instruction given by the court, we will not express an opinion on the plaintiff’s case, as it was not got up with that view. However, as the cause will be remanded, we may as well give an opinion on some of the questions discussed, as they will recur on the trial hereafter to take j place. The plaintiff is mistaken in supposing that on a policy on freight against a total loss only, a party is entitled to abandon for a technical total loss. The rule that there may .be an abandonment for a technical total loss, has never been applied to a cargo consisting of memorandum articles. A /memorandum article is one for whose loss the insurer is not lia- * ble, unless the loss is an actual total one. As the insurer indemnifies only against a total loss, it would be a clear perversion 1 of his contract to make liable for a loss which was not really total but only so by construction. It would be taking from . him the protection he intended by the restriction imposed on his ^undertaking. (Marcardier v. Ches. Ins. Co. 8 Cranch, 47 .) | To the same effect is Philips, who says an insurance against a '.total loss only, or with the exception of particular average, the ! two forms being equivalent, excludes a constructive total loss on account of damage to the article, &c. (2 Phil. § 1767; Hugg v. The Augusta Ins. & Banking Co. 7 How. 605 .) It should be observed that the cases of the American Ins. Co. v. Center, 4 Wend. 47 , and the American Ins. Co. v. Ogden, 15 Wend. 532 , which seem to maintain a contrary doctrine, were on policies not limiting the loss to a total one only.

This case must turn on the question whether the voyage was broken up. What will be a breaking up of the voyage must depend on the circumstances of each case. Cases may be stated which will make the answer to the question a plain one. Others may occur which will admit of doubt. An accident, caused by one of the perils insured against, which merely causes a delay or retardation not going to the destruction of the con *567 templated adventure, is not a good cause of abandonment so as to amount to a total loss. That the retardation may deteriorate the value of the cargo will not justify an abandonment as against the insurer of freight, for the shippers are bound to pay the full freight for the voyage if the cargo is carried to the port of destination; and specifically remains, notwithstanding at its arrival it is by reason of sea-damage utterly ruined. The contract of the ship-owner is to convey the cargo to the port of destination; but he by no means warrants the state in which it shall arrive, as it may be affected by the perils of the sea or other perils against which his contract does not bind him. So, if the retardation will not so affect the cargo as to make it incapable of earning freight, it can not be considered in the question whether there was a breaking up of the voyage in an action on a policy against a loss of freight. (Jordan v. Warren Ins. Co. 1 Story C. C. 854; 2 Phil. § 1767.)

Whether another vessel can be procured in a reasonable time to transport the cargo is, as we have seen, a consideration that does not affect the inquiry whether the voyage has been broken up by the perils insured against. That is a circumstance of importance only in adjusting the amount to be recovered, not in determining the right to an action.

Judge Ryland concurring,

the judgment will be reversed and the cause remanded;

Judge Leonard absent.