American Insurance v. Ogden & Macomb

Á majority of that court, Savage, Ch. J., and Nelson, J., (Bronson, J., dissenting,) held, Savage, Ch. J., delivering the opinion:

1. “ That the seaworthiness, implied in a policy of insurance, related only to the commencement of the risk; if then broken, the insurer was discharged; but that a breach of this warranty after the risk has begun, does not discharge the insuree, unless the loss be the consequence of such unseaworthiness.”

2. “ That it is not necessary that the injury to a vessel by the perils insured against, should, in all cases, exceed one-half the value to justify an abandonment as for a total loss; the inability of the master to procure the necessary funds to make repairs, is a valid cause of abandonment, although the vessel be in the port of destination, and not an intermediate one, or one of necessity.”

After disposing of the question of seaworthiness, as above stated, Ch. Savage says: “ The next point urged in behalf of the insurers is, that the want of funds wherewith to make repairs is not a good ground of abandonment.” “ The right is as perfect, under the construction which has long been given to policies of insurance, to recover for a technical total loss, as for an actual total loss, or a partial loss. In the case of Peele v. The Merchants Ins. Co., 3 Mason 65, Mr. Justice Story after a very elaborate review of most, if not all the cases on this point, comes to the conclusion that the right of abandonment exists, in the five cases, which he enumerates, the fifth and last of which is “ Where the injury is so extensive, that by reason of it the ship is useless, and yet the necessary repairs would exceed her present value,” He further remarks: “ If there be any general principle that pervades and governs them, it seems to be this; that the right to abandon exists, whenever, from the circumstances of the case, the ship, for all the useful purposes of a ship for the voyage, is, for the present, gone from the control of the owner, and the time when she will be restored to him in a state to resume the voyage, is uncertain, or unreasonably distant, or the risk and expense are disproporlioned to the expected benefit and objects of the voyage. In such a case, the law deems the ship, though having a physical existence, as ceasing to exist for purposes of utility, and therefore subjects her to be treated as lost.” The conclusion here drawn from the case, has received the approbation of Chancellor Kent. In his commentaries, 3 Kent, 322, he says; “ The conclusion is, that the right of abandonment is to be judged of by all the circumstances of each particular case, and that there is no general rule ; that the injury to the ship by the perils insured against, must, in all cases, exceed the one-half her value, to justify an abandonment.” The case of the Patapsco Ins. Co. v. Southgate and others, 5 Peters R., 604, exemplifies this principle. The opinion of the court was delivered by Thompson, J. He states that the court below had instructed the jury that if the vessel could not have been repaired without an expenditure exceeding half her value at the port of Garthagena, after such repairs, it constituted a total loss. “ This direction,” says the learned judge (Thompson,) “ we certainly think correct.”

Ch. J. Savage continues :

“In the case under consideration, the defendants below raised no question of fact for the jury upon the bona fideo or discretion of the master.” “This presents the point whether the inability to repair the vessel, which must be admitted to have been a real inability, was a good cause of abandonment. These facts conceded, it seems to me to come precisely within the case of The Patapsco Ins. Go. v. Southgate, where a sale of the ship had become necessary for the interest of all concerned.”

“ In this case, the master had all the means of acquiring credit which the control of the ship gave him, which in this action I think is sufficient.”