Watson v. Insurance Co. of North America

S happen C. J.

The principal point rested on by the defendant is whether there was an abandonment in proper form and time. As to forms of abandonment, none are prescribed, and they are not material. It is sufficiently made out that plaintiff meant to abandon; but was it in time? It must be in reasonable time after he has well authenticated intelligence of the loss, so that lie shall not by delay derive any advantage. The time between the intelligence and the abandonment was however a long time, four or five months. But the plaintiff seemed disposed to look to the underwriters from the first; if he waited till he should know whether he could recover from the French government, he ought not to recover. As to average loss, it is out of the questionVide 4 Dall. 272. s. o. *53this, his honour the Chief Justice said, “ when there is a claim ic for a total loss, and pro'of of a total loss, an average loss is “ out of the question.” So in M'Callmont and Boys v. Murgatroyd., decided in this court. Indeed it is useless to turn to cases for this principle; the books are full of them; and ifit were not so, why have not plaintiffs, in the numberless cases in which they have failed for want of abandonment, attempted a partial loss. But a case in point is Bischoff v. Agar, (a)

Shippen C. J.

The action is brought for the sum underwritten in the policy, to wit, for 1000 dollars, as for a total loss; the jury have found a verdict for the plaintiffs for the sum of 740 dollars and 10 cents, as for a partial loss; the material question is whether the jury could find as they have done.

Where any part of the thing insured is ¡eft, and in that case alone, the insured is bound to abandon to enable him to recover as for a total loss; the only penalty^for not abandoning is that the assured must be satisfied with an average loss. Here it is said there was something left, there was a spes recuperandi, there was a chance of a reversal of the sentence of condemnation, and that this chance should have been ceded to the underwriters. The jury therefore might have considered this as an average loss, that is to say, they might have estimated the spes recuperandi and chance of a reversal of the sentence as equal to the difference between the sum underwritten and the sum found and obliged the insurers to pay the remainder as an average loss. That a partial loss may be found in an action brought for a total loss cannot be denied; but it is said that where the demand is for a total loss, and a total loss is proved, there cannot be a verdict for a partial loss, otherwise the necessity of abandonment might in all cases be evaded by the jury’s being called upon and consenting to give a verdict for some small matter less than the whole sum insured. If this should ever be the case, it will always be in the power of the court to prevent the evasion; but the case in 1 T. Rep. and some others shew that a verdict may be found for a partial loss where a total loss is proved as well as demanded, if the party had chosen tó consider it as such by an abandonment. And it is not competent to the defendant to say there is something lift for the pnr*54Pose making an abandonment necessary, and yet that tjfcere was not^nS kftt0 mahe it an average loss. There seems to be no injustice done to the defendants by the finding of the jury.

But it is said that although there are cases where the loss wou^ have been total and recoverable as such when the loss happened, but which by subsequent events were become not total, the insured by not making a seasonable abandonment might be entitled to an average loss; “ but where the loss was “ .total originally, and continued so to the time of the demand, “ there can be no partial loss, but the insured by not abandon- “ ing will lose his right of recovering from the underwriter “ either in whole or in part.” The consequence of this doctrine would be that the greater the loss the insured should suffer, the less the insurer should pay. An insurance is a. contract of indemnity for a loss within the policy, and the law imposes no arbitrary penalty upon either party, but proceeds upon just and uniform principles: thus where the loss sustained is such as that the assured by an abandonment might consider it as a total loss, yet waits till it appears part of the property is saved, he then loses his right of recovering as for a total loss, and must look to that part of the property saved according to its value for part of his indemnity, and has recourse to the underwriter for the remainder of the sum insured as an average loss. So where the loss is such as might be considered as total from the beginning, and continues so to the time of the demand, it is then that the two kinds of total loss are to he considered; if the loss is of that kind as to be attended with a total destruction of the property, as being consumed by fire, or sunk in the sea, the insured in that case may recover from the underwriter without any abandonment, as there is nothing left to abandon; but if it is said a capture and condemnation is not a loss of that kind, but leaves a opes recuperandi in the assured, and therefore something is left, although only a chance, for the abandonment to operate upon, what will be the effect of not abandoning? Exactly the same as in the former case, where the loss must be paid after deducting the value of the thing saved. So in this case the loss must be paid after deducting the value of the thing not ceded, which value is the estimated benefit which the assured may receive from retaining the chance either of a recapture or the reversal of the decree of condemnation. It is true this benefit is not so easily calculated as where goods are saved and soldi *55but the principle is the same; and where the jury from the circumstances of the case, and from their experience of the strength of the respective belligerent powers, and the probable injustice of the condemnation, have any data to calculate the chance of recovering back the property, and can reduce it to a fractional part of the sum insured, I see no reason why the value of that chance may not be deducted from the sum insured, and the assured recover the remainder from the underwriters, as in the case of common average losses; for it is tmly the value of the thing neglected to be ceded, which forms a deduction in any case of loss, from the sum insured.

Yeates J.

Where an insurance has been made, and the property insured has wholly perished by some one of the perils expressed in the policy, there can be no necessity for abandoning or offering to abandon; for there being nothing in existence on which the abandonment can possibly operate, it would be highly absurd to declare that a ceremony vain and idle should, be practised, which could be attended with no benefit whatever to either party. On this point may be cited 1 T. R. 613. 615. 2 Burr. 687. 1201. 1203. 1 Bl. Rep. 276. Park 161. 1st ed. In Great Britain, notwithstanding a capture and condemnation by an enemy, the owner of the vessel will be entitled to have the property again on payment of salvage. But this was an effect produced by the stat. of 29 Geo. 2. c. 34. s. 24.; and hence it is that Lord Mansfield says in 2 Burr. 695. the jus postliminii in England continues for ever. The general law of nations must govern us on this head, as it was considered in May 1797, when this capture took place; and I have always understood that such capture and condemnation by an enemy altered the property. If such capture and condemnation can be considered equivalent to an entire destruction of the property in the present case, as to the contracting parties, there can be no greater necessity for an abandonment in the one instance than in the other.

But ithasbeen objected that here the vessel existed at the time of the demand for the total loss, and that the spes recuperandi was not wholly extinguished, inasmuch as appeals were allowed from the French court of admiralty in the West Indies to a superior tribunal. On this latter ground my great difficulty has arisen. Because if the insured did not conceive there was any chance *56of reversing the sentence of condemnation on an appeal, they not to preclude the insurers from exercising their own judgment on the case, and should furnish them with the proper documents to enable them to conduct the appeal. Nevertheless ** cannot denied that all the authorities concede to the insured the election whether they will abandon or not, and that they are not bound to make an offer of abandonment if any part of the property exists. 1 T. R. 615. If he does not abandon in such cases wherein Ife might consider it as a total loss, though partial in its nature, by declaring his early and unequivocal option and offering to abandon, he cannot by holding back, convert the partial loss into a total loss. Fuller v. M'Call. Nor can it be denied that if a suit be commenced for a total loss, and ar partial loss be proved, such partial loss may be recovered therein. 2 Burr. 904. But it has been contended that where in such suit a total loss is proved at the trial, no instance can be shewn of the recovery of a partial loss. Admit this to be the case, still if no authority can be shewn establishing a different doctrine, and no injustice is done thereby, the plaintiffs recovering the damages they have actually sustained within one of the perils expressed in the policy, I see no reason to set aside the verdict.

Smith J.

In all cases the insured may choose not to abandon. Burr. 697. Park 162. 2d ed. 2 Bac. 157. 1 T. R. 615. They are not bound to abandon; there never was a case in which it was determined that they were; all the cases have said that where they are entitled to abandon, if any part of the property exists, they have the option whether they will abandon or not. If the property existing amounts only to a shilling, the insured may in an action for a partial loss, recover the whole amount Insured, excepting that shilling.

Now it is settled law that if action be brought for a total loss, if the plaintiff prove but a partial loss, he may recover as for a partial loss. It is also settled law that the assured cannot recover as for a total loss unless he cede or abandon all his right to the underwriters. Park 161.92. This right to abandon is certainly generally for the ease and often a real benefit of the assured. It is always troublesome, and frequently turns out to the loss of the underwriter. He will therefore almost always prefer paying for a partial loss to paying for a total loss, and taking *57the management of the existing property upon himself. It is scarcely ever in his power to manage it to so great advantage’ as the assured can.

The hope of recovering cannot be lost while any part of the property exists, and the assured need not part with the chance unless he pleases. If he does not part with it he has more difficulty in recovering than if he does; for on abandonment he has only to prove the gross value of the vessel or goods, and the loss, which is generally easily made; but if he be content to retain the chance of recovering any part, the proof to recover on a partial loss is more difficult to be made out. He must not only prove the value, but he must prove the amount of the injury done to every part, and the value of that part of it which is in existence. If the assured choose to take this burden by not. abandoning when he may, he cannot recover for a total loss if any of the property exists; and in estimating the amount of the average loss the jury will make a due deduction for his chance of recovering according to its foundation.

The cases in Esp. Rep. 237. 1 T. R. 608. are substantially the same with the present. There the plaintiff might have recovered as for a total loss had he abandoned in due time; so here. There the plaintiff recovered as for a partial loss. What principle of law properly understood, what rule of practice was there to prevent him from recovering for a partial loss ? The right to recover for an average loss was not even called in question by the counsel; they properly contend and the court decide that plaintiffs could not recover more than an average loss.

No hardship on the defendants as to the amount of the damages found, is suggested. “ The defendants came prepared to “ shew either that no damages had happened at all, or at least u that damages did not happen to such a degree as plaintiff “ alleged in his declaration, or that they did not sign the policy.” Burr. 906,7. “ It is an action of damages in whiclFplain- “ tiff is to recover his damages according to his proof.”

Did the plaintiffs gain any benefit, did the defendants lose any advantage by the recovery as for a partial loss, my opinion would be that plaintiffs ought not to recover; but I cannot discover from any part of the argument that there is any benefit to the plaintiffs or any disadvantage to the defendants.

I acknowledge that before I saw the case in 1 T. R. 608. the inclination of my mind was in favour of the defendants on this *58point as a point of strict law, although I would not have signi^ed m3r approbation of insisting on it by the defendants.

Whether the notice of and demand for a total loss be equivalent to an offer to abandon; whether the refusal to pay on °tller grounds, does or does not amount to a waiver of such offer, it is not necessary to give an opinion, because my opinion is, on principles supported by cases, and there being neither principle nor case to the contrary, that the verdict is right.

Brackenridge J.

I am of opinion that the verdict should stand, upon this principle, that under the circumstances of this case there was not a necessity of an express offer to abandon. In the case of a total loss by sinking or burning, all spes recuperandi is gone, or supposed to be gone, and to supersede the necessity of an offer to abandon.

In this case of capture and condemnation, and as said by counsel particularly a French condemnation, the hope of recovery was but a bare possibility; it was ideal. The fact is, it was thought to be nothing; and it would have been a burlesque, an insult, to talk of an interest remaining, or to make an offer to abandon. This rebuts the presumption arising from the not expressly offering to abandon, that there was an idea of retaining a chance.

I admit there was an ideal interest to be abandoned because the condemnation on appeal might be reversed, or the government of the captured might indemnify, or that of the capturing compensate for the spoliation; but in the public estimation there was no hope, and the plaintiffs reasonably might have thought there was nothing to abandon.

The notice of the loss and demand of payment would seem in the first instance to be sufficient, and to put it upon the defendants jjp shew that they had any wish to have the abandonment made. The saying nothing was in fact a waiver.

I think myself on safest ground while going on the first point. As to the other, that in a case of total loss, without an offer to abandon, the insured may receive a part, the jury taking into view and allowing or deducting for the chance of recovering the possibility, it might seem reasonable; but the idea is new, as I take it, in the books. Nor is it analogous to the law merchant in the case of a bill of exchange. On the w nt of notice to the indorser of nonpayment by the drawee, it cannot be given *59in evidence, as superseding the notice or deducting for it, that the drawer was worth nothing or a part of the sum.

Have we a right to put the insurer in the power of the jury as to the value of his chance, which might have been abandoned? I think not. He has a right to be the judge of it himself. There is no average of this kind in the books. The bare possibility in this case rebuts the presumption that the insured meant to retain the chance.

The not offering in express terms the abandonment is waived by the silence, and the probability is that it was omitted from the ignorance of the insured.

Judgment for the Plaintiffs.

Park 82. 5th ed.