Columbian Insurance Co. v. Catlett.

can it be doubted, that if the proceeds of the salvage had been remitted to the insurers on the cargo, the insurers on the freight would have been entitled to recover it of them? If so, Catlett is entitled to it, for he was his own insurer on the freight. Whether we consider him as having insured, or having earned it, his right is incontestible.

But it is supposed, that the cases of Buillie v. Modigliani, and of Caze & Richaud v. Baltimore Insurance Company, have established a contrary doctrine. It appears to me, that it is by placing too much confidence in the general language of indexes, and marginal notes, and misapprehending the doctrine on which this case turns, that the mistake arises. We have nothing but a manuscript report of that case of Baillie v. Modigliani, and obviously one for which the learned judge, by whom the decision was made is very little indebted to his reporter. We find in it a mass of correct principles, thrown together, without order, and without object, and which I make no doubt, is the skeleton of a very learned and correct opinion; and one which, had we the whole of it, would have furnished a full exposition of the doctrine of this case, as well as of that. But, as a decision, the case of Baillie v. Modigliani does not touch the present case. For, in that case, there was no abandonment; the cargo was sold in France, with the benefit of the pro rata freight, and the owners wished to charge the underwriters with the freight so paid, as a loss incident to the capture. The question in the present case did not arise there, and could not arise in any case that does not comprise in it both the ingredients of technical total loss, and freight earned. That was a case of partial loss, and what the judge chose to say about the doctrine of the case of a total loss, was mere gratis dicta. would be but charity, or an act of *justice to his learning, to suppose, that if he ever did utter the words attributed to him, to wit, "In [*403

It

case of a loss, total as between the insurer and assured, with salvage, the owner may either take the part saved, or abandon, but in neither case can he throw the freight upon the underwriters; because they have not engaged to indemnify him against it, and have nothing to do with it"-that he had in mind the only sense of those words in which it was possible that he could be correct; which was, "that they could in no case raise a personal charge for freight, against the underwriters, where sufficient salvage to pay the freight had never come to their hands." In any other sense, every merchant on the exchange of London could have told his lordship that he was incorrect. To have obtained from the learned judge a decision applicable to the present cause, the question should have been propounded to him, as applicable to a case of technical total loss, with salvage sufficient to cover the freight. The answer would then have been rendered in the language of the books, a language on this subject equally that of lawyers, merchants and insurers, "Where freight is earned, the assured, in the case propounded, has a right to apply the salvage to the payment of freight;" which is, in so many words, what Catlett contends for in the present cause.

I have reasoned all along on the assumption that it makes no difference in principle, whether the vessel and cargo be owned by the same individual, or by different persons. I consider it unquestionable, and even conceded; and, indeed, where the cargo is insured, and the vessel not, after abandonment, the underwriter is, in the eye of the law, an owner ab origine, of the cargo, and so distinct from the ship-owner. In the case of Caze & Richaud

Columbian Insurance Co. v. Catlett.

v. Baltimore Insurance Company, 7 Cranch 358, the counsel attempted to draw a distinction; but the court did not listen to it, and in their decision obviously consider it as immaterial to the question before them.

The case of Caze & Richaud is that which is relied on as most fatal to the claim of freight in the present cause; but to me it appears as plain as an axiom, that the court have themselves made it a different case, and *404] adjudged *it to be no authority against the present claim. No one pretends, that Catlett could have retained for freight, if no freight had been earned. But this is the express decision of the court in the case of Caze & Richaud; and if there was no freight due, of what consequence to the decision was it, to say, "that it was no lien upon the cargo," or that "the underwriters could not be made to pay the freight ?" The proposition was equally true, of the most indifferent person. It is of no consequence, as to the bearing of that decision upon this case, to inquire whether the court were right or wrong in deciding that no freight was earned. In so deciding, they have made it a different case from this in an indispensable circumstance, the earning of freight; and plainly shown, that they could not have had in contemplation, to decide a case in which freight had been earned, which is the present case. I believe, myself, that we were wrong in every line of that decision; that it will not stand the test of commercial law in any one of the three propositions that it lays down.

66

The case was this: a vessel and cargo, belonging to the same owner, sailed from Bordeaux for this country; the cargo was insured, the vessel and freight not; on her voyage, there being war between Great Britain and France, she was captured and carried into Halifax, having then crossed the Atlantic, and gone three-fourths of the way on her course to her port of destination. The cargo was abandoned, and vessel and cargo both condemned; but on an appeal, the condemnation was reversed as to both. It is mentioned in the report, that there was no appeal as to the freight;" but the case is defective, in showing whether separate claims were filed for ship and cargo, or the two included in a joint claim by the owner. If joint, the question of freight could not have arisen. But if, as seems probable from the proceeds of the cargo passing into the hands of the underwriters, the claims were several, then a question may be raised, whether the plaintiff was not concluded, by his acquiescence in a judicial decision of a competent tribunal, against the claim to freight. This would have sustained the judgment against him in this court, had there been no other obstacle to his *405] recovering. *As the abandonment was accepted, and the sum insured paid, the proceeds of the cargo got into the hands of the underwriters, and that suit was instituted for money had and received to the use of the ship-owner. Had he preferred this claim against the proceeds of the cargo, while lying in the registry of the British admiralty, there cannot be a doubt, that it would have been adjudged to him, in the distributionof the money among the several claimants.

The three propositions which the opinion affirms in the case af Caze & Richaud, are, 1. That under no circumstances can be assured throw the freight upon the underwriters, even by abandonment. 2. That no freight, even pro rata, was earned in that cause. 3. That the lien of the owner on the cargo for his freight could not affect the question.

On the first point, no one will pretend to maintain the affirmative as a

Columbian Insurance Co. v. Catlett.

general proposition. Losses are either total, partial, or technically total. Upon an actual total loss, no question of freight can ever arise, for there is no freight earned. In the case of partial loss, it is never admitted in adjustments and this is the full import of the decision in Baillie v. Modigliani, and in the case of Gibson v. Philadelphia Insurance Company, and some others. It is a charge payable after the arrival of goods at their port of destination, and therefore, never admitted into an adjustment of a partial loss. The cases of technical total loss are of two kinds, as has been before noticed; the one with, the other, without, abandonment. It is not contended, that, even in these, the assured can throw the freight upon the underwriters, otherwise than incidentally by abandonment. It has been shown, that this is not the principle at all, upon which the doctrine insisted on by Catlett rests, and may, therefore, be safely conceded to the case of Modigliani, and all others in which these dicta are to be found. The principle is, "that the owner cannot, by his abandonment, divest the lien which the ship-owner has in the goods abandoned." That the underwriter takes the cargo cum onere--a rule which is held sacred even against hostile capture (Der Mohr, in 3 and 4 Robinson). The law is, that the master is not bound to part *with his cargo, and fails in his duty, if he does, until his freight is [*406 paid. Why should he be so bound, any more in the case of the transfer by abandonment, than in any other transfer? In that class of technical total losses, which arises where the freight incurred exceeds the value of the thing saved, it is expressly decided, that the right to apply the salvage to the freight exists; and it is impossible to draw a distinction between that class of cases, and the cases of technical total loss produced by abandonment. The full latitude of the assertion, therefore, that the assured cannot throw the freight upon the insurer, may be conceded, without affecting the right of the party to freight in the present case. The rule is rightly laid down, but its application is mistaken.

The same observations dispose of the third position assumed by the court in Caze & Richaud, since it must be obvious, that the lien of the ship-owner on the cargo is all important to the question. The right to apply the salvage to the freight, grows out of the right of the master to hold the cargo for the freight, whatever change of interest may be produced in it by the act of the owners of the cargo. The consideration of the second proposition of the court in Caze & Richaud's Case, is not material to this cause, any further than it shows that they considered themselves as deciding a case the very reverse of the present. Yet so convinced am I, that the decision there made against a pro rata freight was a hasty decision, that I will conclude with. expressing a hope that, if ever the subject should again come before this court, it will pause and examine the doctrine, without prejudice from that decision, since it is one which involves principles of great interest to the mercantile world, and on which, I will undertake to say, if ever that case should be reviewed, there will be found a vast deal of learning and authority against the decision, and very little to sustain it. In the very case which the court profess to decide, the case of Baillie v. Modigliani, the same pro rata charge was paid and acquiesced in by the court and the bar, without a question.

*Upon the whole, I never was clearer in any opinion in my life, [*407

Columbian Insurance Co. v. Catlett,

than that the decision now rendered against the allowance of freight in this adjustment, is not to be sustained by either principle or authority.

After the opinion of the court was delivered in this case, the parties ascertained, that the auditor's report was incorrect (by the disallowance of the freight), in some other respects, and required a different adjustment; and application was accordingly made for a hearing upon these points. The following additional opinion was subsequently delivered by the court.

March 15th. STORY, Justice.-In consequence of the former opinion delivered in this cause, the parties have found it necessary to readjust the auditor's report in several particulars, not suggested at the former argument. Indeed, upon that argument, the parties assumed that the report was perfectly correct, except as to the item of freight. We have examined the report, and are satisfied, that the original plaintiff is entitled to recover the sum of $6626.18, with interest from the 14th of October 1822, which is the residue of the sum of $10,000 insured by the company, deducting the premium note and the proportion of salvage belonging to the underwriters, which has been received by the original plaintiff; and the judgment of the circuit court is to be reformed accordingly.

JUDGMENT.—This cause came on, &c. : On consideration whereof, it is ordered and adjudged by the court, that there is error in so much of the judgment as allowed to the said Catlett, as freight to be deducted from the salvage, the sum of $2041.25: And it is further ordered and adjudged, that upon the reformation of the auditor's report, required by the disallowance of the freight aforesaid and otherwise, there is now due and payable to the said Catlett the sum of $6626.18, together with interest thereon, from the 14th of October 1822, the said sum being the balance of the sum of $10,000 insured, after *deducting the amount of the premium due on *408] the policy, viz., $376, and also the proportion of the salvage belonging to the said Columbian Insurance Company, viz., $2997.82, received by the said Catlett; and that the judgment of the circuit court, to the amount of the said sum of $6626.18, and interest thereon from the 14th of October 1822, be and hereby is affirmed; and as to the residue of the said judgment, be and hereby is reversed: And the cause is to be remanded to the said circuit court, with directions to enter judgment for the said Catlett accordingly: the parties in the court below to be at liberty to open the auditor's report, so far as respects the item for $480, the proceeds of the doubloons, and the item for $719.37 paid over to Captain McKnight; and the judgment to be varied by the circuit court as these items may be found for either party; execution, however, to be granted immediately for the balance of the judgment, deducting the said sum of $719.37.

258

The GENERAL INTEREST INSURANCE COMPANY, Plaintiffs in error, v. RUGGLES, Defendant in error.

Marine insurance. - Fraud of master.

Where an insurance was effected, after a loss had happened, though unknown to the assured, the master having omitted to communicate information to the owner, and having expressed his intention not to write to the owner, and taken measures to prevent the fact of the loss being known, for the avowed purpose of enabling the owner to effect insurance, in consequence of which, information of the loss had not reached the parties, at the time the policy was underwritten: Held, that the owner having acted with good faith, was not precluded from a recovery upon the policy, on account of the fradulent misconduct of the master.1 Ruggles v. General Interest Insurance Co., 4 Mason 74, affirmed.

*ERROR to the Circuit Court of Massachusetts.

[*409

February 27th, 1827. This cause was argued by D. B. Ogden and Wheaton, for the plaintiffs in error, citing Park. Ins. 209, 320; 1 T. R. 12; 1 Maule & Selw. 35; 9 Johns. 32; Phil. Ins. 82, 97: and by Webster and Bliss, for the defendant in error.

March 12th. THOMPSON, Justice, delivered the opinion of the court.-This is an action on a policy of insurance, bearing date the 9th of February 1824, for $3000, on the sloop Harriet, lost or not lost, at and from Newport, Rhode Island, to, at and from, all ports and places to which she may proceed in the United States, during the term of six months, beginning on the 12th of January 1824. And also, $600 property on board said sloop, at and from Newport to Charleston or Savannah, or both. The sloop, whilst proceeding on her voyage, and within the term of six months, to wit, on the 19th of January, was wrecked on Cape Hatteras, and both vessel and cargo wholly lost. An abandonment was, in due time, made, and a total loss claimed. The case comes before this court upon a bill of exceptions taken to the directions given by the circuit court for the district of Massachusetts, to the jury, upon the law of the case.

The loss, it will be seen, happened on the 19th of January, and the policy was not effected until the 9th of February. And the question upon the trial turned upon the legal effect and operation of the misconduct of the master, after the loss occurred. It was proved, that the master, immediately after the loss, for the purpose, and with the design, that the owner, not hearing of the close of the vessel, might effect insurance thereon, did express his intention not to write to the owner, and took measures to prevent the fact of the loss being known; and that by the conduct of the master in this particular, and in consequence of the measures adopted by him to suppress intelligence of the loss, knowledge thereof had not reached the parties, at the time the policy was underwritten.

*Upon these facts, the court instructed the jury, that although it [*410 was the duty of the master to give information of the loss to his owner, as soon as he reasonably could, yet that, in the present case, when there had been an abandonment in due time, for a loss really total, if the owner, at the time of procuring the insurance, had no knowledge of the

1s. P. Kohne v. Insurance Co. of N. America, 1 W. C. C. 93; Patton ". Janney, 2 Cr. C. C. 71; Clement v. Phoenix Ins. Co., 6 Bl. C.

C. 481; Folsom v. Mercantile Mutual Ins. Co., 8 Id. 170.