Armroyd v. Union Insurance

| Pa. | Jul 22, 1811

Tilghman C. J.

The plaintiffs claim an allowance for freight, to which they say they are intitled, because it was earned before their abandonment of the ship to the defendants. The goods were to be carried from Philadelphia to Barbadoes, so that freight would not be due till the delivery at Barbadoes. But they never were carried to Barbadoes; therefore, upon the original contract, the freight was not earned. It is contended however, that by the marine law, freight is due. pro rata itineris, although the voyage was but in part performed; and in support of this the case of Luke v. Lyde is relied on, 2 Bur. 883. That case has been so frequently cited, that it has attracted the particular attention of the courts, and it is now understood to have turned on the circumstance of the freighter having accepted the goods, at the port to which they were carried after a capture and recapture. So says lord Ellenborough in Liddard v. Lopez, 10 East 529., and the reason of the thing proves that he is right. If one contracts to carry my goods from Philadelphia to Barbadoes, for which I agree to give him a certain price, and he being driven to Antigua by stress of weather, offers to carry them on to Barbadoes, and I refuse, in that case he is intitled to the whole freight, because I am the cause of the contract not being performed. On the other hand, if I ask him to carry them on, and he refuses, in consequence of which the goods are delivered at Antigua, he is intitled to no freight, because he has not performed his contract. It would be most unreasonable if he should; for it might happen, that the freight from Antigua to Barbadoes, (I mention those places only by way of example) would be more than from Philadelphia to Barbadoes, as was actually the case in Luke v. Lyde, where the freight from Biddeford to Lisbon, is stated as being more than from Newfoundland to Lisbon. But it may happen, that the freighter may find it his interest to accept the goods at some other port than that of delivery. In that case,-it would be just that he should pay freight pro rata. But this would be a new contract; and if he accepts the goods, without expressly contracting to pay freight, the law will imply a contract. Thus it seems to me, that the law is now settled upon fair and solid ground, for which I refer to the cases of Cooke v. Jennings, 7 D.& E. 381., and Liddard v. Lopez, 10 East 526.

In order to raise this implication of a new contract, it is necessary that the goods should be accepted by the freighter or his agent voluntarily;'fox if they axe in that situation, that the agent or supercargo takes them against his will, and sells them for the benefit of whom it may concern, no freight can be recovered. Such was the case of Hurtin v. The Union Insurance Company, in the Circuit Court of the United States for this district. Cond. Marsh. 281. 601. There a ship bound from New Tork to Gibraltar, was taken by the Spaniards and carried to Algesiras; and the Spanish government consented, that the captain might depart with the ship and cargo, giving bond not to go to any British port in the Mediterranean. The supercargo under these circumstances thought it best to sell the cargo, and Judge Washington was of opinion that no freight was demandable. In the case now before the court, the plaintiffs were owners of both ship and cargo; and they charge the defendants with freight, as coming to the owner of the ship from the defendants, who have become owners of the goods by virtue of the abandonment to them. This presents a singular aspect, not quite similar to any case that has been cited. It must be decided on the principles which have been mentioned. If the defendants could be considered as having acquired the property and possession of the goods by purchase, after the freight was earned, supposing any to be earned, they could not be chargeable with it unless they had so specially agreed. But the plaintiffs contend, that the defendants must be taken as standing in their place. Consider it how you will, it appears to me that the defendants ought not to be chargeable with freight, because they never had an opportunity of making their election to accept g°°6s at Antigua, or have them carried on to Barbadoes. The plaintiffs being owners of both ship and cargo, had the ball in their own hands; and without pretending that they ever jja<j tbe most distant idea of carrying the goods to the port of delivery, or that the defendants had any choice in the business, they demand freight pro rata. It is no answer to the defendants’ objection, to say, that they have ratified the sale of the goods by accepting the proceeds. What else could they do? If they had refused the proceeds, they might have got nothing. They never were consulted about the sale. In fact the sale had been made before the abandonment. It is too much to say, that the bare receipt of the money under these circumstances should amount to such a recognition of the sale, as would burthen the defendants with freight, to which they would not otherwise have been liable. The goodness or badness of the price for which the goods sold was immaterial. In Liddard v. Lopez, the freighters refused to accept the goods charged with freight, and it was agreed that they should be sold without prejudice to either party. They produced a handsome profit, and the freighter received the proceeds, but yet it was held that no freight was due. Considering the case before us under all its circumstances, there does not appear to have been any consent of the defendants to accept the goods at Antigua either express, or fairly to be implied. I am therefore of opinion, that no freight can be recovered.

Ye ates J.

The plaintiffs were owners of the brig “ Fair American” and her cargo, both of which were insured on her voyage from Philadelphia to Barbadoes. No insurance was made on the freight, and consequently the plaintiffs stood their own insurers as to the freight: but it has been correctly admitted on the argument, that they are intitled to every legal right and benefit, which insurers on freight could possibly claim.

The first question'which presents itself, is whether the plaintiffs are intitled to any part of the freight on the goods landed at Antigua.

The brig sailed from Philadelphia on the 26th September 1803, but on the 1st and 6th days of October she experienced violent gales of wind, which greatly increased on the 24th, and laid her on her beam ends. The crew to save their lives, found themselves under the necessity of cutting away her main mast and rigging, and discharging her load on deck. The vessel afterwards leaked greatly, and with much difficulty reached the island of Antigua on the 11th November. The remnant of the cargo was there sold at a good profit by tlie supercargo for the benefit of the concerned. Neither the plaintiffs nor defendants had any special agent in Antigua.

The amount of the sales was afterwards invested in bills of exchange, on which a profit arose to the interested; and the bills being remitted to the plaintiffs, they accounted for the principal and profits to the defendants, on the recovery for a total loss, abating a commission for the negotiation.

The defendants do not place their claim to exoneration on the technical ground, that no action would lie against them for this demand, as an incorporated body, except in covenant under their common seal. They judiciously agree, that if a recovery could be had against private individuals in any form of action under the circumstances of the case, they are willing to share the same fate. But they contend that no authority has been or can be shewn, to ascertain that freight in general is payable until the goods are delivered at the destined port, or to fix the liability of the owners of goods to the payment of a ratable freight, unless where they have hindered the owner of the ship, after the occurrence of the event which has frustrated the voyage, from transporting them to the place of destination, or where some new contract has not either been expressly made, or may fairly be inferred from the circumstances of the case, for the apportionment of the freight. Lutwidge v. Gray, Abbot 249. 1st ed., Luke v. Lyde, 2 Burr. 882., and Christy v. Row, Taunt. 300., were decided on these grounds. Indeed in Cooke v. Jennings, 7 T. R. 381., in covenant on a charter party, the,freighters were held not to be liable for freight unless the full voyage were performed, or a new contract made, though they received the goods at an intermediate place after the ship was wrecked; and it was said by the court that it was of no moment, whether the contract was under seal or not. ■

But in the case before the court, it is said there was no voluntary act of the defendants or of any one in their behalf, accepting the goods at Antigua. No option or opportunity of making any choice was offered to them on the occasion. As to the common clause inserted in every policy, whereby the party insured is authorized in case of any loss or misfortune, “ to sue, labour, and travel without prejudice to “ the insurance,” it only means,' thai until the insured have been informed of what has happened, and have had an opportunity of exercising their own judgment, no act done by the master shall prejudice the right of abandonmeht of the insured. The loss happens generally at a distance, and they cannot exercise their judgment immediately; it is therefore necessary, that the toaster who is on the spot, shall do the best he can. Mitchell v. Edie, 1 Term Rep. 613. The supercargo here was the agent of the insured, and intrusted by them; but his acts cannot bind the underwriters. Besides, the captain had a right to retain the goods shipped on board his vessel, till the freight was paid, but when he parted with the possession of them, he could only resort to his contract. Artaza v. Smallpiece, 1 Espin. Ca. 24.

To this it is answered, and in my idea with much correctness, that ratable freight is due under the circumstances of the case, on principles of equity and reason as well as law. It is fully .admitted, that in general, freight is not demandable by the ship owner or his captain, unless the goods are transported to their place of destination, according to the tenor of the bills of lading. But the commercial law seems equally well settled, that if the vessel be disabled from completing her voyage, the shipholder may still intitle himself to the whole freight by forwarding the goods by some other means to the place of destination, unless the forwarding them be dispensed with, or unless there be some new bargain on the subject. Hunter v. Prinsep, 10 East 393.

The case of Cooke v. Jennings, cited by the defendants’ counsel, turned on the point of its being an action of covenant founded on the original charter party as an entire contract, and is thus distinguished from Luke v. Lyde, which was the case of a general assumpsit for the freight of goods, founded on the marine law. The technical objection there taken, has been expressly waived here. Lawrence justice, recognises the law on the subject, and says the subsequent receipt of the goods by the insurer, might be evidence of a new contract between the parties. The question then is reduced to this, have the defendants by the instrumentality Gf their agents, dispensed with the forwarding the remnant of the goods laden on board, to Barbqdoest If they have so done, freight pro rata is demandable.

It has been frequently observed, that though the master be the general agent of the shipowners, yet in case of extraordinary calamity, he must also be considered as the agent of the owners of the goods, who have intrusted them to his care, so as to bind them. The same remark is applicable to a supercargo, as between him and the underwriters; and more especially if it shall be established, that the abandonment has a retrospective effect to the period, when the vessel insured received her death wound. But the plaintiffs are under no necessity of relying on this reasoning by analogy. Here was a substitution of money for the goods sold for the benefit of the parties concerned, which was equivalent to an actual restitution of the goods themselves. The accepted substitute inuring for the defendants’ benefit afterwards, required no further conveyance, and must be considered as virtually dispensing with the ulterior duty of the shipowners, which would have remained to be performed, if the merchandise had remained in its specific state. The defendants have clearly adopted the acts of the supercargo, as their agent, by receiving the proceeds of sale, and insisting that the profits of the bills of exchange in which the sales were invested belonged to themselves, after deducting a small commission for the negotiation. This brings the case within the principle of the decisions cited. The goods were not abandoned by the owners at Antigua, according to lord Mansfield's expressions in Luke v. Lyde, 2 Burr. 888.; and in Mackrell v. Symond, Abb. 266., he says, “ if the ship be cast “ away on the coast of England:, and never arrive at the port “ of London, yet if the goods are saved, freight shall be paid, “ because the merchant receives advantage from the voyage: “ it is not expressed in the charter party, but arises out of “ the equity of the case.” This doctrine rests on abroad and reasonable basis. See Scott v. Libby et al.,2 Johns. 341.

Instead of the plaintiffs having parted with their lien on the goods, the real contest now is, what ought to be the extent 0f tp,e crecJit allowed to the defendants upon the recovery against them for a total loss on both policies, which is not yet ascertained. The defendants claim the full amount of the proceeds of sale, and the profits on the bills with a small abatement for commission; and the plaintiffs insist that a pro rata freight for the merchandise should be deducted. I conclude for the reasons, which have been stated, that the plaintiffs standing their own insurers for the freight, are in that capacity intitled to a ratable proportion thereof.

What that ratable proportion should be, depends on the legal operation of the act of abandonment, whether it relates to the inception of the voyage, the occurrence of the accident, or the time of the cession. The English books inform us, that when an abandonment is made, the insurers succeed to all the rights of the insured; but I have not met one decided case in them, which precisely ascertains to what period of time it shall have relation. That the future earnings of a ship insured and abandoned belong solely to the underwriters, there can be no doubt. It would seem that by the French law, an abandonment has a retrospective effect from the beginning of the voyage, and that the insurers are supposed to have had the property from that period. 2 Emerig. 196. 223. 224. In the Supreme Court of New Tork in April term 1800, it was determined, that upon abandonment of the vessel, the owner of the freight being also owner of the vessel, did not thereby abandon his freight in toto, but that he retained a certain part to be apportioned pro rata itineris, and consequently to be carried down to the time when the loss happened. United Insurance Company v. Lenox, 1 Johns. Ca. 377. This decision was affirmed in the court for correction of errors in 1801, and was afterwards recognised and confirmed by all the judges of the Supreme Court in May term 1805, in Davy v. Hallet, 3 Caines 20.1 concur therein for the reasons assigned by the judges of that court; and therefore upon the whole matter I am of opinion, that the plaintiffs are intitled to a ratable part of the freight earned on the 26th October 1803, the time when the brig is supposed to have received her death wound in the course cf the voyage. -

Brackenridge J.

In the contract of carrying, there is an implied undertaking to carry safely to the place of destination. The owner taking the goods from the carrier at an intermediate place, may be considered as dispensing with the carrying to the place of destination, and as bound to pay for the carrying performed, what, taking all things into view, the carrying so far may seem to be reasonably worth. This, if not settled by express agreement on the accepting the goods from the carrier short of the place of destination, must in all cases be a matter of estimation, for which there is nothing certain to guide in fixing the sum, but which must depend merely on a consideration of what such carrying may be reasonably worth; and this must depend on the taking into view every circumstance of disadvantage under which the goods are accepted; The pro rata cannot be the proportion of the distance run to the distance originally destined, throwing out of the calculation the distance of deviation from the direct course from which the ship may have borne away to reach a port. It will not do to say, as the whole voyage is to the whole freight agreed upon, so this part of the voyage to the part freight. The disadvantage under which the goods are accepted must be taken into view. Under circumstances, it may be unreasonable that the owner of the goods pay any freight, his loss being greater than the pro rata freight earned. It may be better for the carrier, or those who represent him, to have the goods taken oif their hands, than to be obliged to repair the wreck or procure another vessel. What control in that case has the owner of the goods over the assurer, to compel him to repair the vessel, or to procure another? His contract, (the owner of the goods) was with the original carrier. Must he not look to him for his remedy? What control has the original carrier, the assured, over the assurer who becomes the carrier, to compel him to repair the vessel, or procure another? What right of action can he have against him if he refuses to repair in a reasonable time, or to procure another vessel? If he cannot have the freight earned, as well as that to be earned, it may be a loss to him to go on with the carrying, and in such case he , . , , , , . , can have no inducement to complete the voyage, which seems the only hold that the assured, after abandonment, can have upon him, to induce him to fulfil the contract of carrying in his stead; and for which contract, he the assured must be answerable to the owner of the goods. Admitting that the assured has a right of action against the insurer on an implied undertaking to complete the voyage, is it not better that the interest he may have in completing the voyage should serve instead of legal compulsion, and secure a fulfilment? It would seem to be taken for granted in all cases, that the as-surer when he takes the abandoned vessel will go on with the voyage. This goes to prove the understanditig of the parties that it cannot but be his interest to earn the freight; but it may not in all cases be his interest, unless he is allowed the whole freight, that earned and to be earned; ergo, as the logicians would say, it is the understanding of the parties, and it is a reasonable understanding, and for the mutual interest of assurer and assured, and is the simplest rule, and the only one easily practicable. In that case he only who lets out his ship to hire for a voyage, or in the language of the merchants, charters it out, will insure for freight; in which case, on abandoning the freight, he has the whole to abandon, and the insurer makes good the whole, and takes the pro rata, if any has been earned, or the whole if earned, subject to the expenses incurred; which may reduce the freight to very little, and furnishes a reason xvhy he should have the whole.

I have said that it is a matter of difficulty to settle the quantum meruit of a part performed carrying. I would rather say that it is an absolute impracticability to reach justice in such a case, from the want of an exact standard of valuation; which uncertainty ought to be avoided, by adopting such a rule as will reduce the cases. These cases are reduced, by considering the assurer as stepping into the place of the assured, so as to be intitled to the whole freight from the commencement of the carrying. In that case the assurer at the time of insurance will look to the being intitled to the whole freight, or hire of carrying, if the ship should at any time in the course of the voyage be abandoned to him; and he will reduce his demand of premium accordingly. The assured on his part will take the same thing into view; and, the premium being adjusted on this ground, it comes to the same thing as between these, and the only question will be, which is the simplest and most convenient rule?

It must lie with the assurer on abandonment, supposing him present, to say, whether he will repair the vessel or provide another, so as to complete the carrying and be intitled to the whole freight, or to take the goods and pay for them, and give up the freight in tota; for he has now become the carrier. The carrier in the first instance, the assured, who has abandoned the possession and the property, cannot make himself a party, and dispose of the interest to which another has succeeded. It is for the benefit of the assured himself that the assurer should succeed. to an interest in completing the original contract of carrying, by which the assured continues still bound, notwithstanding his abandonment; for it is not in his power by abandoning, to release himself from this obligation to the owner of the goods. It is to him that the Owner of the goods must recur on the not completing the carrying. The owner of the goods has no privity of contract with the assurer, and cannot call upon him for his goods nor his damages. It is therefore against the interest of all concerned that the as-surer should not succeed to all interest in the freight pro rata, and otherwise.

This is the view of the case I have taken as between the assured and the assurer, where only the vehicle of carriage is insured. But where the owner of a ship insures carriage or freight also, not only inconvenience hut inconsistencies arise from the principle carried into effect of the assured after abandonment being considered as intitled to the pro rata of freight earned. It is this only which he can pretend to abandon to the insurer on freight; for that which may be earned after abandonment goes to the insurer on the ship. It can be only as trustee for the insurer on freight, that the owner of the vessel claims, the pro rata. What therefore does he get by his insurance on freight when he abandons the vessel? The truth is, that the insurance on vessel and on freight at the same time, by the owner of the vessel, is in the nature of it, to a certain extent, a double insuranóe. An insurance of the absolute property in the ship, and the qualified property, or the use for a specific purpose. He xoho insures the part, has already insured the whole. Should he claim the pro rata, he has nothing to abandon. It will become necessary therefore, that in case of such double insurance of ship and freight, the insurer on freight be informed of the insurance on ship also; for in case of an abandonment of ship, the insurer will claim the freight to be earned after abandonment, and the owner of the ship will claim for himself, the freight earned before abandonment. All that he can get in case of technical loss, is the premium paid to him, to be deducted out of the whole freight which he has insured and must pay. The owner of the ship claims the pro rata for himself, and hot as trustee for the insurer on freight. This reasoning goes only to the inconvenience of considering the owner of the ship as intitled to the pro rata, and not the insurer on ship. For not being to have the pro rata, having insured the ship, he will not insure the freight without informing that he has insured on ship; and so in case of loss can have nothing to abandon to the insurer on freight, meaning to take the pro rata for himself. It goes to shew what,must be the understanding also in cases of insurance, since we have nothing of a stipulation for the pro rata on freight. It must be considered as going, on abandonment, to the insurer on the vessel.

It may not necessarily follow that these deductions must be considered to be the understanding of the parties; but from the language of writers, the insurer on ship would seem to me to be considered as a purchaser from the time of the insurance. It is the value of the ship before the voyage that is insured, and not the value at the end of it, or at any intermediate stage. The insurer is considered as a purchaser conditionally from the time of the valuation. If she was to be considered as valued as at the time of abandonment, it would be reasonable that the freight she may have earned after-wards, should go with her in lieu of the wear and tear she may have suffered, and which would bring it to the same thing as a valuation as at the time of insurance. Epierigon 196. 222-3-4.

... With regard to the second point in this case, whether a pro rata has been earned, I would take it from the nature of the contract to carry to a certain place, that, in order to recover a proportions a part only being performed, the completing the contract must be dispensed with expressly or impliedly by him who has an interest in the completing it. In case of injury to the vessel, it does not lie upon the owner of the cargo to demands but on the owner of the ship to offer to repair or procure another. This is not expressly stated that I find in any of the books; for the language is equivocal, one while speaking of the owner of the goods demandings another while of the owner of the ship or his representative the master offering, to repair or procure; but I deduce it from the nature of an undertaking to do a things that it must be done or offered to be done to intitle to a compensation. It must be the act of him for whom the thing is undertaken to be done, to dispense with the doing it in whole or in part; and by word or act, the duty must be waived by him who has a right to insist upon it. He who has under taken to do a thing in one way, and cannot in that way do it must offer to do it in another.

In the case before us, the supercargo must be considered as representing the owner of the cargo. But it is impossible to say that by accepting the proceeds of the sales, he dispensed with the obligation to complete the voyage; but rather that he accepted as in part of the damages sustained if any, for not completing, and as trustee in this case for the insurer on the cargo. Whether he ought to pay for freight under these circumstances, would seem to depend on his having derived benefit from the carrying so far. It may have been better for him to have had his goods in the port from whence they were carried; or the market may have been not less profitable than that to which bound. This is a fact that a jury would seem alone competent to settle, there being nothing that can with certainty be inferred as to an offer on one sides or waiver on the other. If the merchant has been profited, the shipowner ought to be allowed something reasonable. If he has received a benefit the law might presume that he has undertaken to compensate. Whatever this might I think the insurer on the ship will be intitled to receive. At least I would lay down this principle supposing it a new case. In the English books it would not seem to be decided in point; but so far as I can collect, when it comes to be de - cided, it will be this way. In the New York state, the point came expressly tobe decided, 1 Johnson1s Cases577., where the court were divided, Radcliffm my opinion wholly wrong, Lansing and Lewis half right, Kent and Benson right. But in the court Of errors and appeals what I think right, was thought wrong. It is settled in that state, that as between the assurer and assured this last is intitled to the pro rata. My'judgment is the reverse, and that the' insurer is intitled; and this from the mutual interest and convenience of the parties concerned, which is always a test of principle, and must govern, where a rule would not seem to have been settled expressly to the' contrary; and which, from my investigation, would not seem to be the case here.