173 N.Y. 17 | NY | 1902
The action is brought on a policy of marine insurance effected on a cargo of apples, potatoes and other vegetables shipped on a canal boat. The boat was sunk by an obstruction in the Erie canal. Part of the cargo was recovered, though in a damaged condition, and reshipped to the plaintiff. This portion was sold. The amount realized on the sale was but slightly in excess of the handling and selling charges and was less than the sums expended by the defendant in raising and shipping the cargo, not including therein the expenses of the sale. The trial court found that there was a constructive total loss of the property insured. The judgment entered upon the decision in the trial court was unanimously affirmed by the Appellate Division. No exceptions were taken to the rulings of the court in the admission or rejection of evidence. In this state of the record the only question presented to us is whether, under the policy, the defendants were liable for constructive total loss.
The material clauses of the policy under which the controversy arises are, first, "The said loss or damage to be estimated according to the true and actual cash value of the said property at the place of destination on the day of the disaster; * * *But fruit and vegetables, and other articles perishable in theirown nature, are free of particular average," and second, "It is understood that there can be no abandonment of the subject insured; nor shall the acts of the insurers or their agents in recovering, saving or disposing of the property *21
hereby insured, be considered a waiver or an acceptance of abandonment, nor as affirming or denying any liability under this policy; but such acts shall be considered as done for the benefit of all concerned, without prejudice to the rights of either party." The first provision is generally found in marine policies, though in different forms, and is of quite remote origin. It is known both in the text books and in judicial opinions as the "memorandum." (2 Arnould on Marine Ins. § 993; 1 Parsons on Marine Ins. 627.) The reason which dictated this provision is said to be that there are many articles of a perishable nature with regard to which it is very difficult to discover how far their deterioration is owing to the perils of the sea against which the insurance is effected, and how far to their own inherent decay or decomposition. There is no dispute that free from particular average exempts the insurer from liability for partial damage or for anything less than a total loss. All the authorities agree in this. In marine insurance total losses are of two characters, actual and constructive. This seems to be the law in all commercial countries, though the rule differs in different countries as to what damage is sufficient to create a constructive total loss. In England the damage must be so great that when repaired the value of the restored ship or article is not worth the cost of repair. In this country the rule is that where the repairs will exceed fifty per cent or one-half of the value of the ship or articles insured when repaired or restored it is a constructive total loss. The issue between the parties is whether insurance against total loss is confined toactual total loss or whether it includes as well constructive
total loss. In England, though at one time a contrary doctrine was asserted by Lord MANSFIELD (Cocking v. Fraser, 4 Douglas, 295), the law seems settled that such insurance indemnifies against constructive as well as against actual total loss, and the rule applies to memorandum articles as well as to other insured property. (Arnould on Marine Ins. sec. 902; Adams v.McKenzie, 32 L.J.C.P. 92.) In this country the authorities are conflicting, and possibly the weight of authority is the other way. Kent says *22
(3 Com. 295) that to charge the insurer the memorandum articles must be physically destroyed so as not to exist in specie. This was in accord with the decision made by him while in the Supreme Court of this state in Maggrath v. Church (1 Caine's 195), which was decided on the authority of Cocking v. Fraser
(supra). This doctrine has been modified in the United States Supreme Court so that a total loss in value is deemed to render the insurer liable the same as a total physical loss (Ins. Co. v. Fogarty, 19 Wall. 640), but subject to that qualification seems to be strictly adhered to. The latest case on the subject in that court is Washburn Moen Mfg. Co. v. R.M. Ins. Co. (
The first inroad in this state on the doctrine of Chancellor KENT was made in De Peyster v. Sun Mutual Ins. Co. (
It is contended by the learned counsel for the appellant that as the policy provides that there can be no abandonment of the subject insured, there can be no such thing as a constructive total loss. If the policy contained a provision standing by itself that "the insured shall not have the privilege of abandondment," his position might be correct. Ordinarily to constitute a constructive loss, it is necessary that there should be an abandonment. "A constructive total loss in insurance law, is that which entitles the assured to claim the whole amount of the insurance, on giving due notice of abandonment." (Arnould on Marine Ins. sec. 1091.) But in this policy the provision that there can be no abandonment of the subject insured, is found in connection with the further provision, "nor shall the acts of the insurers or their agents *25 in recovering, saving or disposing of the property hereby insured, be considered a waiver or an acceptance of abandonment." Construed with the text of the whole provision, we think that the only effect of this clause is to prevent the action of the underwriters in taking possession of the property and interfering to save it from being held as the acceptance of an abandonment.
The judgment appealed from should be affirmed, with costs.
PARKER, Ch. J., GRAY, BARTLETT, HAIGHT, MARTIN and WERNER, JJ., concur.
Judgment affirmed.