Royal Exch. Assur. v. Graham & Morton Transp. Co.

166 F. 32 | 7th Cir. | 1908

SEAMAN, Circuit Judge

(after stating the facts as above). The decrees appealed from are each founded upon policies of marine insurance written in favor of the appellee, upon the steamer Argo, which were in force when the insured steamer became stranded on the east short of Rake Michigan while attempting to make the port of Plolland, Mich., in a storm, November 24, 1905. The terms of insurance and fact of stranding, as averred in the libels respectively, are undisputed. Notice of the disaster, followed by notice of abandonment to the insurers, was promptly given by the appellee; and the underwriters upon the hull proceeded at once in efforts to release the steamer — as authorized under the terms of their policies — without accepting the abandonment. On January 28th the Reid Wrecking Company, employed for the purpose after two wrecking expeditions had failed, succeeded in such release. Under each libel the contentions were for and against tlie right of abandonment, as a constructive total loss, within the terms of the policies and the rules applicable to such issue; and the testimony bearing upon the solution is voluminous, and conflicting as well, in various particulars. The District Judge, hearing this testimony, mainly given by witnesses in open court, states (in the opinion filed below), as his conclusion from the evidence, that “the dangers to be apprehended” from the stranding “justified the owner in abandoning the boat, because there was a high probability that the cost of rescue and repair would exceed thirty thousand dollars”; and thereupon awarded recovery in full in each case.

1. For reversal of such decrees, the main contentions on behalf of each appellant are in reference to this conclusion of the trial court, as predicated (1) upon an erroneous vie.w of the rule of law which must govern the issue, and (2) upon incompetent and insufficient testimony, disregarding the true tests of “high probability” or “highest probability” at the date of abandonment:.

(1) The amount of insurance upon hull and machinery, involved in the present inquiry, was $60,000, distributed under 10 insurance policies, issued by different: insurers, with the valuation of the steamer fixed therein at $60,000. Under the American maritime rule applicable to such policies, and as well under their express terms, constructive total loss with right of abandonment to the insurers existed in the event of damage in excess of one-half such valuation, namely, $00,000. When the stranding of the insured steamer occurred, the rule referred to required prompt decision and action on the part of the appellee, if such right of abandonment was claimed. From the nature of these disasters, certainty of results cannot be made the test, and the rule thereupon, stated in Kent’s Commentaries (3 Kent. Com. 321), has become the established doctrine in America (Bradlie v. Maryland Ins. Co., 12 Pet. 318, 397, 9 L. Ed. 1123; Orient Ins. Co. v. Adams, 123 U. S. 67, 75, 76, 8 Sup. Ct. 68, 31 L. Ed. 63), namely :

“The right of abantionment does not depend upon the certainty, but on (lie high xirohability, of a total loss, either of the property or of the voyage, or both. The insured is to act, not upon corta ini ios, but upon probabilities, and if the tacts present a case of extreme hazard, and of probable expense exceeding half the value of tlie ship, the insured may abandon, though it should happen that she was afterwards recovered at a less expense.”

In the early and leading case of Peele v. Merchants’ Ins. Co., Fed. Cas. No. 10,906, 3 Mason 27, Mr. Justice Story reviews and distinguishes the authorities with definitions of the rule thus adopted for ascertaining whether abandonment is justified; and we deem no citations needful, other than above noted, for the rule of law applicable to the case at bar.

Tlie authorities referred to settle not only the rule as stated, but these further propositions for its interpretation: (a) The right to abandon the vessel to insurers must be determined as of the time of abandonment; if then good, “the rights of the parties are definitely fixed, and do not become changed by any subsequent events”; if not good, “subsequent circumstances will not affect it, so as, retroactively, to impart to it validity, which it had not in its origin.” Bradlie v. Maryland Ins. Co., 12 Pet. 378, 397, 9 L. Ed. 1123. Moreover, it depends upon the existing state of facts, with hazards involved therein, and not upon the state of information received, (b) Nevertheless, subsequent events are admissible and enter into consideration in so far “as they operate by way of evidence upon the pre-existing state of the ship” (Peele v. Merchants’ Ins. Co., supra); and in like view, evidence of efforts made and expenses incurred in subsequent release of the vessel may be considered, under proper restriction, to ascertain the pre-existing conditions and hazards (Bradlie v. Maryland, supra; Orient Ins. Co. v. Adams, 133 U. S. 67, 76, 8 Sup. Ct. 68, 31 L. Ed. 63). (c) The assured cannot be required to abandon, although the loss, 'actual and prospective, may exceed one-half the value fixed in the policies; but the right of abandonment depends alone upon the fact of such excess, and cannot rest, as contended on behalf of the appellee, upon the election of the assured that it was “most to his advantage,” or more profitable for him, to abandon, “in view of the additional so-called disbursement insurance.” (d) The burden of proof to establish right of abandonment is cast upon the assured, as libelant.

The opinion and rulings of the trial court plainly recognize the rule and propositions of law above stated as controlling, and the finding of ultimate fact, as recited in the opinion, appears to be stated in conformity therewith. The complaint, therefore, that the rules of law were disregarded in such conclusion must rest upon their application to the facts in evidence or other assignments of error.

(3) The contention that the decrees are unsupported by competent evidence is earnestly pressed for review of the testimony, and we recognize the importance of the issues of law and of fact involved in such inquiry. With the issue of law determined, as above stated, it goes without saying that no facts can enter into consideration which do not tend to prove or disprove “high probability that the cost of rescue and repair would exceed thirty thousand dollars,” as found by the trial court. The finding of such ultimate fact is not conclusive upon appeal, but is entitled to much weight; and under conflicting testimony, with witnesses before'the trial judge, will not be set aside unless it clearly appears that the conclusion is either unsupported by the evidence or against the evidence. The Edward Smith, 135 Fed. 33, 34, 67 C. C. A. 506; Jameson v. Lewis, 131 Fed. 738, 739. 65 C. C. A. 586; Alaska Packers’ Ass’n v. Domenico, 117 Fed. 99, 101, 54 C. C. A. 485. We have deemed it needful, therefore, to examine the testimony in detail, and are impressed with its sufficiency to meet the utmost requirement of either of these tests for support of the finding.

The circumstances of the stranding, the existing and prospective conditions of weather and of the sand bottom in which the steamer was imbedded, and her inevitable loss unless released, sooner or later, by a wrecking expedition, are undisputed facts; and the testimony is free from material conflict in proof of the efforts made for such release by three successive expeditions employed for the purpose, and of 'actual difficulties encountered, so that the steamer was not released until the end of 64 days on the beach — together with the actual expenses incurred by the underwriters therein, and the extent of damage suffered by the steamer in hull and outfit. In the proof submitted of the various material facts involved in the controversy (apart from opinion evidence), no conflict appears in matters of substance, except • in reference to the actual extent of damage attributable to the stranding, namel}r, whether so-called “bottom damages” were pre-existing and so not chargeable. Error is assigned for not excluding this element of damage (and other elements hereinafter referred to), from the estimate of probable loss due to the stranding, and we deem it sufficient to remark, for the present consideration, that the finding in favor of the appellee thereupon is well supported by testimony, notwithstanding such conflict, and that the credibility of one and the other version is not an open question. The various witnesses called to estimate the expense required to make good the injuries sustained by the steamer differ widely in the estimates made on behalf of the parties respectively; but these differences are plainly reconcilable, for the reason that the inquiry on the part, of the appellants excluded elements of injury (hereinafter discussed) which were included in the estimates introduced on the part of the appellee. So the force of each version must he measured by the correctness or incorrectness of its premises, and does not rest upon the credibility of witnesses.

Upon the crucial inquiry, however, of the probabilities of danger and loss to be apprehended from all the circumstances of the disaster, as of the date of abandonment, the opinion evidence introduced on the part of the appellant is directly in conflict with that given in support of the libel, and is irreconcilable, as well, with the conclusions of the trial court. The admissibility of such evidence, under that issue, is unquestionable, within the well-recognized limits of its reception and value, to aid the court in rightful understanding of the facts in evidence, from the viewpoint of expert knowledge and experience, plainly involved in this question of fact: What were the high probabilities of loss, both existing and prospective, imposed by the stranding? These opinions are without force except as they are consistent with and predicated alone on facts in evidence, arc then advisory only of the import of such facts, and can neither supply nor set aside evidentiary circumstances in the case.

This class of testimony in favor of the appellant exceeds the opinion evidence introduced by the appellee, not only in positiveness, but in the number and seeming qualifications of the witnesses as experts. In substance, eight witnesses for appellant — Benham, Tuttle, James Reid, Sinclair, Baker, James T. Reid, Warkman, and Parry-jones — testify that the circumstances of the stranding presented (a) no serious existing injury to the steamer, (b) no “difficult job to get her off” without serious injury, (c) no probable dangers in her position from sea or ice, (d) no probability that it would cost $30,000 to release and repair the steamer, nor “anything like $30,000,” and (e) no probability that she would be injured seriously by the stranding, exposure, or wrecking operations, nor to any considerable amount even if not released during that winter. These concurring opinions of experts are clearly in point upon the issue of probabilities, and the appellants contend, therefore, that they are decisive against the right of abandonment, and of error accordingly in the decree. We believe this contention to be untenable, however, under the evidential facts well established and plainly inconsistent with such opinions — irrespective of the question whether expert opinions are entitled to such controlling effect in any view of the facts. As before stated, subsequent efforts and events may be considered to ascertain the probabilities of conditions and loss which were to be apprehended at the stage of abandonment; and it is undoubted, as well, that occurrences or expenditures not within the range of probabilities are inadmissible for such purpose.

The testimony referred to is uncontroverted (except in reference to its bearing aiid force), and impresses-us as both evidential and convincing for support of the decree. Measures for release of the steamer were promptly taken on behalf of the underwriters, by representatives of great experience and skill in such undertakings, and were constant and energetic for the utmost of speed and safety in their efforts to that end. The operations of the successive wrecking expeditions, and the various conditions of weather and shifting sand which caused failures during two months of trial, are detailed by the witnesses (mainly those engaged therein by the appellants), and are instructive throughout; but for the purposes of this review, it is sufficient to remark, as our understanding of the entire testimony, that each of the efforts so made, and all the various difficulties so encountered, appear to be within the high probabilities at issue. The dangers of that shore, at and after the close of the season of navigation, with the prevalence of like winds and adverse conditions, are clearly indicated by the testimony, together with like experience in other wrecking operations for release'of steamers theretofore stranded in the vicinity; and the court was justified, as we believe, in accepting these facts for solution of the issue, rather than the above-mentioned opinion testimony, upon which further comment is not required.

The finding of “high probability that the cost of rescue and repair would exceed thirty thousand dollars” rests equally upon the undisputed facts of these wrecking operations, of actual expenses incurred, and of actual damages suffered by the steamer beyond that amount. It is contended, however, that a large part of the actual damages so included are not within the issue. For expenses, the underwriters paid $10,800; for damages, $3,279.67 is conceded to be the loss in “outfit” of .the steamer, and $19,500 is the estimated cost of repairs upon hull. The objections raised to these items of damage are (a) that the loss of outfit was not due to the stranding, but to neglect in leaving these furnishings, instead of taking them off when the cargo was removed, and (b) that the estimate for repairs includes so-called “stem damage,” amounting to several thousand dollars, alleged to be “caused by mistake of the engineer” in backing, instead of going ahead, during the wrecking operations. Another objection, urged for including “bottom damages,” alleged to be pre-existing, has been heretofore considered, and requires no further discussion. Whether one or the other version of cause for either of these conceded injuries appears to be best supported under the evidence,- or to what extent, if any, neglect or fault in the wrecking operations may have contributed thereto, do not impress us to be, re viewable questions. True, the issue is not one of liability for damages due to stranding, as proximate cause thereof, but of probable results to be apprehended from such stranding; nevertheless, it is not reasonable to assume that wrecking operations will be faultless throughout their course, and just allowance for such contingencies may rightfully enter into the estimate of probabilities. This finding of probable cost and injury in excess of $30,000 is a general finding of fact under all the evidence, not resting for support on any specific element in controversy. From the nature of the issue, exactness in the measure of each element of probability is neither required nor attainable. The actual expctiscs and injuries which are uncontroverted approximate closely (in a comparative sense) the contract amount fixed for constructive total loss, leaving merely a reasonable margin, as we believe, for estimate of other probabilities. 'Moreover, the amount referred to of wrecking expenses paid excludes the important wrecking operations during December of the expedition called the “Great Takes T. & W. Co./’ for the reason that they were unsuccessful after persistent efforts, and their contract with the underwriters provided for payment only in the event of success. As the evidence establishes both well-directed and well-equipped service by this expedition, and the value of such service at customary rates, the fact of escape from payment therefor under the contract cannot bar the quantum meruit value of the service from consideration in making up the estimate.

We are of opinion, therefore, that the challenge of this decree for want of sufficient evidence must be overruled.

2. Error is assigned upon rulings against numerous offers of opinion on the issue of probabilities, under various forms of inquiry. Each of the witnesses thus interrogated had previously stated his opinion thereupon (as hereinbefore mentioned), substantially covering the inquiry thus ruled out, and the further answers sought were merely cumulative, at best. Assuming, therefore (without so deciding), that these further questions were otherwise admissible, as framed, no aspect appears in which either tended to strengthen the opinion testimony of such witness theretofore given, and it was within the discretion of the trial court to allow or disallow.

3. Allowance of interest on the amount of loss from hi arch 2, 190i>, is further assigned as error, for want of evidence that “due proof of loss was made.” We do not understand that the formal proof of loss referred to is required, either under the terms of the policies in suit or any rule of law applicable thereto, for the purpose of recovery under an abandonment, where the right of abandonment is the single issue involved; and objection to the interest allowance in each of the decrees is overruled. The propositions ilius considered and our views thereupon are equally applicable to both classes of policy in suit for support of the decrees respectively, and dispose of all objections raised to either recovery founded on the policy designated as “hull” insurance.

4. The decrees against the appellants. Commercial Union Insurance Co. (No. 1,485), Indemnity Mutual Marine Insurance Co. (No. 1,486) and the Sea Insurance Company (No. 1,487), are founded, in whole or in part, on policies of the class named “disbursement insurance,” which are alleged to involve a further question of liability under their peculiar terms. Each of these policies is independent of the general marine insurance upon the steamer, under “hull” policies heretofore considered, and is made payable only in the event of total loss, actual or constructive — a special and well-known form of marine indemnity inaptly named as above mentioned. As frankly conceded and fairly described in the brief for appellants, “It is a valid insurance, made to give a larger total loss recovery, without increasing the valuation —and thereby increasing the average deductible from losses and left with the owner — making a saving in premium.” The insurer thereunder is without interest in salvage after abandonment. In each the special terms of the insurance are stated to be “against the risk of total or constructive total loss of the vessel only.” Each contains, however, the following clause: “A total and/°r constructive total loss paid by insurers on hull, to be a total loss under this policy.” The contention is in effect that no right of action accrues under the policy, until total loss (actual or constructive) appears, together with its payment by the “insurers on hull.” We are of opinion, however, that such interpretation of the last-mentioned clause is unauthorized under the plain terms of indemnity stated in the policy; that it is merely a provision for simplification of'proof in the event stated, and not a limitation of liability; and that proof of the fact of such loss, however established, authorizes recovery.

5. The decree against the appellant Indemnity Mutual Marine Insurance Company is founded upon two policies, one of each class, and, upon one of the special provisions contained in its policy for “disbursement insurance,” reversal of such decree is sought. This policy is written on a printed form obviously used for and adapted to “hull” insurance, with various clauses inapplicable to “disbursement insurance” ; and, among these printed provisions, one clause reads: “The right of abandonment under this policy as for a constructive total loss, shall not exist unless the loss exceeds seventy-five per cent, of the value in this policy.” Were such provisions controlling as the insurance contract, no ground would appear for the recovery. We are of opinion, however, that the controlling provision is contained in the rider attached td the policy, as indicated in the reference thereto, identical in terms with the other disbursement policies above described. It plainly refers to and adopts the provisions contained in the “hull” policies for definition of the constructive total loss thereby insured against, namely, a loss which “exceeds half the value of hull and machinery, as stated in the policy.” Indeed,, its own “hull” policy on the vessel so defines the risk; and the purpose is unmistakable in its supplemental contract to adopt the American rule of constructive total loss. The inconsistent printed clause referred to is without force, therefore, under the well-settled rule applicable to such instruments.

We believe no ground is presented for. disturbing either decree appealed from; therefore each of these decrees of the District Court is affirmed.