Murray v. Receivers of the Harmony Fire & Marine Insurance

Majority

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D. Colden Murray and another vs. The Receivers of the Harmony Fire and Marine Insurance Company.

Headnote

By the terms of a marine policy of insurance, the insurers were liable only for an absolute or total technical loss. The policy contained the following warranty: “Warranted by the assured free from loss or claims on account of capture, seizure, detention, or destruction by or arising from any belligerent nation, or from any seceding or revolutionary slate or states of the union, or from any guerrilla party, or by or from any officer, civil or military, or other persons claiming to act in their name or under their authority, or in their behalf.” The perils insured against were those of the “seas, winds, waves, rocks, sands, shoals and coasts, collisions and sinking at sea, fires, jettisons, loss by pirates, rovers or assailing thieves, barratry of the master and ma-the hurt, detriment.or damage of the said vessel, or any part thereof, occasioned by sea perils.” Seld, 1. That the forcible taking possession of the vessel by the officers of the United States government, with the intent to appropriate it to the use of the government for a specific purpose, viz., the carrying of a cargo to Santiago, amounted to a capture; and that the warranty in the policy did not extend to such capture. riñes, and all other perils, losses and misfortunes that have or shall come to

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2. That the grammatical structure of the sentence containing the -warranty ' precluded any such extension, and no reason was apparent why the construction of the clause should not be according to that structure.

And the vessel having been lost while thus in the service of the government, by stranding, and the insured having, without any previous abandonment, made a claim on the United States government for payment for the vessel, by reason of her loss while in the possession of the government officers, which claim was allowed and paid, to an amount nearly equal to the whole value of the vessel; Seld that these circumstances caused the capture to cease from operating as a total loss; and that the insurers being liable, under the policy, only in case of a total loss, it was immaterial whether they had insured against capture, or not.

Seld, also, that if the assured had desired to make the constructive total loss arising from the capture, an actual total loss, so far as the insurance was concerned, they should have abandoned; in which case the insurers would have been entitled to the sum paid by the government; but that they, not having done so, but choosing to hold on to their property in the vessel, and to accept the sum paid by the government, could not claim to recover of the insurers as for a total loss.

If the assured, before abandonment, either recovers the subject insured, or receives an indemnity for its loss, he cannot thereafter elect to abandon.

ON the 7th day of June, 1865, a policy of insurance was issued by the above insurance company upon the schooner Alice Dell. By its terms the company is liable only for an absolute or technical total loss. The policy contains the following warranty: “ "Warranted by the assured free from loss or claims on account of capture, seizure, detention, or destruction by or arising from any belligerent nation,'or from any seceding or revolting state or states of the union, or from any guerrilla party, or by or from any officer, civil or military, or other persons claiming to act in their name or under their authority, or in their behalf.”

The perils insured against were those of the “seas, winds, waves, rocks, sands, shoals and coasts, collisions and sinking at sea, fires, jettisons, loss by pirates, rovers or assailing thieves, barratry of the master and marines, and all other perils, losses and misfortunes that have or shall come to the hurt, detriment or damage of the said vessel, or any part thereof, occasioned by sea perils.” The vessel sailed from New York for New Orleans, and arrived there in

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May, 1865. The master testifies that while discharging cargo there he received a written order from the quartermaster’s department to come to the office; he went to the office. They told him they wanted his vessel to go to Santiago with a load of timber. He asked what would be the rate. They told him he should have what the Washington rates were; he did not know what the charges "were, and did not ask. Stevedores, employed by the quartermaster’s department, loaded the timber on board the vessel. The master, in his protest, says nothing about his agreement to carry the cargo, but terms the transaction a seizure of his vessel by the quartermaster at Hew Orleans, for the service of the United States government. In his evidence before the referee, he says that he agreed to take the cargo at the rates established at Washington. The vessel sailed on the 27th of May, 1865, with a load of lumber, for Santiago, where she arrived June 3, 1865. The master went ashore and reported to the quartermaster there, who told him to wait for further orders. On the 6th of June the cargo was discharged. On the 13th of June the quartermaster’s tug came and towed the vessel outside the bar to lighten the brig Kodrick, but in consequence of the weather she was obliged to anchor astern of the brig. On the 14th of June the quartermaster’s tug-boat came and towed the vessel alongside the steamer Illinois, and about 700 colored troops were transferred from the steamer to her, for the purpose of taking them in over the bar. The master, in his protest, says that owing to there being a heavy swell, he did not wish to take the vessel alongside the Illinois, as she would thereby be endangered, but the captain of the Illinois, with aid of United States officers, took the entire charge of the vessel, threatening to shoot him if he did not obey their orders. The master, in his evidence before the , referee, says that he remained in command all the time until the vessel was lost, and that the captain of the Illinois tried to get command of the vessel, but did not succeed;

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but he further says, in his evidence, that the facts stated in his protest were made from his best recollection of the same as they had occurred ; that his recollection was better then than at this time before his evidence; and that the facts in the protest are all true as far as his knowledge goes. He further states, in his evidence, as well as in his protest, that the captain of the Illinois threatened to shoot him unless he did as they wanted him to do. That they wanted him to lay alongside the Illinois to take troops from her; that he did take troops from her, but had his own way about it. It appears from the protest and the captain’s evidence, that after the colored troops, with their officers and a superior officer, had been taken on the vessel, she having a pilot on board, proceeded to cross the bar and enter the harbor of Brazos Santiago; while doing so she struck on the bar; the anchor was let go, and the captain remarked to the mate, “ she is all right and can be saved at daylight.” Thereafter one of the United States army officers gave orders to pay out ten fathoms of chain; the captain objected; the officer told him that unless he obeyed orders they would tie him and throw him overboard. The chain was payed out and the vessel commenced thumping in the beach breakers; at about ten the next morning the vessel commenced leaking so badly that she could not be kept free by the pumps; at eleven she was half full of water. The flood tide setting in strongly, the vessel commenced dragging her anchor towards the outer breakers; at this juncture the United States officers and pilot left. During this time the master was not permitted to give any orders, or have any control "over the vessel. It then appears from the protest, that the pilot and United States officers having left, the master perceiving that the vessel was being carried by the current directly upon the outer breakers, where there was danger that the vessel and . all on board would be lost, set the mainsail and all the jibs, slipped the chain, and for general safety ran

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the vessel upon the south east beach of Petrie island. Here the vessel was stripped of everything except the "masts, standing rigging and starboard anchor and chain. The vessel was full of water and lying quiet, breakers running over her, and in this condition she was left by the master and crew, they being unable to remain longer on board, and in order to save themselves were obliged to swim ashore. The protest leaves the vessel thus lying. The master, in his evidence before the referee, swears “that the vessel was lost; she went down in the quicksands but he gives no particulars; he does not state when she went down, nor whether she could be got off and saved, or not; nor whether the getting her off and repairing would have been at such an expense as to render it unadvisable to undertake it. There is no pretense that the vessel was under charter or contract, made either voluntarily or compulsorily, with the quartermaster’s department, from the time she discharged her cargo at Brazos Santiago until "she was stranded.

Geo. G. Barnard, J.

It is laid down by good authority on insurance law, that if there be a capture, and before the vessel is delivered from that peril she is afterwards lost by fire, accident or negligence of the captors, the whole loss -is properly attributable to the capture. (Magoun v. The New England Marine Insurance Company, 1 Story, 157 .) So also, Justice Kent says: “ Suppose the policy against capture only, and the vessel was captured, and then shipwrecked while in the hands of the captors; the assured might maintain that his right to recover for total loss attached upon the capture, and that the subsequent casualty was one in which he had no concern.” (Schieffelin v. New York Insurance Company, 9 John. 27 .) The converse of the last proposition is equally true. .Suppose the underwriters exempt from the risk of capture, and after capture the vessel, while in the hands of the captors, wrecked by

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one of the perils insured against in the policy, the subsequent casualty is one with which the assurers have no concern, and the assured cannot recover. (McCargo v. New Orleans Insurance Company, 10 Rob. La. 328 .)

It is not intended to' say that the above cited cases are direct decisions sustaining the above propositions, but merely that the learned judges, in their opinions, laid them down as sound law. When we look at the principle on which they are founded, no reason for dissenting from them can be found. A capture is a total loss, subject to be defeated by a recapture, or relinquishment, unless the assured, in case he is insured against capture, abandons before notice of the defeasance. Consequently, until such defeasance the vessel is a total loss to the assured. It being so, he has no concern with what happens to the vessel during the continuance of the capture, for it harms him not. Therefore, if he warrants free from capture, and the vessel is lost by capture, he cannot hold the assurers for a total loss on a peril assured against, happening during capture ; for the vessel has not been lost to him by that peril, but by the capture. The question then is, are the acts of the United States officers and soldiers in this case fraught with the consequences of a capture ? If they are, then the stranding of the vessel is of no consequence in determining the defendants’ liability. It is laid down that by capture is meant the taking possession of property by the commissioned officers and agents of some lawful and acknowledged government, with the purpose of appropriating it to the captor’s own use. (Phillips on Insurance, §§ 1108-1110.) It is evident that in this case the vessel was forcibly taken possession of by the officers of a lawful government, with the purpose of appropriating it to the use of the government. It may be urged that the intent of appropriation, in order to constitute a capture, must be to divest the owner of the property for all time to come; and that an intent to appropriate it only for a specific purpose, or for

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a time only, and then to return, with or without an indemnity for the appropriating, constitutes not a capture, but a mere detention. I do not understand that the distinction between capture and detention rests on any such difference of intention. A detention arises when there is no intention to appropriate, and in fact no appropriation to the detainer’s use, but where the property is either simply held as a hostage, as it were, for the payment of ransom, or for the purpose and as a means of obtaining some ulterior object, such as for the suspension of commerce with a port by embargo or blockade, which detains a vessel in that port, or for the exercise of the right of search. (1 Story on Marine Insurance, 584, 585.) The general definition that a capture means a taking with intent to keep, and an arrest or detention, a taking with intent to return the thing taken, must be regarded as not supporting any other doctrine ; for the cases cited in support of this definition of an arrest or detention are all cases in which there was no design to appropriate the vessel to the detainor’s use for any length of time, or for any specific purpose, but simply to detain it as a means of enforcing some other object had in view. And although there is no decision directly in point, that the forcible taking possession, by the officers of a recognized government, of a vessel, with the intent to appropriate it to the taker’s use, for a specific purpose, or for a time only, amounts to a capture, yet its effect is substantially the same as a capture by the enemy, with intent to appropriate for all time to come. The owner is deprived of his property. True, it may possibly be returned to him; but then, just as possibly, it may not. The vessel may be worn out, or lost, while in the service of the takers; or if not, the government may never carry out its intent of restoration. As in the case of capture by the enemy, there is a possibility of restoration by a recapture or relinquishment, so in the case of a taking with the intent to appropriate for a time and then return, there is a possi

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bility of restoration. The only difference between the cases is, as to the degree of the possibility. Where there is a total loss while the vessel is in the hands of the takers, and appropriated to their use, the possibility of a restoration is just as completely extinguished in the one case as' in the other. I have, therefore, come to the conclusion that the seizure in the present case amounted to a capture; and as the stranding of the vessel took place before she was delivered from that peril, the assurers are not liable, unless they have insured against capture by the United States government or .those acting under it; and not even then if, since the capture, circumstances have transpired which, in the event of no abandonment prior thereto, would defeat the operation of that capture as causing a •total loss.

First. Have the assured warranted against the capture in question ? I think not. If seems to me that the warranty does not extend to this capture. The grammatical structure of the sentence containing the warranty precludes any such extension, and no reason is apparent why the construction of the clause should not be according to that structure.

Second. Does the term “ perils of the sea,” cover capture ? Two eminent writers on marine insurance differ in their views on this question. Thus, Marshall observes: “ In a large sense, all the accidents or misfortunes to which those engaged in maritime adventure are exposed, may be said to arise from the perils of the sea; and, conformably to this idea, a loss by capture was formerly holden, in our courts, to be a loss by the perils of the' sea, as much as if it were occasioned by shipwreck or tempest. But in more ■modern times it has been found convenient to distinguish the losses, to which ships and goods at sea are liable, by the more immediate causes to which they may be particularly ascribed. In this view, losses by the perils of the sea are. now restricted to such accidents or misfortunes

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from mere sea damage, that is, such as arise, ex vi divina, from stress of weather, winds and waves, from lightning and tempests, rocks and sands,” etc. (Marshall on Marine Insurance, 385, 386.) Phillips, on the other hand, says: “ The risks or perils, or causes of loss, for which indemnity is promised, must be specified. These are usually perils of the seas, fire, public enemies, thieves, captures, restraints and detentions by governments or people, and barratry of the master and mariners, and all other perils. The first of these descriptions, namely, ‘perils of the seas,’ is the most comprehensive. It includes all the others, while the subject is off land, except the last, which has very little practical effect, since it can be applied only to perils of the like kind to those specifically enumerated.” (Phillips on Insurance, § 35.) Again he says : “ Perils of the seas, which constitute a part of the risks, in almost every marine policy, comprehend those of the winds, waves, lightning, rocks, shoals, collision, and in general, all causes of loss and damage to the property insured, arising from the elements, and inevitable accidents, though sometimes considered not to include capture and detention.” (Phillips on Insurance, § 1099.) The question has never been solved by any decision directly on the point, nor is it necessary to solve it in this case, since I have come to the conclusion that circumstances have occurred since the capture which, there having been no abandonment before their occurrence, cause the capture to cease operating as a total loss. This being so, and the insurers being liable under the policy only in case of a total loss, it is immaterial, so far as their liability in this case is concerned, whether they have insured against capture or not. The circumstances alluded to are, the claim made by the assured on the United States, for payment for the vessel, by reason of her loss, while in the possession of the government officers, and the payment by the government and

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acceptance by the assured, upon that claim, of $16,000 or $17,000, being nearly the whole value of the vessel. In all eases of constructive total loss, including therein capture, there remain some valuable remnants, or a valuable hope and possibility of recovering the property, or indemnity for its loss or detention. If, then, an assured seeks to recover of the assurers, as for a total loss, it is a plain principle that he should place them in a position to realize from this remnant or receive the benefit from a recovery of the property or of the indemnity. (Parsons on Marino Insurance, 108, 499.) He is therefore bound to make his election whether he will give up this remnant, &c., to the assurers, and hold them as for a total loss, or will retain the remnant, &c., and hold the assurers for a partial loss only. His election to give up constitutes what is termed in insurance law an abandonment. It follows that if, before abandonment, he either recovers the subject insured, or receives an indemnity for its loss, he cannot thereafter elect to abandon. There are some exceptions to this general rule, in case of a recovery by recapture, as, for instance, where the salvage on a recapture exceeds half the value of the subject insured, or (where the insurance is on freight or goods) the voyage is broken up by the capture, in which cases he may abandon, although the subject insured has been recaptured. (2 Phillips on Insurance, §§ 1530, 1531, 1621. Marshall on Insurance, 454.) In the present case the assured have already received, for the loss of the subject insured, almost its whole value. If they had desired to make the constructive total loss arising from the capture an actual total loss, so far as the insurance is concerned, they should have abandoned; in which case the assurers would have been entitled to the sum which they (the assured) have already received. This they did not do. On the contrary, they deemed it more to their advantage (as the evidence in the c.ase shows it in fact was,) not to abandon, and received the amount of the insurance as for a total

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loss, but to hold on to their property in the vessel, and their hope and expectation of procuring from the United States an indemnification in a greater amount than they expected to realize from the sum insured. They did so. Their expectations have been realized. They cannot now say to the assurers, although we have received for the loss of our vessel nearly her whole value, yet you must pay us as for a total loss.

[New York General Term,

January, 3, 1870.

The order confirming the referee’s report must be reversed, referee’s report set aside, and the order of reference vacated.

By the policy the insured warranted against any loss from capture, seizure or detention, or any of the consequences of the hostilities of nations. The evidence shows such seizure by a vessel of the United States, and control taken by the captain of the United States vessel, by which the vessel insured was taken from the charge of the captain in command at the time, and which proceeding occasioned the loss.

We think this comes within the exception in the policy, and the assurers are not liable. (Swinnerton v. Columbian Insurance Co., 37 N. Y. 174 .)

The referee also erred in not allowing interest on note.

The report should be set aside, and order of reference vacated.

Brady, J., concurred.

Ingraham, Geo.