Majority
p. 99McConochie et al. v. The Sun Mutual Insurance Co. (Before Bosworth, Hoffman, Slosson, Woodruff and Pierrepont, J. J.) Heard, March 6; decided, April 24, 1858.
Headnote
1. A person insured, on receiving information of facts which, if true, make it highly probable that a constructive total loss has occurred, has a right to give notice of his election to abandon.2. And an abandonment valid in other respects, and authorized by the facts existing at the time, is sufficient when made on such information.
3. It is not essential to a valid abandonment that the insured at the time of giving notice should have information of facts which, if true, would make the inference that a constructive total loss had occurred, necessary and un avoidable, it is enough that they render such a result highly probable.
This is an appeal by the plaintiffs from an order made at Special Term, sustaining a demurrer to their complaint: The action is on a policy of insurance by which the defendants insured the plaintiffs upon 280 hogsheads of sugar, of the value of $23,800, against loss or damage from the perils of the seas on a voyage from Matanzas to New York. The only point is, whether the abandonment set forth in the complaint is sufficient to entitle the plaintiffs to recover for a constructive total loss.
The complaint, after describing the issuing of the policy, and its terms, and the shipment of the sugars, and the sailing of the vessel on her voyage, alleges that while the policy was in force, the vessel, M. L. Frank, “ encountered stormy and tempestuous weather, causing her to labor badly and make a good deal of water, so that she had large quantities of sea-water in her hold, whereby she was compelled to and did ” put into the port of Savannah in distress; that by reason of the sea-water in the hold of the vessel, it became necessary to remove the sugar from the vessel, and land it, whereupon it was found to be wet by sea-water, one of the perils insured against, and damaged to more than 72 per cent of its value, whereupon, and “the day after the plaintiffs received intelligence of damage to the said goods,” they gave to the defendants a notice, in writing, reading thus:
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“Hew York, 5th April, 1856.
“A. B. Nelson, Esq., President:
“Dear Sir—Understanding that the bark M. L. Frank on her voyage from Matanzas to Hew York has been compelled to seek the port of Savannah, in distress, where she arrived, we hear, with several feet of water in her hold; the cargo was landed and found very seriously damaged; we therefore, hereby, abandon to you two hundred and eighty hogsheads of sugar, valued at $85 per hhd., insured by you, under our open policy, Ho. 29, 179, for $23,800, and shall claim for a total loss.
“We are yours respectfully,
“ Alex. McOonochie & Co.”
The defendants demurred to the complaint, by a demurrer in these words, viz.:
“The defendants demur to the.complaint in this action and specify as the ground of such demurrer that the said complaint does not state facts sufficient to constitute a cause of action, in that, the matters therein averred do not show an actual total loss of the merchandise therein mentioned, nor is the abandonment therein set forth sufficient to warrant the plaintiffs in claiming as for a constructive total loss, while it appears by the said complaint that the defendants have paid to the plaintiffs all that was due them by reason of any partial loss upon the said merchandise set forth in the said complaint.”
The demurrer was argued, at Special Term, in January, 1857, before Mr. Justice Duer, who ordered that the demurrer be allowed, with liberty to the plaintiffs, to amend their complaint on payment of costs. He “held, that an abandonment, to be valid, must in all cases set forth the grounds upon which it is made; and that these must be such that, admitting them to be true, the right of the assured to recover a total loss is a necessary consequence. That, tested by this rule, the abandonment set forth in the complaint was defective and void; that the allegation that the goods insured were “very seriously damaged” did not necessarily import that the damage exceeded half their value. It might be true, and yet the plaintiffs not be entitled to recover, the total loss which they claimed.”
From the order allowing the demurrer this appeal is taken.
p. 101I. Where a notice of abandonment in a case where an assured abandons to his insurers intending to claim for a technical total loss, the damage exceeding fifty per. cent of the value of the article insured, is such as to leave no reasonable doubt of the intention of the assured to abandon, and of that intention and of the grounds of the abandonment being understood by the insurers, it will be sufficient; and the abandonment will be complete, if justified by the facts existing at the time it is made. (2 Arnould on Insurance, 1162; 2 Phillips on Insurance, 394 to 397; Southgate v. The Patapsco Ins. Co., 5 Peters, 604; 22 Pick., 191 , Reynolds v. Ocean Ins. Co.; Hazard v. The New England Marine Ins. Co., 1 Sumner, 218.) II. The object of stating in the notice the grounds of the abandonment, is to indicate the character of the loss, i. e., whether by fire, capture, shipwreck or otherwise, and to notify the insurers that the loss was occasioned by one of the risks covered by the policy. The notice need, therefore, only state the grounds with sufficient distinctness to accomplish this object. The intention to abandon, and the claim on the part of the assured that the facts warrant an abandonment, appear by his offer to abandon. (2 Phillips on Ins., 381, 384; Suydam v. Marine Ins. Co., 1 Johns. R., 181; Pierce v. Ocean Ins. Co., 18 Pick., 83 ; Ralston v. Union Ins. Co., 4 Binney, 386, 400; Macy v. Whaling Ins. Co., 9 Metcalf, 354; Hazard v. The N. E. Marine Ins. Co., Dickey v. The New Yorh Ins. Co., 4 Cowen, 222.) III. The sufficiency of the notice in this case must be determined by reference to the information it conveyed to the defendants, and the purpose of any such notice. They knew of the right to abandon in a case like this. The intention to abandon was stated clearly and distinctly. The occasion of the loss was also mentioned (water in the hold of the vessel). The defendants must then have been informed by the notice, and known that by “very seriously damaged” the plaintiffs meant damaged to more than fifty per centum of value. If the loss had been less than fifty per cent, the plaintiffs could not have abandoned; if total, no notice was necessary. In connection with the facts indisputably stated in the notice, the
Daniel Lord, for the plaintiffs and appellants, made and argued the following points:
p. 102intention it expressed, and the words “ very seriously damaged,” must have given the insurers all the information to which, under any construction of the rule of law, they could be entitled. lY. A notice of abandonment is not to be confounded with preliminary proofs of the details of loss, but supposes that the latter are to be afterwards delivered. It will virtually destroy the right to abandon, to subject it to a restrictive nicety scarcely required in preliminary proofs of loss. contended that the notice of abandonment, and that alone converts what would otherwise be only a partial, into a total loss. That such a notice, in order to be sufficient, must, among other things, either allege in terms, that the loss exceeds half the value, or state facts which, if true, would make the inference a necessary one, that the loss was to that extent. He cited and commented on 21 Pick., '456, 470; 16 id., 310, 313; 1 J. R., 181; 2 id., 138; 4 Gowen, 222; 18 Pick., 89 , 93 and 94; 4 Mass., 221 , 230; 4 Binney, 400, 403 ; 3 Gill & John., 450; 2 Wash., 300 ; 2 Phillips (last ed.), 1666. On the 24th April, 1858, the judgment of the Court was announced by Boswobth, J., who stated that the members of the Court (with the exception of Slossoh, J., who dissented) concurred in the following propositions, viz.:
F. B. Gutting, for the respondents,
By the Court.
We hold: First. That the facts alleged in the complaint and admitted by the demurrer to be true, establish that the loss, at the time the abandonment was made, was constructively total.
Second. That a person insured on receiving information of facts which, if true, make it highly probable that a constructive total loss had occurred, has a right to give notice of an election to abandon. And that an abandonment valid in other respects and authorized by the facts existing at the time, is sufficient when made on such information. That it is not essential to a valid abandonment, that the assured should have information of facts which, if true, would make the inference, that a constructive total loss had occurred, necessary and unavoidable, it is enough that they render such a result highly probable.
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Third. The notice in question states truly as the cause of the loss, a peril insured against and such information as to the nature and extent of the damage as rendered the inference of a constructive total loss highly probable, and abandons absolutely and without any qualification or condition.
Fourth. The complaint imports that the assured at the time of abandoning had information of the nature, and as specific as that communicated by the notice of abandonment. The abandonment set forth in the complaint is, therefore, sufficient, and the order appealed from must be reversed and judgment entered in favor of the plaintiffs, with liberty to the defendants to answer on payment of the costs of the demurrer, and $10 costs of this appeal.