Sale v. Sun Mutual Insurance — 26 N.Y. Super. Ct. 602

Majority

p. 602

William A. Sale and another, plaintiffs and respondents, vs. The Suit Mutual Insurance Company, defendants and appellants.

Headnote

The loss of a part of an assured’s portion of a cargo insured in a valued policy, which cargo is partly lost by' perils insured against, and the residue is brought to the port of destination, is partial, and not total, with benefit of salvage, notwithstanding only part of the portion so belonging to the insured is capable of being identified by any marks. So held in a case where the assured notified the underwriters of his intention not to abandon his interest in the cargo, and the damage to the part saved from the perils insured against had been adjusted as a partial loss. Monell, J. dissented..

(Before Monell, Garvin and Jones, JJ.)

Heard February, 1866;

decided-, 1866.

p. 603

This was an appeal from a judgment upon a verdict against the defendants, in an action upon a valued policy of insurance, for a loss of cotton shipped on board of a brig (Trade Wind) at Matamoras, bound for New York. Of 265 bales of cotton composing the cargo, 166 belonged to the plaintiffs. The remainder were the property óf other consignees. All of the bales were marked. The brig, on her voyage, went ashore and filled with water, and part of the cargo of cotton was lost. What was saved was carried to Beaufort, N. 0., arid from that place, by an arrangement between the parties, agreed to be brought to New York, without prejudice to the rights of the plaintiffs, by an agent dispatched for the purpose. Some (203) whole bales, some (40) parts of bales, and some (77) bags of the cotton were brought to New York. The quantity so brought on was sold at auction, by the defendants. After a careful examination, the plaintiffs could only identify as theirs, by the marks of that brought on and sold, some (41) bales. Others (27) were identified by their marks as belonging to three other consignees.

The loss upon the bales so identified as those of the plaintiffs was then adjusted as partial. The plaintiffs claimed . similar adjustment of the loss upon the rest of the bales shipped by them, (125.) The defendants contended, that the loss should be adjusted as total, with salvage. All the cotton shipped was uniform in quality. It weighed nearly 128,000 pounds, and its total value in New York, at the market price at that place, (65 cents per pound,) was over $83,000. The sales in New York netted only about $76,800. Before the arrival in New York, of the cotton, the plaintiffs had resolved not to abandon their share of it, of which they gave the defendants notice. After deducting the weight of water absorbed by, and sand gathered upon, the bales and cotton, (62,713 lbs.) there remained of damaged cotton, in New York, over about 113,000 pounds, leaving nearly 14,500 pounds to be accounted for, as having been sold with the hull of the vessel, or otherwise lost. The average weight of cotton, per bale, was 480 pounds. The identified cotton brought to New York

p. 604

weighed over 33,250 pounds, leaving the weight of unidentified cotton above 94,600 pounds. The defendants paid the plaintiffs $40,204.93, on account of their insurance of such cotton.

The issues in this action were tried Before Justice Barbour and a jury.

The defendants’ counsel, among other requests, requested the justice to instruct the jury :

1. That the loss incurred upon the unidentified residue of the plaintiffs’ cotton, as well that which was sold in New York as that which was sold with the wreck, must be adjusted upon the principle of a salvage loss, by deducting from the valuation thereof, at the rate named in the policy, the portion of the net proceeds thereof which were set apart and appropriated to the plaintiffs, upon the apportionment. Eor one third of which difference, and no more, the defendants are liable. 2. That as respects so much of the cotton as was confused with the cotton of other shippers, and unidentified by any ear mark, there being no means of determining either its actual condition when sold, or its damaged or sound value, every element necessary for the adjustment of the loss as a particular average loss being wanting, it can only be adjusted as a salvage loss. 3. That in view of the circumstances under which the unidentified cotton was brought from the place of the wreck to New York and sold, the loss thereon is to be adjusted in the same manner and upon the same principles as if the whole of it had been sold at the place of the disaster—that is to say, as a salvage loss. 4. That the preliminary proofs presented by the plaintiffs to the defendants afforded no means for the computation of the loss as a particular average loss, as they gave neither the sound nor the damaged value of any portion of the plaintiffs’ cotton, except as to the plaintiffs’ 41 identified bales. They were therefore insufficient to form the basis of any action or recovery other than upon the theory of a salvage loss. 5. That the burden, in this case, is on the plaintiffs to make proof of their alleged partial loss, by furnishing evidence of the sound and damaged value of the very

p. 605

cotton covered by the policy, and having failed to do this, they can recover in this action more than the amount of the loss adjusted as a total loss, with salvage as it is proved.

The judge refused to charge any of such propositions, and the defendants excepted to each and every of such refusals.

The jury rendered a verdict for the amount claimed by the plaintiffs, and the defendants appealed.

J. H. Choate, for the appellants, (defendants.)

T. Scudder, for the respondents, (plaintiffs.)

In this case there was no abandonment; nor was there sufficient evidence to establish a legal transfer of the remnants of the cargo to the underwriters. What evidence there was to that effect was very slight, and abundantly refuted by other facts in the case. No such pretense was made by the defendants, and express notice to the contrary was given to them by the plaintiffs. It may be assumed that the underwriters had no title to the cotton saved, whoever else had. It had been expressly agreed that the sending of the .agent for the cotton, and bringing it to New York, should be without prejudice to the plaintiffs. There being no .abandonment before it arrived at the port of destination, the plaintiffs could not afterwards abandon it for damages. There is no pretense of any other way in which the plaintiffs could have parted with, or lost the title to, their property. It must therefore be assumed, that the consignees were the owners of all the cotton which came from the wreck of the brig. As between the different consignees, if there had been no insurance upon the cotton, and it had arrived in the precise condition in which the cargo was landed at this port, there could have been no question as to their interest in the unidentified part. Each consignee and owner would have been entitled to his proportion of the proceeds of a sale of it, had it taken place; and exclusive possession and refusal to deliver upon demand, or. the assertion of exclusive dominion, by one con

p. 606

signee as against the other, would have been a good cause of action by the latter, against the former. In such an action by these plaintiffs it would have been no defense to have insisted upon inability to identify the property claimed. For at most not more than thirty bales were physically lost with the wreck ; so that at least ninety five bales of the plaintiffs’ cotton, among the identified cotton, must have been saved. The cotton itself was of a uniform quality. The plaintiffs,, therefore, not only had an interest in, but were the owners of, some portion of the cotton which arrived, which was undistinguishable from the rest. It is quite clear that a large portion of the cotton of the plaintiffs reached New York, although 125 bales could ,not be identified as the original • bales. It was in proof, as matter of fact, that all the cotton shipped was brought to New York, except about thirty bales. The mere facts of insurance and loss of marks and numbers upon the bales could not therefore affect the title to the property, as between the defendants and the assured, in the slightest degree. If the plaintiffs had, with the consent of all parties, taken possession of their aliquot portion of the cotton saved, although with marks and numbers erased, that would have taken the place of their cotton, for all purposes, including that of their ownership; he sacking, size and weight of bales of cotton being of course the same. But instead of. that course being adopted, a sale was made by the defendants, of the cotton in mass, requiring the rights of she parties now to be fixed by a distribution of the proceeds. It cannot be contended that there was either a physical destruction, or one in contemplation of law, of the cotton, any more than it can be assumed that no part of the cotton of the plaintiffs came, as such, to the port of destination. The only pretense for such a supposition is the fact that the marks and numbers upon a portion of the bales were destroyed. If this reasoning be sound, and loss of marks as a means of identification, destroys ownership, it would be equally so, although the plaintiffs had been the only consignees and the cotton had arrived at the port of destination with the same loss of marks. Loss

p. 607

of identity is a peril insured against by the policy; otherwise the existence of the marks and numbers would form a part of the subject matter of insurance.

The accidental mingling of grain of the same quality, consigned to different owners, without damage, cannot be said to be a total loss at the port .of destination. How can the loss of identity by reason of a peril be a destruction, in any sense, of an article in specie ? And how can there be a total loss without abandonment, if the thing insured still exist in specie ? An insurance on goods is a contract to indemnify the insured only for any loss he may sustain by his goods being prevented by the perils of the seas from arriving in safety at their port of destination. (2 Arnould on Ins. § 1119.)

But it is said the plaintiffs must identity their cotton, or the damage to it cannot be determined.. In answer to this, it may be said, that we have already seen that, upon the proofs, a very large part of the 125 bales belonging to the plaintiffs, in fact arrived, and that the plaintiffs would have had the right to have taken their aliquot portion of the rest of the cotton. This would be equally true, if every bale, had been broken, and the cotton reduced to one confused mass, although no part of it had been actually physically lost. In other words, if the cotton had all been unbaled, and thrown into a confused mass, and so brought to the port of destination, each consignee would have had aright to take his aliquot part; being only accountable in case he invaded the quantity which belonged to the other consignees. (Kimberly v. Patchin, 19 N. Y. Rep. 330 .) There is no difference between such a case and the one under consideration. Evidence of the amount of injury to the value can always be got at by averaging the different degrees of damage among the cotton, when it is of a uniform quality; and such damage may always he determined by a comparison of the proceeds of the sale with the sound values. Here loss of evidence, or difficulty of determination of the amount of damage, cannot alter rights. It may create difficulty for a jury to determine the facts, but cannot change the law.

The rule of adjustment adopted by the jury was, therefore,

Dissent

p. 608

correct. This was a case of partial and not of total loss, with salvage.

The exceptions taken by the defendants must be overruled, and the judgment affirmed, with costs.

Jones, J., concurred.

The adjustment of damage in this case, was upon the principle applicable to average loss, as upon an open policy. The difference between a valued and an open policy is chiefly in the mode of ascertaining the loss. Under an open policy, the assured can obtain the actual value of the subject insured. In a valued policy, the valuation in the policy is conclusive. Partial or total loss has no other effect than, in case of a part destruction of the subject insured, to open a valued policy, to let in extrinsic evidence of damage; and opening the policy is merely resorting to such extrinsic evidence, to fix one element in ascertaining the loss.

The principle adopted in this case, allowed a recovery of the per centage ascertained by the difference between the actual value of cotton in a sound condition, at the port of destination, and the actual value of the cotton which arrived in its damaged state.

Such adjustment was correct, if the loss was partial. • In • respect to the 41 bales which arrived and were identified, the adjustment upon the principle applicable to arrange loss, was conceded to be correct.

Some of the cotton only, was rescued from the wreck. It was water soaked and sanded. The bales had been broken, and the marks defaced or destroyed. It was brought to New York, some of it in bulk or mass ; some in bales and parts of bales, and in bags. Of the whole number of bales (229) shipped from Matamoros, only 68 were capable of identity, 41 of those belonged to the plaintiffs, and the remainder (27 bales) belonged to one or other of three other consignees. Part of the cotton on board the brig was not rescued, but was left in the hold, and sold with the hull of the vessel. The quantity thus

p. 609

sold was never ascertained, nor was it known to whom it belonged. The cotton which arrived in New York, and which was incapable of identity, was water soaked and twice its usual weight. After separating the 41 bales identified as the plaintiffs’ property, and the 27 bales belonging to other parties, it was not possible to determine the ownership of the remaining cotton. It was not known, and could not be, how much, nor whose, cotton had been sold with the hull of the brig. No conceivable evidence could have established any fact upon which a calculation could have been made ; nor was it possible to say that the whole, or what particular part less than the whole, did or did not belong to the plaintiffs. No comparison of weights could aid in determining the ownership, the condition of the cotton rendering a computation impossible

Upon a partial loss, the burthen of proving the nature and extent of damage to the subject insured, is upon the plaintiffs. It is essential that they should show there had been a partial loss of their property. Interest in the subject insured, even under a valued policy, is necessary, although it need not be proved. And a claim for a partial loss, involves the showing of property in the subject damaged.

A constructive total loss usually embraces the right to abandon to the underwriters. The subject insured is not physically annihilated. It frequently remains in specie, or may be so injured as to be of little value, and the assured may abandon to make a total loss.

What property had the plaintiffs in the unidentified cotton which arrived in New York ? The solution of this question can only be had by the aid of facts wholly out of the power of either party to furnish. The extent of the plaintiffs’ interest in the goods saved must depend upon the quantity totally lost. The whole of the plaintiffs’ 125 bales may have been left in the hold of the vessel and sold with the hull. There is no evidence that it was not, except what may be inferred from the supposed quantity which reached New York, which quantity was in a condition so water soaked and sanded as to leave it, at least, doubtful as to the original weight. A particular average loss

p. 610

involves the sound value and the damaged value. Such values are ascertainable, legally, only by an inspection of the subject insured and a knowledge of the market price. They are not inferrable from the hind of property merely, nor from comparison with other and similar property.

The only evidence, in the case before us, of the value of the cotton in a sound state, was, that it was examined on its arrival in Hew York in its damaged state and estimated, by experts, to be worth sound, 90 to 92 cents a pound. Mr. Taber testified that there were many grades of cotton well known to dealers. He denominates them a’ good, good fair, fair, middling fair, good middling, middling, &c. He stated that 97 of the bales he examined were “middling good,” and 135 bales “ middling.'” He did not pretend to any knowledge of the cotton in a sound state, never having seen it, but judged of its value merely by an inspection in its damaged condition. This evidence exhibits the difficulty of furnishing any practical proof of ownership in the plaintiffs of any specified part of the cotton rescued from the wreck. The 97 bales and the 135 bales were of a somewhat different quality. Among which lot were the plaintiffs to find their property ?

The doctrine that the arrival in specie at the port of destination, of "any part of the subject insured, makes it an average loss, without regard to the extent of the damage, is founded on the reason that such part is capable of actual delivery.

And the rule that there cannot be a constructive total loss without abandonment to the underwriters, also requires that it should appear that the subject insured could not have been delivered, or was incapable of being delivered in specie, at the port of destination. } ''

If on the arrival of the cotton in Hew York the plaintiffs’ 166 bales could have been delivered, although in a damaged condition, it would have been an arrival in specie ; and the damage would have been an average loss. But, if the plaintiffs’ cotton was so intermixed with the cotton of three other owners as to render it incapable of separation or identification, and consequently of delivery, it cannot be said to have arrived in specie.

p. 611

In cases of involuntary or accidental commingling of the goods of several owners, the separate interests become blended, and indistinguishable. There is a quasi tenancy in common, and neither party owns the whole. (Story on Bailm. § 40. 2 Kent’s Oom. 364.) In such cases their rights can be determined only by a judicial decree, and there must be a sale of the entirety, and á distribution among the owners.

That, in the case before us, there was a commingling of the cotton, to such an extent as to render the different parts indistinguishable, is conceded. And it may be said to be further conceded that, excepting 41 bales,' neither the plaintiffs could claim, with unerring certainty, that any portion of the remaining cotton was the identical cotton shipped by them ; nor could the defendants, with like unerring certainty, insist upon its delivery.

The case, therefore, furnishes no data from which a partial loss can be estimated. The damage to the cotton was not uniform ; it was wet and sanded in different degrees ; it was without marks ; in bulk or mass, and owned in common by four several shippers.

In cases of constructive total loss the property is not wholly destroyed, but it is wholly lost to the owner, as much so as if it were annihilated. Any thing, therefore, occurring to the property, from the perils insured against, whereby it is lost to the owner, renders it a constructive total loss. If by capture, condemnation or abandonment, the property is lost to the owner, is it not equally lost if all means of reclaiming it are gone ?

In defining the meaning of “ particular average,” “ average loss,” and words of equivalent import, in contracts of marine insurance, the courts have admitted a class of losses which they have called a “ constructive total loss.” They are not, as has been seen, actual total losses of the subject, but actual total loss of the interest of the assured in such subject. To the list of constructive total losses should, I think, be added the indistinguishability of the subject from others of a

p. 612

like kind, produced by any of the perils covered by the policy, rendering it impossible to deliver in specie.

Subjects of property which are distinguishable by any physical attributes are capable of exact identification, and are objects of sale and transfer. (Kimberly v. Patchin, 19 N. Y. Rep. 330 .) Without such attributes or means of identification, to afford the means of ascertaining and describing the property, it cannot be the subject of an executed sale, so as to transfer the title from one to another. (Id.)

It is not demonstrated in this case what portion, if any, of the plaintiffs’ cotton arrived in Eew York ; and in that sense, none of it can be said to have reached the port of destination.

Suppose the subject insured had been within the memorandum clause, could the underwriters have claimed an arrival in specie ? To sustain such a claim it would be necessary to establish at least a possibility of delivering to the owner his identical property. Here, it seems to me, no such possibility existed. The undivided interests of the four owners could not be separated, nor could the cotton be divided among them.

There is no equity in the mode of adjustment insisted on by the plaintiffs. They agreed upon a valuation, and should be held to their agreement, and not be allowed to claim the advantage of a sudden, and probably unexpected rise in the market, especially in a case where, in my opinion, they have failed to establish either by proof or in law a right to open the policy.

I think there should be a new trial, unless the plaintiffs stipulate to reduce their judgment to the amount proper for them to recover, upon the principles applicable to a total loss with salvage.

Judgment affirmed.