Hammond v. Essex Fire & Marine Ins.

11 F. Cas. 387, 4 Mason C.C. 196

• Court: U.S. Circuit Court for the District of Massachusetts
• Decided: October 15, 1826
• Status: Published

Opinion

STORY, Circuit Justice.

In this case it is not disputed, as I understand the argument, that after an abandonment is accepted, the underwriters, as owners of the ship, are liable to the payment of the wages of the master and mariners for the residue of the voyage after they become owners. This is a doctrine so consonant with the general principles of law, and, as far as authorities go, so well supported, that iu ordinary cases of hire, there would not seem much room for controversy. Marsh. Ins. c. 13, § 4, p. 602; Thompson v. Rowcroft, 4 East, 34; Sharp v. Gladstone, 7 East, 24; Case v. Davidson, 5 Maule & S. 79, 8 Price, 569; McBride v. Marine Ins. Co., 7 Johns. 431; Coolidge v. Gloucester Ins. Co., 15 Mass. 347;. Marsh. Ins. bk. 1, c. 13, § 4, p. 602. The abandonee of a ship is entitled to her earnings acquired after the abandonment; and whether the freight be earned upon a general contract, or upon a charter-party, although it may make a difference as to the form of the remedy to recover it; yet it does not seem to make any difference as to the right of the abandonee. Splidt v. Bowles, 10 East, 279; Chinnery v. Blackburne, 1 H. Bl. 117, note; Morrison v. Parsons, 2 Taunt. 407; Case v. Davidson, 5 Maule & S. 79: Livingston v. Columbian Ins. Co. 3 Johns. 49; United Ins. Co. v. Lenox, 1 Johns. Cas. 377, 2 Johns. Cas. 443. If so, then he, who receives the benefit, ought to bear the bur-thens.

In respect to the relative rights of the underwriters on ship and freight, in cases of constructive total losses, and an abandonment by the ship-owner to the respective underwriters, there is a diversity between the English and the American doctrine. In England the doctrine is established, that the underwriter on the ship, after an abandonment, is entitled to the whole freight of the voyage then in the course of being earned, as incident to the ownership of the ship. That was finally adjudged in Case v. Davidson, first by the court of king’s bench (5 Maule & S. 70), and afterwards upon error in the executive chamber (8 Price, 559). No distinction was admitted in that case between the portion of freight, which might be deemed earned as a pro rata freight antecedent to the abandonment, and that earned afterward. In America a rule somewhat different has been established in some of our commercial tribunals, which is entitled to the highest respect. The rule is, that up to the' time of the loss, the underwriter on freight {like the ship-owner) is entitled to a freight pro rata itineris; and the underwriter on ttie ship to all which is subsequently earned. In all cases, therefore, where there is a growing freight not absolutely earned, the parties take it, when earned, in the proportion of the voyage performed before and after the abandonment. The cases cited at the bar fully support this doctrine; and what is more material, it has been recognised by the supreme <fourt of Massachusetts, to which state these parties belong. United Ins. Co. v. Lenox, 1 Johns. Cas. 377; 2 Johns. Cas. 443; Davy v. Hallett, 3 Caines, 16; Livingston v. Columbian Ins. Co., 3 Johns. 54; Marine Ins. Co. v. United Ins. Co., 9 Johns. 186; Coolidge v. Gloucester Ins. Co., 15 Mass. 347. As between the different underwriters on ship and freight in the present case, it is clear, upon these principles, that, by the abandonment, the former became entitled to so much freight only as was earned antecedent to the loss for which the abandonment was made, and the underwriters on the ship are entitled to all earned afterwards.

This, then, being the posture of the case as between the respective underwriters, how is it as between the parties now litigating before the court. It is plain that the libellant has, as master, been in the service of the respondents since the time of the acceptance of the abandonment, and retroactively, by operation of law, from the time of the loss. The present case is yet stronger, for the respondents must be deemed by their own acts, with the fullest means of directing the voyage, to have justified the master in the prosecution of it. Whether, after an abandonment to the underwriters on the ship, the latter are bound to prosecute the voyage, as succeeding to the rights and obligations of the owner in statu quo; or whether they may give up the voyage, and undertake any new enterprise, it is unnecessary, in this case, to decide. The language of the books is very direct on this subject (Marsh. Ins. bk. 1, c. 13, § 4; Coolidge v. Gloucester Ins. Co, 15 Mass. 341; Case v. Davidson, 5 Maule & S. 79, 89, 8 Price, 559), but it may be well to reserve any absolute opinion respecting it, until it forms the very point in judgment. Here the original voyage was, in fact, pursued with the unquestionable assent of the respondents, and the freight earned on that voyage has been received by them without objection. Under such circumstances, in ordinary cases, the master would be entitled to receive wages, or an equivalent, for the period of his employment in the service of the respondents. What, then, are the grounds on which his claim is resisted? First, it is said, that he is not entitled to wages as upon the ordinary contract of hire, because here was a special contract, which superseded it. The latter was not extinguished by the abandonment of the ship, and the master’s claim must stand, if at all, upon the terms of his original engagement with the ship-owner. -In considering this point, it is important to look at the situation of the parties after the abandonment. By that event the respondents became owners of the ship. They elected to pursue the original voyage, and the master also elected to pursue it. If it was competent for either party to break it up, still it was as competent for either party to waive that right. No objection having been made, on either side, to the terms of the original engagement, the fair inference is, that for the residue of the voyage they adopted them, and consequentlv the master must be understood to be entitled, not to wages as upon ordinary hire, but to his share of the freight in lieu of wages. So far I go along with the argument. But the resuit of this reasoning is, that if there had been no abandonment, the libellant would have been clearly entitled to his moiety of the freight, subject to the expenditures provided for in the original agreement.

This leads me to the consideration of another objection, which is, that the abandonment of the freight by the master is an ex-tinguishment of his right of recovery; first, because he has been fully' indemnified and paid by the abandonees; and secondly, because the abandonment operated as an assignment of the freight now in controversy; and the respondents, having notice, ar» bound to pay it over to the assignees, and not to the libellant. The first ground is not well founded in point of law. The respondents have nothing to do with the contract of insurance with the underwriters on freight. They are not parties or privies to it. They have paid no premium, and are entitled to no interest in it. It is, as to them, res inter alios acta. Their contract with the master is to pay him his share of the freight; and whether he has been indemnified by others or not. furnishes no discharge of their obligation. Suppose the master had received the whole freight, there is no pretence to say, that the respondents could recover from him any more than their own moiety.

The other constitutes the main ground of defence. And if it be well founded in law and fact, there will be no difficulty in giving effect to it in the present suit. A court of admiralty is not, like a court of common law, bound by technical rules as to remedies. It acts like a court of equity, ex aequo et bono, and will give effect to the rights of parties, and recognise them, as they would be recognised in a court of equity. If, therefore, the master has made an assignment of his moiety of the freight, valid in equity, this court will give it entire effect, although it may not be such an assignment as would have transferred a remedy at law. See Morrison v. Parsons, 2 Taunt. 407. I agree also to the position, that an abandonment does operate as an assignment, valid between the parties, and sufficient to bind their rights to the extent of its purport But the difficulty is of another sort. It is to establish, that the abandonment did assign the right to this freight to the abandonees. The general principle has been already stated, viz. that the abandonment to the underwriters on freight conveys no title to the freight subsequently earned. As to them, such freight is deemed a total loss. Whatever is so earned is deemed to be earned by and for the benefit of the new ship-owners; and all contracts respecting the future progress and consummation of the voyage,, are at the expense and for the benefit of the new ship-owners. That was the doctrine in Davy v. Hallett, 3 Caines, 16, and it was acted upon to its full extent in Coolidge v. Gloucester Ins. Co., 15 Mass. 341. The whole embarrassment in this case arises from confounding the American with the English doctrine on this subject. By the latter the abandonees of freight, so far as respects the original ship-owner, would, in an adjustment with him, be entitled to an allowance of all the freight earned in the voyage, and received or receivable by him. If the whole freight was earned, they would be entitled to the whole as against him, though as between themselves and the abandonees of the ship, they could make no claim to any of the freight. As has been already stated, the American doctrine is otherwise; and it ought to be adhered to on the present occasion.

The true posture of the present case, with reference to the American doctrine, is, that there was an entire loss of the original voyage and freight, upon the abandonment. In respect to the underwriters on freight and the assured, the voyage from Norfolk to Surinam, and back to New York, was a new voyage, carried on by new parties, under a new contract, grounded, indeed, by the assent of these parties, upon the same stipulations as the original contract, but still substantially new. The master, after the abandonment at least, so far as the underwriters on freight are concerned, was under no obli-ligation to pursue the voyage. It was, as between them and him, entirely at an end. If he elected to go, it was for his own benefit, and not for theirs. They were not subject to the charges of victualling or manning the ship, and there would be no equity in giving them his earnings. If he was under no obligation to go the voyage on their account, or to labor further in their service, it is clear that his acts ought to be referred to his own rights and interests. The short view of the matter, however, is, that the underwriters on freight can claim no more than was assigned to them by the abandonment, and that was only the freight antecedently earned. As, therefore, the freight afterwards earned has not been assigned by the master to any one, he io entitled to recover his moiety of it from the respondents, as an equivalent for his wages. Upon these principles I shall refer the c to a commissioner to report the sum due to the master. The freight for the portion of the voyage from New York to Norfolk, pro rata itineris, belongs to the underwriters on the freight, and the master has no claim upon it. As to the residue, he is to bear all the expenditures provided for in the original agreement with the ship-owners, and with these deductions he is to be allowed his moiety of the freight subsequently earned. Considering the circumstances of this case, it appears to me that the expenses ought to be equally borne by both parties. Decree accordingly.